The Ins & Outs of L&I for Nonprofits Roseann Collins, Employer Services Outreach Supervisor

Today’s Topics: Reduce costs –Use L&I’s Consultation Services New legislation –Volunteer Reporting Avoid unexpected liability –Find out which workers are reportable Put money back in your pocket –Use the Stay at Work Program

Volunteer vs. paid status Unpaid volunteers of nonprofits –Do not receive anything of monetary value for their service –Maintenance and expenses may be reimbursed (Maintenance = meals or temporary sleeping quarters during volunteer duties) ** Value in excess of expenses may cause the volunteer to be considered a covered worker. **

Stipends/Gifts/Reimbursements The amount of a stipend, value of a ‘gift’, or amount paid in reimbursement would be evaluated in relation to the work performed to determine if this is reimbursement or compensation for labor provided.

Which workers are reportable? Mandatory coverage –All paid staff (hourly, salary, full-time, part-time, board members, etc.) –There are no “owner exemptions” for nonprofits Optional coverage –You may choose to have coverage for unpaid volunteers of 501(c)3 charitable organizations – Medical benefits, no wage reimbursement

New Reporting Option for Volunteer Coverage The legislature took steps to change workers’ compensation coverage for volunteers. New Reporting Option for Volunteer Coverage An option for employers who use volunteers with Medical Aid coverage to report either: –Actual hours worked by the volunteers or –100 hours per volunteer per calendar year. –Employers must report all their volunteers the same way.

New Coverage Option for Unpaid Student Volunteers Other changes Expanding elective student volunteer coverage beyond K-12 and publicly funded schools only, to include higher education and privately-funded schools (K-12 through higher ed). Allowing for-profit entities, as well as non-profit entities, to elect medical aid coverage for unpaid students participating in a school- sponsored work-based learning experience, including cooperative education, clinical experiences, and internship programs.

What about 1099 workers or independent contractors? We would follow the same rules and criteria for nonprofits as we do with for-profit companies to determine if a 1099 worker is reportable for workers’ compensation coverage. Being paid by an IRS Form 1099 does not automatically exempt the worker from workers’ compensation coverage in Washington State.

1911 – WA Workers’ Comp Law Written very broadly to cover most workers in Washington State Exceptions: –Specialized heavy equipment or –Own work crew You do not supervise the contractor, their employees, or the use of the equipment. This “personal labor test” still exists, RCW

1992 –additional exceptions Takes a broader view of what an independent business looks like Provides a ‘test’ to pass as an exempt independent contractor –6-part Test, RCW –7-part Test for Construction, RCW

Independent Contractor Test Record Keeping and Reporting Guides, Page 14 –RCW (heavy equipment or own work crew) –RCW (6-part test) –RCW (7-part test for construction)

6-Part Test, RCW “Be free from your control or direction” Do you: Schedule when they start, take breaks, etc.? Provide training or tell them how to do the job? Provide the tools and materials? Directly supervise their work?

6-Part Test, RCW “The service is either –outside the usual course of business or –performed outside all of the places of business or –the individual is responsible for the costs of the principal place of business from which the service is performed” Do they: Provide a service or product that you do not provide? Work from a different location than you do?

6-Part Test, RCW “The individual is either –customarily engaged in an independently established trade, occupation, profession, or business, of the same nature as that involved in the contract of service or –the individual has a principal place of business that is eligible for a business deduction for IRS purposes” Do they: Have other customers? Advertise? Have their own IRS qualified business location?

6-Part Test, RCW “The individual is responsible for filing a schedule of expenses with the IRS.” 5. “The individual has established an account with the department of revenue, and other state agencies as required” 6. “The individual is maintaining a separate set of books or records that reflect all items of income and expenses” Do they: Follow all requirements to operate a business? Keep separate books and records?

What is the financial impact of misreporting? When an injury happens, who is responsible? L&I workers’ comp coverage is provided by insurance premiums. Employers and workers share the costs. If your organization is found responsible AND did not have workers’ compensation coverage: –Claim will be accepted –Audit reviews 1-3 years of records to determine premium due, plus penalties and interest –Plus % of the claim’s costs (actual or estimated) as a claim penalty for being an unregistered employer

Let’s do the math… Kids club (class 6203), 3 workers. Four different scenarios… Base RateQuarterlyAnnual $0.3723$536.11$2,144 Filing on time Voluntarily contacted Outreach Filed and paid for 4 quarters’ premium Penalties and Interest waived Base RateQuarterlyAnnual $2,144

1 year Audit Assumed full-time hours for 3 workers $ in additional costs (plus other penalties) Let’s do the math… Base RateQuarterlyAnnualPenaltiesInterestTotal – 1 yr. $ $2,144$428$160$2734 Kids club (class 6203), 3 workers. Four different scenarios…

Let’s do the math… “ Worst Case” scenario… A claim was filed, and the employer was not registered with an active workers’ compensation account. Base RateQuarterlyAnnual3 years’ Premium* Penalties & Interest* Claim Cost Penalty* Total* $ $2144$ 6,432$ 2,541$11,183$ 20,157 Claim filed, unregistered employer 3 year Audit, assumed full-time hours for 3 workers $ 13,724.14in additional costs

Recap Know your liability Keep sufficient records Avoid penalties

How can I control costs? Prevention Quick response to near misses and injuries Return to work program Stay at Work reimbursements

Sprains and strains prevention 44 cents of every workers’ compensation dollar are spent on sprains and strains Ergonomics consultation – FREE Rick Goggins, Ergo Supervisor (360)

FREE Consultation Services Safety & Health Consultation –Safe workplaces, help with APP –No fines or penalties assessed Sprains & Strains/Ergonomics –Employees’ movement and body mechanics –Placement of work surfaces or tools Risk Management Consultation –HR practices, hiring policies –Rates and claims analysis for your account Or call your local L&I office

Retrospective Rating Retrospective Rating is a voluntary program that offers Washington employers an opportunity to earn part of their premium back. You can get a REFUND With opportunity comes risk You might get an ASSESSMENT Pooled premium = pooled risk

Stay at Work Reimbursements Financial Incentives for medically-approved light duty work, including: 50% of the base wages, up to $10,000 or 66 days $1,000 for training $2,500 for tools or equipment $400 for necessary clothing Per claim Washington Stay at Work Rx Light Duty MD

Stay at Work Program

Questions?