Insurance and Employment Law – Outsourcing

What happens when you outsource jobs?  There are benefits to outsourcing in the right circumstances.  But what problems can come up and what should you do to protect your business?

1. If the workers are not your employees, they can escape the Workers Compensation system and pursue law suits against you.   If you don’t set it up correctly, you may violate State and Federal labor laws.  See the link below for Colin Page’s blog page laying out a real case of a problem blowing up in the employer’s face.
2. If you create a 1099 relationship, making someone an “independent contractor”, you have to be very careful to make sure the relationship truly qualifies as an independent.  If you want detailed advice on those rules to observe, on how to stay out of trouble with your State Board of Workers Compensation and Department of Labor, and lawsuits, click on the link below to William Barrett for legal advice.
3. Employees are generally entitled to Workers Compensation benefits if injured; in New Jersey there are very few exceptions.  Non-employees can sue outside the controlled environment of Workers Compensation.  Make sure you have someone else’s insurance in front of yours; if you have a contract with someone who doesn’t have Workers Compensation, you are probably going to be providing it.
4. You should follow basic risk management procedures.  If you contract jobs out to another company, get their certificates of insurance for Workers Compensation and General Liability.  Have them name you as an “additional insured” on their policies.  Make sure you have your own Workers Compensation, General Liability, and Employment Practices Liability insurance policies.

For more detail or to kick ideas around, we’ve given you links below to some intelligent lawyers and to our own contact information.

Here’s a link to the Chair of Corporate Law at a large NJ law firm.  Bright lawyer, William Barrett, who has been very solid for us.

Here’s a link to a Colin M. Page & Associates blog with comments on problems with outsourcing work.

Here’s a link to information on Employment Practices Liability Insurance.  GBW Insurance, 3 Gold Mine Road, Flanders, NJ  07836.  1-800-548-2329