Distillery Employees Workers' Comp

[Paul Tomaszewski]

Well the day has come for us to bring on some part-time folks to help out in the distillery on a regular basis, and I know that employees are not considered "equipment," but this was the best fit I could find as far as topics go. For those of you who have experience with covering your employees under workers' comp, I was wondering about your experience for those working IN the distillery (vs. tasting room, sales, or something not related to day-to-day production operations). I know that not every insurance company is the same, but the cost to cover someone as a distillery employee (as quoted to me) is in the neighborhood of 90 cents to a dollar per 100 dollars of salary vs. a gift shop employee being a fraction of that. Has anyone had different experiences with this and, if so, were the employees covered under a different category than simply "distillery operations?" Maybe there's a "small-scale production facility" category or something like that? If there is a microbrewery category that isn't as high as a standard-sized brewery, than maybe we can work the channels to develop a "micro distillery" category.

[grehorst]

I think insurance companies tend to use your SIC code, so if you're a distillery, microbrewery rates likely won't apply. I think the best you can do is hire in areas unrelated to product production and get competitive quotes. Insurers see inherent danger from high proof alcohol and like to charge accordingly.

[pcheak]

Well the day has come for us to bring on some part-time folks to help out in the distillery on a regular basis, and I know that employees are not considered "equipment," but this was the best fit I could find as far as topics go. For those of you who have experience with covering your employees under workers' comp, I was wondering about your experience for those working IN the distillery (vs. tasting room, sales, or something not related to day-to-day production operations). I know that not every insurance company is the same, but the cost to cover someone as a distillery employee (as quoted to me) is in the neighborhood of 90 cents to a dollar per 100 dollars of salary vs. a gift shop employee being a fraction of that. Has anyone had different experiences with this and, if so, were the employees covered under a different category than simply "distillery operations?" Maybe there's a "small-scale production facility" category or something like that? If there is a microbrewery category that isn't as high as a standard-sized brewery, than maybe we can work the channels to develop a "micro distillery" category.

The contractor that built your building paid $25.00 per hundred for his carpenters and the roofing contractor paid $50.00 per hundred to roof your building. Less than $1.00 per hundred is CHEAP in comparison to what other people are paying.

I am sure your worker will do things that are less risky than work in the distillery. If you could find another job code that would cover other tasks that the worker would be required to perform at a lower rate, then keeping accurate time reports of the workers time would save you money when the insurance company audits your pay records.

I have an interest in distilling but owned a construction company for many years. I paid a lower rate for workers in the shop and much higher rate for workers in the field. Some of my workers worked both in the shop and out in the field. By keeping detailed payroll records I was able to save a lot of money at the audit. It is much nicer to get a refund than pay a lot extra.

Pat

[CathyTuthilltown]

Congratulations on your growth! You are correct- if you categorize employees by job type, you can set up multiple workers comp codes and rates with your insurance provider. At Tuthilltown Spirits, we use two different codes, "Production" and "Admin/Retail" (according to our insurance company the administrative rate was the same as the retail rate). Hope that helps, feel free to reach out if you have additional questions.

[Beauport Bob]

I believe this is a state to state and experience driven issue. I pay $2.70 for sic #2130, spiritous distillery worker and $.12 clerical. This is a cost of doing business. In Massachusetts you do not want to get caught messing around with this. Along the same lines, I would get a payroll service to do that work for you. There are many federal and state issues with documentation (use on-line "e-Verify"),hiring and firing practices. Put that liability on your payroll service. Are you yourself on a payroll? Have you filed for exclusion as a owner/stockholder? Get some professional advice rather than trust the forum here. Too many variables.

"Part time" on a regular basis? Again, be careful with compliance in your state.

[Paul Tomaszewski]

My apologies, I meant 9-10 dollars per hundred and I'm not looking for legal advice, I understand all of that and have done so accordingly, just wondering if there's other categories and/or ways of working this.

[ViolentBlue]

I know that employees are not considered "equipment," but this was the best fit I could find as far as topics go.

might not be equipment per say, but met a few who were tools.

[Beauport Bob]

Hi Paul. 9 bucks/100 does seem high. Getting "them", the rate setters, to create another catagory would be nice, now that there are a greater number of micro distilleries to insure. On the otherhand, one claim would impact a smaller group heavily, and result in a higher rate. Sometimes it is better to deal with the devil you know. I guess the base for my reply is that my experience is in Massachusetts, very heavy in claims. Workman's Comp is mandatory, the rates are set, and it is NOT sold competitively. Just about every agency carries it. The only advantage we can get is to try to lessening the catagories. I believe that is your question. The problem we faced was if the comp insurance had to be executed, would we be covered properly? For the difference between brewery worker and distillery worker I decided better to pay now than what could be years in court should an unexpected event happen nd have a claim rejected. Also employer diligence on the work floor pays off. Next door, an employee came in yesterday with a swollen hand. The owner documented it, recommended he get it looked at, and sent him home for a couple of days. The worker is a good friend of his, but better safe than sorry. False Workers Comp claims are easier than robbing a bank.

[Sonja]

I would just echo what some others have said - keep clear records about what your employees were so you can report it separately if they do more than one type of work. Every year, you will likely get an audit request from the insurer asking for the total payroll amounts paid to each category of employees, and for a list of them, etc. I am in the middle of filling one of those out now. The rates for distillery workers are much higher than anything else we do - retail sales, admin, and "outside sales" are cheap in comparison. But, those are the riskiest jobs and the areas where they're more likely to get a claim.

I agree that it's not something to mess around with much, here in IL it's very easy to report a company that doesn't have workers comp, and the penalties are pretty significant. There is an online database of all companies registered with the state for coverage, and they encourage people to make sure their employers, prospective employers, etc. are listed. Just takes one employee to trigger the need for coverage, and insurance companies will have a minimum premium amount. So even with one part-time employee, just a few hours a week, it would have been at least $1000 a year for the coverage. Not because of the wage-based rate, but because of their minimum premium amount.

Good luck, and congrats on needing to hire - that's a great problem!