For specialty trade businesses in Southeastern PA, spring is usually the time to ramp up operations for a busy warm season. Both solo contractors and small businesses are likely to bring on extra help in trades like HVAC, electrical contracting, painting, plumbing, flooring, and carpentry. While it’s great to be busy enough to hire seasonal employees, it does change the risk profile for the business.
Workers’ Compensation insurance is a key aspect of seasonal hiring. Workers’ comp protects both the business and its employees from the cost of job-related injuries, so it needs to be in place for the right number of people at all times. A rushed hiring process that skips this important step can result in delayed claims resolution and surprise premium balances during year-end audits. Get the busy season off to a great start with workers’ comp updates that protect your business and employees every day.
How Do Seasonal Hires Change Business Insurance Needs?
Adding seasonal employees immediately affects payroll, jobsite risks, and the size and scope of business operations. All of these areas have an impact on business insurance, so it’s a good idea to call your commercial insurance agent before you post the first “Help Wanted” ad.
Payroll is the primary number used for calculating workers’ compensation premiums. The initial premium for workers’ compensation is based on estimated payroll. If you reported a number at the beginning of the policy year that did not account for a seasonal bump in business, your year-end audit will show that you underpaid your premiums. When it looks like the business will need to bring on extra help for a season, call your insurance agent to work out the updated estimate. It may result in a higher premium for the affected timeline, but at least there won’t be any surprises. Going forward, the policy can take the seasonal bump into account and spread the total cost over all premium payments.
More people on the job always means more risks. Every new hire adds exposure for workplace injuries, but temporary employees in particular tend to have the highest risk. Safety protocols and thorough training are essential for preventing injuries and property or liability claims.Supervision is also key to navigating a busy season without major problems or injuries. You, or a manager or foreman, will need to keep an eye on new employees to ensure that they are using equipment properly and performing their duties in alignment with safety protocols.
The additional work you’re getting this summer may require you to expand beyond your normal radius or services. Business licensing and operating requirements always vary by municipality, and your current commercial limits and endorsements might need to be adjusted in order to get approved for work in some locations. Talk to your commercial agent about where your upcoming jobs will be located. Working with a local agency gives you a competitive advantage because we understand the requirements in municipalities throughout Montgomery, Bucks, and Philadelphia Counties. Already being insured to work within the Philadelphia city limits can make all the difference on whether you get that profitable contract.
How Should Seasonal or Temporary Staff Be Classified for Insurance?
In workers’ compensation, classification is based entirely on the specific type of work an employee does, not their official job title or employment status. In the specialty trades, this is a very important distinction. It’s also one that is commonly misunderstood, which is how small businesses can find themselves without adequate insurance coverage.
Seasonal employees may be hired as general labor, but then grow into other duties as they complete training and gain more skills. Within just a few weeks of joining the team, a competent self-starter could be doing much higher level tasks than their classification describes. Similarly, skilled tradespeople who step in to pick up extra contracting work might dabble in multiple areas of the business.
The workers’ compensation policy defines coverage by job duties, so identifying each employee’s role is crucial to having the right coverage in the event of a claim. Additionally, during the workers’ compensation audit, the insurance carrier reconciles actual job activity with original descriptions to determine if higher premiums need to be charged. Having employees classified correctly also impacts Certificates of Insurance (COI), which municipalities and general contractors usually request before hiring your company. When you have the right paperwork from day one, you will establish credibility with those entities and position yourselffor more business going forward.
If you are hiring 1099 subcontractors, never assume that they are excluded from your workers’ compensation coverage. Unless they carry their own policy and can produce a COI for it, they need to be covered under your policy.
Best Administrative Practices for Hiring Seasonal Employees
The very first year your business brings in extra help for a busy summer, it will be tricky to determine exactly what each new hire is going to be assigned. This is a good question to ask within your trade association networks to get insight from more experienced business owners. You can also call your insurance agent to brainstorm all the possible tasks your seasonal employees might have to perform.
Once you get through the first year, you will have a good understanding of your seasonal needs. Take time to establish consistency in training and documentation to set your company up for ongoing success. As a business owner, you know that better organization always reduces administrative headaches. It also reduces injuries and enhances employee safety.
Consider building a Busy Season folder that includes:
• Positions to hire with required skills, licensure, flexibility, and task overview
• New hire training that covers safety protocol, injury reporting procedures, and skills/equipment training
• Specific interview questions that gauge safety consciousness, general competence, and jobsite reliability
• Notes about past seasonal employees and whether bringing them back would enhance safety or create unnecessary risk
• Collected COIs from contractors that carry their own insurance
When going through the seasonal hiring process, it can be tempting to skip over some best practices in order to get everyone job ready. Always avoid this temptation and do your due diligence to prevent your short-term employees from becoming long-term problems. Perform background checks and driving records (if applicable), and always call a few references for each applicant. Even though the employee is only doing a few months of work, they will have an impact on your reputation and profitability. Make it a good one by following best practices to hire quality employees.
Prepare for the Spring Surge in Your Business and Hiring Practices
Successfully managing a spring hiring surge means keeping up with best practices for documentation, job training, and safety management. By maintaining accurate classifications, keeping your payroll records clean, and sticking to your training schedule, you can prevent workers’ compensation from becoming an expensive mess during a claim or audit. Take care of these administrative steps ahead of time to maximize your busy season’s opportunities.
The goal of these habits is not just about navigating your annual workers’ compensation audit, though. An organized process for hiring employees and keeping up with documentation will help you grow sustainably over time. If you are getting ready for the first busy season in your trade business, or you have had several bumpy years of dealing with seasonal hires and want to be on top of things this year, contact us. Smyrl Insurance educates, nurtures, and empowers small business owners to make sound business decisions that set a foundation for growth. We help business owners obtain workers’ compensation, commercial liability, commercial property, and other insurance products that support their business in Hatfield, Lansdale, Souderton, Harleysville, and throughout the region in Montgomery County and Bucks County, Pennsylvania.
