Unfair Competition?
Important Facts to Consider
by Mark A. Caldwell, President

 

Many of our clients have expressed their frustration regarding competitors offering to see patients / clients at artificially low rates, and have often asked what can be done.

Here are a few suggestions:

"Certificate of Insurance"

Inform your client to request a "Certificate of Insurance" from your competitor listing:

    a. Professional Liability

    b. General Liability

    c. Non-Owned Auto

    d. Fidelity Bond (for employee theft)

    e. Workers Compensation

It is important to inform your client that if the worker (who is probably considered an independent contractor by their employer) is responsible for any bodily injury or property damage, or becomes injured on the job that your client may be responsible for the damages, since they could be determined to be the employer.

 

Homeowners Policy & Workers Compensation

I have heard that some companies tell their clients that their homeowners policy will provide workers' compensation coverage for their caregiver. While policy language differs, generally the following will apply to most homeowners policies:

By statute, any insurance policy that provides comprehensive personal liability insurance must also provide workers’ compensation coverage for injuries suffered by "residential employees" injured in the course of their employment by the homeowner.

Who is a "residential employee:"

  • Persons whose duties are incidental to the ownership, maintenance, or use of the home (e.g., household domestics, part-time gardeners).
  • Persons providing child care and supervision.
  • Persons whose duties are personal, and do not pertain to the owner’ occupation, profession, business, or trade.
  • This includes persons whom the homeowner hires to make repairs on the premises, such as a plumber or a carpenter. Furtado v. Schriefer (1991) 228 Cal.App.3d 1608.
  • This may include a family member (who would otherwise be excluded) who is also an employee (e.g., older child providing babysitting services for a sibling, for pay).

Who is not a residential employee:

  • Persons employed in the construction of a home before construction completion.
  • A person providing solely adult care. While the statute expressly provides that care-givers for children are residential employees, persons providing care of an elderly or infirm household resident is not a residential employee. McCallister v. WCAB (1976) 61 Cal.App.3d 524.
  • A "casual residence employee." This is someone who:
  • Was employed for less than 52 hours during the preceding 90 days or
  • Earned less than $100 during the preceding 90 days.

The insurance only applies if the injury was suffered during the course of employment - this means that the injury was sustained while the employee was engaged in the work he or she had been hired to perform.

The Homeowner Policy workers’ compensation coverage does not apply to independent contractors. Whether a person is or will be considered a residential employee or an independent contractor heavily depends on a number of factors, and must be considered on a case-by-case basis.

So, if your competitor is telling your client that workers compensation coverage for the worker is provided for under the client's homeowner's policy, advise your client to notify, in writing, his or her agent that a caregiver will be in the home, providing care to an adult, and indicate how many hours the caregiver will work. Have your client request a statement from the agent, in writing, if the homeowners policy would, in fact, provide coverage.

 

How to File a Complaint

Many California clients have asked how they can report a competitor that does not carry workers' compensation insurance. You may report an uninsured employer to the nearest office of the Division of Labor Standards Enforcement. The offices are also listed in the state government section of the white pages of your local telephone directory under industrial relations, labor standards enforcement.

 

Resource Links

1. Division of Workers' Compensation - Answers to frequently asked questions about workers' compensation for employers

2. Employee vs Independent Contractor

 
This information is designed for general informational and descriptive purposes only. The precise wording of each coverage is subject to specific conditions and endorsements of the actual policy issued. Always read your policy very carefully!