1099 Structural Work 1

[Enginerd19]

Hi - I have been approached with an opportunity to work as a 1099 employee stamping calcs/plans for engineered lumber components in residential structures. I am concerned about liability insurance. The owner said their policy allows me to be included as a 1099 for E&O but it still makes me a little nervous since I do not have my own personal liability insurance.
Does anyone have experience with this? What have you done to protect yourself?
Also- what is a reasonable fee for this type of work?
Thank you!

 

[IRstuff]

If you are 1099, you are ostensibly a contractor, and not an employee; the IRS will want to come after the company for taxes for the latter.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert!

https://www.youtube.com/watch?v=BKorP55Aqvg

faq731-376 forum1529 Entire Forum list

http://www.eng-tips.com/forumlist.cfm

 

[gte447f]

What kind of company is proposing to contract you? Is it an engineering company, or is it a lumber supplier or something like that? The reason I ask is because, unless they are an engineering company I think they are unlikely to have E&O insurance that covers engineering, because insurance companies don't give out professional liability policies to non-professional businesses. If the company is not an engineering company, they may have E&O insurance, but I would be surprised if it covers engineering services.

 

[Enginerd19]

Thanks IRstuff on the taxes. Good point.

gte: this is for a specialty lumber yard, so not a professional company. I am told they were “grandfathered” in to carry E&O insurance and that other yards are unable to obtain this insurance now unless they are owned by a PE.

 

[gte447f]

Enginerd19, interesting what they say about their insurance. For starters, you should require to see a copy of their complete policy to verify everything they say is correct. If they baulk at showing it to you, well...

 

[phamENG]

In addition to what gte447f said, you may want to go ahead and talk to an attorney about ensuring your contract is good. You'll want them to indemnify you regardless of the insurance situation. I believe this is a case where you'd want to be named as an additional insured on that policy, but you'd want to talk with a broker about that to ensure you have good information.

Having your own policy isn't necessarily a bad idea, but it may not be an economically sensible one. With everything else in place, you may be able to get a policy for a minimal fee to give you peace of mind, but then again maybe not. You'd have to reach out to a broker to see. And be careful of the online 'discount' insurance...from most accounts I've heard you get what you pay for and not an ounce of effort more.

 

[SWComposites]

Who is preparing the designs and drawings? You? Who is supplying loads, etc? Is this for something like trusses?

Fee?? Charge by the hour.

 

[alchemon]

Just make sure that you have a good contract with them. Something along the lines of.... They accept financial liability for failures should be satisfactory. They probably just need your seal for permits and the like. I'm sure everyone can come to an agreeable solution. But you should be wary of them not having E&O insurance.

 

[Aesur]

Something along the lines of.... They accept financial liability for failures should be satisfactory.

This is not a true statement, I have seen engineers lose this battle where they provided a cheaper fee in exchange for a statement as you describe that puts all liability on the manufacturer and every time I have seen it come down to lawyers being able to get around anything; especially when by law the stamping engineer is the party liable for said product/project. The other side is when insurance is involved many times they settle instead of fight for you, even if you are not in the wrong or have a contract that says you can't be held liable, settling is normally just cheaper for them.

I would however setup as an LLC if your state allows an engineer to do so, this way at least your personal property has an extra layer of shielding. Personally, if I were to take on such a project, I would setup an LLC, get quotes from insurance carriers and setup a fee schedule with the client that includes them paying my insurance coverage + a fixed amount up front for a tail policy should we cease doing business together or they close shop.

 

[jhnblgr]

If you do research on engineering businesses you find that that only protects you personally for acts done by others not acts done by you. So if you stamp the plans then you are personally liable and the business set up might at best delay them. But if another PE does something then the business protects you personally. So in this case if you are the only professional in your company it’s not all you think it is.

 

[phamENG]

jhnblgr - while you are correct about professional liability, that's not the only type of liability we face as engineers running businesses. A business entity, if properly established and managed, will protect personal assets from general liability claims (ever dropped a tool from your belt on a ladder or scaffolding? Imagine a construction worker walking below...), workers comp claims, etc.