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Youth sports get break: New law could cut Worker's Comp premiums dramatically

June 27, 2005

State lawmakers scored a goal for youth sports this spring when they approved a bill that could save some clubs thousands of dollars in present or future insurance premiums.

Starting July 1, not-for-profits that have employees and pay youth coaches part time under an independent contractor arrangement will not have to provide Worker's Compensation benefits for those coaches.

State Sen. Murray Clark, R-Indianapolis, said he had travel teams or clubs in sports like soccer, volleyball or baseball in mind when he pitched this bill. One youth soccer official said clubs won't have to pay Worker's Comp insurance premiums for "hundreds" of coaches statewide.

These organizations will have to cover only the few people they consider employees, not all the coaches they work with on a seasonal basis. The savings in some cases could be substantial.

Carmel United Soccer Club, for instance, saw its annual Worker's Compensation rate rise from about $2,000 to $15,000 a few years ago after an insurer told the club it had to provide coverage for coaches as well as its handful of employees, President David Cutshaw said. Former club President Alan Brown said the club "bit the bullet" and paid the full premium after unsuccessful attempts to find a better deal.

"We're not broke by any stretch of the imagination, but that's a lot of money for a little soccer club," he said.

Little might not be the operative word. In fact, growth is a reason the soccer club wound up in this predicament.

The club currently has about 650 players ranging in age from 8 to 20. It offers a "very high level" of soccer and draws players from as far away as Fort Wayne and New Albany, Cutshaw said.

It pays its coaches-some of whom are former professional players-a part-time wage.

Around 2000, Brown decided to hire a full-time coaching director and a part-time administrator after watching the club grow.

"I just told people we were too big and we had too much money and we couldn't act like a card club anymore," he said.

Once the club had employees, it had to provide Worker's Compensation benefits. It found an insurer, but that insurer conducted an audit and told club leaders they had to extend the benefits.

Brown said the club had about 40 other people coaching under independent contract arrangements for which the club paid them "a few thousand dollars" a season.

Club leaders do not consider these coaches employees. The club assigns the coaches a team and lays out the practice schedule. The rest is up to the coaches.

"They're not employees at all," Cutshaw said. "They have other jobs. They decide what to do in practice, what drills to practice, who to play, when to play, what tournaments to go to."

Aside from those factors, the club has never had a coaching injury in its 20-year history, Brown noted.

Cutshaw contacted Clark about the predicament and helped draft the bill that exempts such coaches from coverage. Clark sponsored the bill in the Senate, and Rep. Jerry Torr, R-Carmel, shepherded it through the House of Representatives. Gov. Mitch Daniels signed it into law May 11.

Expanding coverage to include these independent contractors could take a notfor-profit's budget and "just blow it out of the water," Clark said.

"These groups cannot just simply pass that cost on, that type of huge increase, to the families [of players]," he added. "You just can't do it."

Clark should know. He serves as newly elected president of another soccer club, Indianapolis' Dynamo FC, which could have wound up in the same predicament as Carmel. Dynamo FC only recently started using paid employees, but that club had not yet run into premium problems.

Clark knows of no other situations like Carmel United's, but he believes the potential existed for more premium headaches. He said many travel teams pay their coaches some sort of compensation.

"The only way you can get quality coaches to coach them and live with them night and day during the season is to pay them," he said.

Most soccer programs do not pay their coaches, according to Don Rawson, executive director of the Indianapolis-based Indiana Youth Soccer Association. Still, he estimates that the number of Indiana soccer coaches this law may affect is "in the hundreds."

He counts his association among the beneficiaries. The Indiana Youth Soccer Association compensates coaches who train players for an Olympic development program.

"The need as a non-profit organization is pretty significant," he said, calling Worker's Compensation costs "extraordinary."

The law clarifies what youth sports organizations thought was the arrangement with their coaches, Torr said. It also provides a comfort level for the insurer.

The Insurance Institute of Indiana did not oppose the issue as it made its way through the Legislature. Spokesman Marty Wood said insurers previously determined their hands were tied. They had to provide coverage or face the prospect of a lawsuit from a coach who may get injured on the field.

"The companies were telling these clubs you either have to go with no Worker's Comp coverage at all or be on the hook for everybody," he said. "You had to say all or nothing."

The new law didn't make huge waves in the insurance world, where few companies provide this kind of coverage. But it could make a big difference for the youth sports organizations.

The Carmel United Soccer Club currently has no fields to call its own. Money saved on premiums might help its leaders change that.

"In Carmel, land is not cheap, and it's disappearing every second," Cutshaw said. "[A high insurance premium] really hamstrings us from doing that type of facility development and maintenance.

"I mean, you can't have a soccer club without fields."
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