2.3 Contractor Insurance (Liability & Workers' Compensation), the Statutory Employer Rule & Business Records
Key Takeaways
Residential construction and subclassification applicants must show workers' compensation coverage and liability insurance or approved trust-fund protection (R.S. 37:2156.1(E)).
Act 757 of 2026 raised the minimum liability coverage for residential classifications from $100,000 to $500,000, effective August 1, 2026.
Proof of coverage must come from the agent, broker, or insurer, cover at least six months and all licensed scopes without exclusions, and list the LSLBC as certificate holder.
Under La. R.S. 23:1061, a principal contractor can be the statutory employer of a subcontractor's workers; it pays their compensation benefits and may seek indemnity.
OSHA injury and illness logs (Forms 300, 300A, and 301) must be kept for five years after the end of the year they cover (29 CFR 1904.33).
Why Insurance Is a Licensing Issue
For residential classifications, insurance is a condition of the license. R.S. 37:2156.1(E) requires applicants for residential construction and its subclassifications, which include Residential Roofing, to submit:
- certificates of workers' compensation coverage that complies with Title 23; and
- liability insurance, or liability protection from an authorized liability trust fund.
Letting coverage lapse means you no longer meet a licensure requirement, which is a violation under R.S. 37:2158(A)(10). R.S. 37:2159 also requires the insurance certificates to be part of the customer contract.
The 2026 Changes: Act 757
The LSLBC's July 13, 2026 memo summarizes Act 757 of the 2026 Regular Session. Effective August 1, 2026, applicants and licensees in residential construction and its subclassifications and specialties, mold remediation, and home improvement must meet these rules:
| Requirement | Detail |
|---|---|
| Minimum liability coverage | $500,000, up from $100,000, or qualifying protection through an authorized liability trust fund |
| Who submits proof | The agent, broker, or insurer, not the contractor |
| Content of the proof | Identifies the licensee, insurer, broker and broker's address, policy number, and coverage dates |
| Term and scope | Covers at least six months and all licensed scopes, with no exclusions for those scopes |
| Certificate holder | LSLBC |
| Continuity | Required workers' compensation and liability protection must stay continuously in effect while the license is active |
Why "no exclusions for licensed scopes" matters. Some cheap contractor policies exclude roofing, work above a certain height, or open-flame work. A Residential Roofing licensee's policy must cover the roofing scope it is licensed for.
Program requirements can be higher. Contractors on Louisiana Fortify Homes Program grant jobs must carry commercial general liability of at least $1,000,000 for roofing work under the program's contractor rules (Chapter 5).
Commercial General Liability (CGL) Basics
CGL covers third-party bodily injury and property damage from your operations and completed work. Typical roofing examples are rain entering an open roof and damaging a living room, or a dropped bundle denting a car. When you buy or renew:
- Read the exclusions: height limits, "open-roof" or rain limits, hot-work or torch exclusions, and exclusions for subcontracted work.
- Confirm completed-operations coverage, because roof leaks often appear months later.
- Keep certificates of insurance current for the LSLBC, permit offices, and customers.
Workers' Compensation in Louisiana
The Louisiana Workers' Compensation Act (La. R.S. 23:1021 et seq.) is administered by the Louisiana Workforce Commission. It gives injured employees no-fault medical and wage benefits, and it gives employers immunity from most tort suits by their employees. The Act generally applies to any employer with one or more employees; there is no small-employer exemption. Coverage is bought from an insurer or through approved self-insurance.
Classification. Louisiana uses the National Council on Compensation Insurance (NCCI) classification system. Roofing payroll is rated under Code 5551, Roofing—All Kinds & Drivers, one of the higher-rated construction codes. Classifying roofers under a cheaper code, such as carpentry or drywall, invites premium audits and fraud exposure.
The Statutory Employer Rule: La. R.S. 23:1061
When a principal contracts out work that is part of its trade, business, or occupation, the principal becomes the statutory employer of the contractor's employees. The rule applies in three ways:
- (A)(1) basic rule. The statutory employer is liable to pay workers' compensation benefits to those employees as if it employed them directly. In exchange, it receives the exclusive-remedy (tort) immunity of R.S. 23:1032.
- (A)(2) two-contract situation. A statutory employer relationship exists whenever the subcontractor's work is part of a contract between the principal and someone else. The classic example is a general contractor that agreed with the owner to reroof and then subcontracts the shingle work.
- (A)(3) written-contract presumption. Otherwise, the relationship requires a written contract recognizing the principal as statutory employer. That creates a rebuttable presumption.
The principal who pays benefits is entitled to indemnity from the contractor (R.S. 23:1061(B)).
What this means for a roofing contractor who subcontracts:
- Require a current certificate of insurance sent directly by the subcontractor's agent, and check that it stays in force through the job.
- Expect your own carrier's year-end premium audit to charge premium on payments to uninsured subcontractors as if they were your payroll.
- Remember the LSLBC rules. Subcontractors to a Residential Construction license holder may be exempt from licensure (R.S. 37:2157(A)(17)). Contracting with an unlicensed contractor for work that requires a license is still a violation (R.S. 37:2158(A)(7)).
Job Costing and Cash Flow
A roofing job should be tracked as its own cost center:
- Direct materials: shingles, underlayment, flashing metal, nails, ventilation, and decking allowances, plus waste (Chapter 3).
- Direct labor: wages plus labor burden, meaning payroll taxes, unemployment insurance, and Code 5551 workers' compensation premium.
- Job overhead: permit fees, dumpsters and landfill fees, equipment rental, and safety equipment.
- General overhead and profit: office, vehicles, advertising, estimating software, and margin.
Commercial jobs may hold retainage until closeout. Plan working capital so a slow-paying job does not stop you from paying suppliers. Unpaid suppliers can file Private Works Act claims (Section 2.1).
Record Retention
Keep records at least as long as the government can audit or a claim can arise:
| Record | Minimum guide | Source |
|---|---|---|
| Louisiana state tax records (income, franchise, sales and use) | At least 3 years from December 31 of the year the tax became due, the Louisiana prescription period for assessment | La. R.S. 47:1580 |
| Federal income tax records | Generally 3 years after filing; longer in some situations, such as 6 years for substantial underreporting | IRS guidance |
| Federal employment tax records | At least 4 years | IRS guidance |
| OSHA Forms 300, 300A, and 301 | 5 years after the end of the calendar year covered | 29 CFR 1904.33 |
| LSLBC requests | Produce requested records within five business days | R.S. 37:2158(A)(22) |
Also keep signed contracts, change orders, permits, inspection results, photos, delivery tickets, and warranty registrations for at least the length of your workmanship warranty. They are your evidence in lien suits, warranty claims, and board complaints.
Effective August 1, 2026, what minimum liability coverage must a Residential Roofing licensee maintain under Act 757 of 2026?
$100,000, the amount in the pre-2026 statute.
$250,000, with the certificate held by the parish permit office.
$500,000, with proof from the agent, broker, or insurer naming the LSLBC as certificate holder.
$2,000,000 aggregate, with the contractor submitting its own certificate.
A general contractor agrees with a homeowner to replace a roof and subcontracts the tear-off to a crew with no workers' compensation. A crew member is injured. Under La. R.S. 23:1061, what is the general contractor's position?
It has no exposure because the injured worker was not its employee.
It is the statutory employer: it owes workers' compensation benefits, receives tort immunity, and may seek indemnity from the subcontractor.
It is liable only in tort and may be sued for negligence without limit.
The Louisiana Workforce Commission pays all benefits from a state fund.
How long must a roofing employer keep its OSHA Form 300 injury and illness log under federal recordkeeping rules?
One year after the injury.
Until the employee leaves the company.
Three years from the date of the injury.
Five years following the end of the calendar year the records cover.
Sections you finish are checked off in the contents.