Many business owners – especially at startup businesses – have questions about how to meet the complex compliance requirements for workers’ compensation insurance. Do you know what “workers’ comp” coverage actually is, and the purpose it serves? Do you know who pays the premiums, or costs of the coverage? How do you, as an employer, obtain coverage? Or, if you are the sole proprietor of your company and do not have any additional employees, are you even required to purchase workers’ comp?
What is workers’ compensation?
Workers’ compensation is the insurance that provides medical, disability and rehabilitation benefits for employees injured at your worksite. In a worst case scenario, it also provides death benefits to the family of a fatally-injured employee. As an employer, you provide the premium payments which entitle your employees to coverage. The added benefit is that you receive employers’ liability coverage for any legal liabilities as a standard part of your plan.
If your business is a one-man show and you are the sole proprietor, it pays to do the research in your own state, but more than likely you are considered exempt from coverage. Following are a few additional exemptions:
- Volunteer (does not receive wages for services)
- Owner-operator truck driver
- Domestic worker (in a private home which gross <$50,000)
- Certain agricultural workers
In the majority of states, an employer must purchase workers’ compensation through a private carrier or become self-insured in order to provide coverage. A few states require workers’ comp coverage to be purchased from state-run systems; such is the case in Ohio and Washington. Texas is the only state which allows employers to decline to carry workers’ compensation coverage. Very few Texas business owners choose this route, realizing the high damages that are awarded to employees who prove negligence. Employers who decline to carry workers’ compensation insurance are considered “non-subscribers,” have ongoing administrative compliance requirements owed to the state, and may be subject to penalties for compliance missteps.
Answers may lead to more questions
Are you truly required to report all injuries to workers? How are the medical bills paid on reported claims? Are subcontractors covered under workers’ comp? And the bottom line: business owners need employees who can work; can you terminate an employee who has filed a claim?
State laws require that you report workplace injuries, and typically require you to provide notice within a certain time period. Your workers’ comp carrier considers late reporting as “lag days,” which may impact your premium. You must report claims that require “lost time” away from the shift or require medical attention. Unless you are self-insured, your insurance carrier will pay the reasonable charges and fees for medical claims submitted. Subcontractors are not employees, and are not covered under your workers’ comp plan. However, an injury is still an injury and you could be held liable; hence the need to ensure that subcontractors provide their own coverage. Yes, you need healthy workers who can perform the job for which you pay them; however, you cannot discharge an employee who in good faith filed a claim for an injury.
Consider your business configuration. Many companies are spread across the country, with employees who work in many different states, while others have a corporate office with a few remote employees in different states? Regardless of your set-up, you should be aware that every state requires a specific workers’ comp “worksite poster” or set of posters. The postings are all different, and require very specific language for each statute. Some require that employers provide a specific list of medical providers for employees; others insist that employers do not interfere with the employee’s choice of provider.
To put it mildly, complying with the varied compliance rules under each state’s framework for workers’ comp can be quite a challenge. And you cannot simply throw your hands up and decide to put the matter on the back burner, since states issue fines and penalties for non-compliance and can stop your work orders until you can get all your ducks in a row.
Working with a Professional Employer Organization (PEO) like Staff One can greatly reduce the stress and headaches of sorting out the compliance rules, as well as providing risk assessment services, a return-to-work program and more. A quick call or e-mail could quickly have you up and running with the latest compliance postings and give you assistance with timely reports to your state agencies.
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