WORKERS COMPENSATION
What is workers compensation?
Workers Compensation Insurance can pay for three things when an employee gets injured at work and those reasons are as follows:
- Medical Bills
- Recovery Costs
- Partial Missed Wages
If an employee dies due to work related injuries, workers compensation can cover funeral expenses and benefits to the deceased workers family. Depending on state laws and contract requirements, you may need this policy to cover employees, contractors, freelancers and or even yourself.
Workers compensation (formerly known as "workman's comp") emerged from a "grand bargain" between business owners and workers. Business owners were tired of being sued by injured workers and workers were tired of being injured and not compensated appropriately.
Workers compensation insurance was designed to help pay for work related injuries and illnesses without the rigmarole of a lawsuit. This liability insurance policy can help your business do the following:
- Pay for medical expenses and replacement wages when employees are injured on the job.
- Comply with state workers comp. laws.
- Pay for legal expenses if an employee sues over a work related injury that the policy does not cover
Example: Your copywriter churns out articles all day, but constant typing gives her carpal tunnel syndrome. Because the injury is considered to be work-related, she can recoup her medical expenses from your business.
If you have a workers comp. policy, that's no big deal. The copywriter can make a claim to cover corticosteroid injections or corrective surgery and even partial wages for the time that she needs to recover.
Rates are determined by the following factors:
- Your state
- Your industry
- Number of employees
- Type of work your employees do
- Your payroll
- Your claims history
Did you know?
- According to the National Safety Council, the average workplace injury claim costs $36, 551.
- According to the Bureau of Labor Statistics, it took a median of 9 days for an injured employee to recover from a work related injury in 2014.
- According to Circadian, a workforce solution company, there were accumulated productivity losses which amounted to approximately $2, 660 per hourly worker.
- According to the Bureau of Labor Statistics, the most common workers comp insurance claim is for an injury that can happen anywhere and at anytime, falling on level ground. 17% of workplace accidents are caused by same-level falls. One trip over a computer cord and you could be facing a pile of employee medical bills
- US businesses had 3 million work injuries in 2014
Workers Compensation Quick Facts:
You can turn your workers comp policy to help pay for employees' work related injury or illness expenses, including the following:
- Medical bills
- Ongoing care (including medication and rehabilitation)
- Missed wages (often partial) during recovery
- Funeral Expenses for fatal incidents
- Death benefits to support the deceased's family
But it can not pay for the following:
- Injuries caused due to intoxication or drugs
- Self-inflicted injuries
- Injuries from a fight the employee starts
- Injuries caused by horseplay or company policy violations
- Off-the-job injuries
- Injuries claimed after an employee is fired or laid off
- Wages for a replacement worker
- OSHA fines
10 Most Common Non-Fatal Workplace Injuries:
10 Most Common Non-Fatal Workplace Injuries:
Sequence Cause of Injury Percent of Total Injuries
- Struck by an object 24.5%
- Falls on same level 17%
- Overexertion in lifting or lowering 10.9%
- Falls to lower level 5.4%
- Transportation incidents 5.2%
- Slip or trip without falling 4.1%
- Exposure to harmful substances and environments 4.1%
- Violence and other injuries from persons or animals 4.1%
- Repetitive Motion 2.7%
- Fires and explosions 0.1%
Forty-nine states currently require employers to carry some form of workers comp insurance however there is a catch; every state has its own spin of those laws.
Some states require employers to carry coverage as soon as they hire their first employee (California and Illinois are examples). In other states, the mandate kicks in once you have a certain number of employees (e.g. Four in Florida, Five in Tennessee).
Only Texas allows employers to opt out of carrying insurance altogether. However, Texas employers can still be sued over uncompensated work related injuries.
To complicate the matter even further, four states only allow you to purchase coverage from STATE-RUN providers and they are as follows:
- North Dakota
- Ohio
- Washington
- Wyoming
Many people ask, "What happens if I skip Workers Compensation Insurance when my state requires it?" Well the answer to that is, it depends entirely on where you live, but generally you can face fines and even jail time for serious offenses.
As an ISP contractor, it is mandatory that you obtain Workers Compensation Insurance immediately.
Sample of State Penalties for Workers Compensation Non-Compliance
California: Up to $10,000 in fines and or up to a year in jail (the state can also issue penalties up to $100,000 against illegally uninsured employers).
Florida: 2x the amount the employer would have paid in premium within the last two years.
Illinois: Up to $500 for every day of non compliance with a minimum fine of $10,000.
New York: Up to $50,000 in fines for employers with more than 5 employees.
Virginia: $250 per day for each day of non compliance, with a maximum penalty of $50,000.
