Workers' compensation is in place to protect employees injured on the job. All states except Texas require business owners to provide workers' compensation insurance coverage. Even small businesses with a single employee must have coverage. Some states want all businesses to have workers' comp, even sole proprietors. Small business owners should check their state requirements about business insurance and the number of employees needed for workers' compensation to kick in.
Workers' comp insurance is separate from business liability insurance and any health insurance you may offer as an employee benefit. Workers' comp covers a limited range of injuries and illnesses and protects employees and business owners. This article discusses the employers' responsibilities and protections with workers' compensation insurance.
Worker's Comp 101
Workers' compensation covers workplace injuries and illnesses caused by conditions unique to the workplace. Worker's comp is "no-fault" insurance. The employee gives up the right to sue the employer for the injuries in exchange for full coverage of all medical expenses and related costs. In return, an employer must keep the injured employee's job open while they recover from their injuries.
Workers' compensation benefits have restrictions. They only apply:
- To employees. Some states cover volunteers under certain conditions, such as volunteer firefighters while on duty. Independent contractors and some part-time workers are not covered. Check your state laws for a complete list.
- To injuries and illnesses that "arise from or are caused by performing functions of employment." Traveling to or from work, lunch breaks, and similar non-work related activities are not covered.
Employers should consult their attorneys when reviewing employee injury claims. Workers' comp claims are situation-driven. For instance, falling off a ladder at a construction site is obviously a work injury, but what about falling off a ladder at the company picnic? Getting into a car accident on the way to work may be a job-related accident if the employee must drive a company car. An employer's biggest responsibility is staying current on the state's workers' compensation laws.
Getting and Keeping Workers' Compensation Insurance
Most states require employers to buy insurance from a workers' compensation insurance carrier or through the state compensation fund. Large companies may be able to self-insure. The process varies depending on the state's Department of Industrial Relations. The important thing for any company to remember is that workers' comp benefits must cover all medical bills for an injured employee.
Texas does not require private companies to have workers' compensation insurance. If you are a small business owner in Texas, you should consult an employment law attorney in that state to review the costs and benefits of the different types of insurance available for coverage.
Getting a Quote
Insurers base your workers' compensation insurance quote on several factors, including:
- Your industry classification in your state
- Your company size and payroll
- Your claims history, sometimes called your "experience modification." The insurer wants to know how many work-related injuries you have had in the past year.
- Arrangements you have with a certified healthcare organization for medical care, along with any group or dividend programs you qualify for
Be prepared to shop around as you would for any insurance policy. Insurance companies vary in cost and available packages. Begin with your existing business insurance agent and see what your present carrier can offer.
Other Employer Responsibilities
Your duties have only begun once you have your workers' compensation policy. Your continuing responsibilities include:
- Posting workers' comp policy compliance notices and other labor law posters at your job sites.
- Providing immediate emergency medical treatment for any workers injured on the job, including transportation to emergency care if necessary.
- Making a written report of all accidents resulting in lost time beyond the day of injury, any injury requiring treatment beyond first aid, or more than two treatments by a physician.
- Submit all paperwork to the state workers' compensation office and insurance company as required by state law.
- Complying with all requests for additional information by any authorized individual, including the worker's doctor, attorney, insurer, etc.
Remember that any retaliatory action, including termination, can result in a wrongful termination lawsuit.
Handling a Claim: Employer Duties
When an employee suffers a work-related injury or illness, they must report the injury to their manager or supervisor before they can file a workers' comp claim. Workers' compensation coverage does not begin until the employer is notified that a workplace injury has occurred. The exception is when the employee is so severely injured that they need emergency care.
Once they notify the employer, the employee files the claim and begins medical treatment. The employer must provide all required documentation when requested. The employer completes a form called "First Report of Injury" and sends that to the state board and the insurer.
Workers' compensation insurance only covers medical treatment and costs. The goal is to return the worker to work as soon as possible. If the injured worker completes the medical treatment but cannot return to work or to their position, they have several options, such as:
- Disability benefits: A worker has the option of applying for state disability benefits, sometimes called SSI or SSDI. SSDI benefits are short-term benefits while the employee recovers enough to return to work.
- Part-time or light-duty work: The doctor may clear the worker for part-time or light-duty return to work. Your responsibility is to ask exactly what part-time or light-duty means.
- Family Medical Leave Act: Workers always have the option to take an additional 12 weeks of unpaid leave to recover from a serious illness or injury.
Employees must return to approximately the same job or its equivalent when they return to work. Depending on the nature of the injury and any lingering disability, it may not be possible for a worker to return to the same position they held previously.
Employers must offer employees jobs of roughly equal seniority and pay when they return to work. They must also work with the employee to meet the doctor's recommendations as closely as possible. For instance, if a worker returns unable to stand for more than two hours per day, they cannot return to assembly-line work. They will need a job where they can sit down most of the time.
Workers' compensation claims for work-related illnesses have one difference from injuries, which is the time involved in bringing the claim. As doctors discover more connections between chemical exposure or head injuries and long-term illness, job-related injuries and deaths increase.
Workers' comp coverage does include long-term exposure and illnesses that appear many years after exposure or injury. However, the requirements for proving or disproving these claims are complicated. If you have a claim of this type, contact a workers' compensation law attorney as soon as possible.
Get Legal Advice
Small business insurance is already expensive, but if you have enough workers you must have workers' comp insurance for your full-time employees. Before you incur fines and penalties for not having your insurance policy, speak with a workers' compensation insurance company, or an employment law attorney in your area.
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