Statistics from the United States Bureau of Labor show that as of 2018, 2.8 million nonfatal injuries occurred in the workplace.
Accidents happen. However, that doesn’t mean that as an employer, you should be caught unawares. You need to prepare ways to support your employees using workers’ comp.
Here’s a guide detailing five elemental facts you need to know to answer the question, “What is workman’s compensation?”
What Is Workman’s Compensation?
Workers’ comp is a type of insurance that pays employees who suffer injury or fall ill due to job-related accidents.
Essentially, your employee will receive the benefits that help facilities their medical care, among other things, after an injury or illness. In return, the same employee gives up the right to sue you due to the on-the-job accident that might lead to their injury or illness.
Different industries administer varied workers’ compensation rates. It’s therefore critical that you consult widely within your industry before you pick out a policy to better understand the cost implication.
Workers’ comp is a no-fault policy, and as such, your employees will receive benefits even if they were careless or negligent. It’s only in several exceptions that the policy won’t kick in.
Once an employee files a workers’ comp claim, you (as the employer) and the insurance provider must first agree that it is compensable.
If there’s any reason for an insurer to reject a claim’s compensability, then your employee won’t receive the benefits. Instead, it will take your state’s workers’ compensation board, a judge or mediator to decide on whether to award the claim or not.
Let’s look at some salient issues concerning workers’ comp that every employer ought to know about.
1. Workers’ Compensation Insurance Is Mandatory
Except for Texas, every state in the country requires an employer to carry workers comp insurance. Every employee in Texas that opts out of workers’ comp will need to comply with the state’s notification and reporting requirements.
The way each state handles workers’ comp will vary. In some, the minimum number of employees that mandate you to get workers’ comp is one. Others may specify a minimum of two to five employees.
Several states also make an exemption for specific categories of construction and agricultural firms. Charities can also receive the right to opt-out of workers’ comp system depending on the state in question.
If you are a substantial employer, you can get room to self-insure in several states. Because workers’ comp is a high volume and low severity scenario, large organizations find they can reliably forecast the impact.
Furthermore, the statutory cap on how much you can pay your staff on the loss of wage benefits adds to the allure of self-insurance for big firms.
Generally speaking, though, you want to get workers’ comp insurance even if your state doesn’t mandate you to carry it. That’s because the alternative – employees suing you for damages – poses a higher potential risk.
The liability protection built into workers’ comp comes at a much more reasonable cost in the long run than unforeseeable and potentially disastrous litigation.
2. You Have Specific Responsibilities Under Workers’ Comp
When you deploy workers’ comp insurance in your organization, there are a few things you become responsible for.
To begin with, you must post notices around the office in areas that employees frequent during working hours.
These notices should inform the employees about their rights under workers’ comp. The announcements you post also spell out the details of workers’ comp benefits to your employees and your insurance carrier’s information.
If you recruit new workers, you’ll be expected to furnish them with this same information as well.
In the event of a work-related injury or illness, you’ll have to give the affected employee the right forms to fill within 48 hours. That still applies when you are aware of an injury, but the employee hasn’t formally notified you yet.
3. Not Every Worker Qualifies for Workers’ Comp Coverage
It’s not everyone you hire to work for you that becomes eligible for workers’ comp insurance. When you engage independent contractors, they don’t convert into full-time employees, which means you don’t have to factor them into your workers’ comp system.
With that said, you should be careful against misclassifying those you hire. If the state or Internal Revenue Service discovers that you misclassified your workers, you can face stiff penalties and criminal charges in some states.
In case of any dispute, the fact that a worker filled a 1099 form or signed an agreement with you classifying them as independent contractors doesn’t mean you’ll win.
The state’s worker’s comp board will instead scrutinize issues such as the level of control the worker had on the job, among others, to determine how to classify them best.
4. There Are Injuries You Won’t Be Liable For
There are a few injuries that fall out of the scope of your firm’s workers’ comp policy. If, for example, an employee is injured while flouting company policy, then they won’t be eligible to claim the benefits.
Similarly, if an employee is injured while committing a crime, then you are free and clear of covering such injuries.
You’ll also not foot the bill when an employee sustains injuries arising from self-harm.
Since injuries that qualify as compensable must be work-related, your employees can’t file a claim when they sustain injuries that fall outside the scope of their work.
5. You Can Still Get Sued by Your Employees
Workers’ compensation doesn’t absolve you of all liability related to on-the-job injuries. If it’s proven that you intentionally caused your employee harm, then they have the right to take you to court for damages.
Of course, if you are legally required to carry workers’ comp, and you fail to do so, then your employees also have a legal ground to sue you. Your workers will be seeking punitive damages and pain and suffering.
Look out for Your Team’s Safety
Workplace related accidents are, sadly, inevitable. Despite this reality, you don’t need to be the employer who’s caught slacking. The more you seek to answer the question, “What is workman’s compensation?” the more you’ll uncover ways to better cushion your employees against the adverse impacts of on-the-job injuries.
National Workman’s Comp Solutions is a team of deeply experienced professionals looking to help you offer workers’ comp coverage to your staff. Talk to us today for a superior workers’ compensation program for your firm.