As a small business owner, you care about your employees’ success, as well as their wellbeing and their safety in the workplace. With that said, even the most conscientious employers have to face the fact that mishaps can and will occur even in the safest of workplaces. Accidents are inevitable in any workplace. So, it’s crucial that you have sufficient workers’ compensation coverage that will protect both your business and your employees. As important as workers’ compensation coverage is, it can feel like a burdensome expense. And yes, it can be expensive. Luckily there are ways to save money on your premiums so, you can have peace of mind while sticking to your small business’s budget.
Calculating Workers’ Compensation Premiums
The amount you’ll pay for worker’s compensation insurance is calculated using a simple formula. The premiums for workers’ compensation insurance are calculated per $100 of your company’s payroll. That means that your rate will go up as you hire more people.
In addition, the nature of your business, and the type of employees you have, will play a major role in establishing your premium. When purchasing workers’ comp, you’ll have to give each employee a class code, based on the risks of their job. Each state provides the class codes for different types of employees. For example, a warehouse supervisor and an administrative worker will have different codes. So, there will be a big difference between the rate at a factory and the rate at a beauty supply store. In order to ensure that your business is charged a fair and reasonable rate, it is crucial that your employees are classified correctly.
Your final price will be adjusted based on a number of factors, including “modifiers.” The modifier will be based on your claim’s history. Your insurance company will go over your claims history and assign you a modifier. The typical modifier rating is between .75 and 1.25. Modifiers of 1.0 or less are possible if your business has a documented history of successfully lowering workers’ exposure to injury risk. If there have been numerous incidents at your workplace, your modifier will be higher than 1.0. If you can get your modifier for workers’ compensation insurance down to 1.0 or lower, your premiums will go down.
9 Ways to Cut Workers’ Compensation Costs
The following are some simple things that you can do right now to cut down on your workers’ compensation costs:
Choose the Right Workers’ Compensation Policy
It is essential to do some comparison shopping in order to find the best workers’ compensation insurance policies. In the same way it is when choosing the best auto or health insurance policy for yourself. If you live in a state that has a competitive market, which the vast majority of states do, it is in your best interest to speak with multiple insurance companies about the premiums they are willing to offer you and your business.
Once you have a policy in place, you should continue to shop around at least once every few years, since insurance companies will periodically change their prices in an effort to woo customers away from their competitors. Unfortunately, if you live in a state that does not have a competitive market, you won’t have the option to shop around. But there are still other steps you can take to lower your premiums.
Follow Claims Management Best Practices
Perhaps the single most important thing you can do to keep your workers’ comp costs under control is to make sure you’re handling claims with best practices for claims management. “Best practices” include simple tasks like keeping in touch with the employee and possibly medical personnel. This can mean staying on top of any possible issues that may pop up, such as coverage not kicking in on time or money not coming through.
If you need help, an adjuster can make the process go smoothly and save you money by doing things like making sure all paperwork is filed on time, verifying coverage, and keeping a daily diary of all work completed on the claim. This may cut the payout amount by as much as half.
Create Strong Safety Protocols
Creating a safe workplace environment can do wonders for employee morale. As well as help save money on workers’ compensation claims. It’s less difficult than you might think to establish a culture of safety. In fact, you’re probably already doing some of this work already.
First, make sure your staff has access to the tools and information they need to stay safe on the job.
If you don’t do so already, schedule periodic safety inspections.
Use daily safety checks to constantly remind workers to be cautious whenever they are at work.
Plan weekly and/or monthly in-depth inspections.
Putting an emphasis on safety will not only reduce accidents and injuries among workers and help lower your workers’ compensation premiums but will also demonstrate your concern for their well-being.
Know What to Do in Case of Injury
Having a strategy ready in the event of a workplace injury is an important part of fostering a culture of safety. Managers, co-workers, and the claims adjuster would all have immediate tasks to perform in this scenario. For this to go smoothly, each person involved needs to know what they are responsible for.
Having a plan in place gives workers the opportunity to make choices that lessen the severity of injuries on the job. In the event of an accident, they will feel more at ease knowing that everyone around them is prepared to help.
Offer New Hire Incentives
Incentive programs are a great way to motivate employees, especially new hires, to follow the safety procedures in place. You can offer more experienced workers incentives to teach newer workers about your business’s safety culture.
Utilize Return-To-Work Programs
Workers’ compensation costs tend to be lower for businesses that utilize return-to-work programs. These programs encourage injured workers to return to some sort of duties as soon as possible. Doing so will help with the indirect costs of an employee’s injury such as:
Overtime pay for workers who do the injured person’s duties,
Compensation to cover a decrease in productivity,
The cost of hiring and training new workers.
The time that managers or supervisors have to take away from their administrative duties to help out.
With all that said, the sooner an injured worker returns to work and starts making money again, the less you will have to pay. So consider implementing some sort of return-to-work program.
Look for Workers’ Compensation Discounts
Find out if your state offers workers’ compensation discounts to businesses that implement safety programs. For instance, some states reward businesses that promote drug-free workplaces with tax breaks. Since workers who use drugs while on the job are more likely to get injured. So, showing that you promote a drug-free environment by doing things like requiring regular drug testing for employees can get you a tax break for being proactive.
As noted above, not only will different companies have varying overall workers’ compensation rates. But the costs associated with various categories of workers will also vary. A sheet metal worker, for instance, will have a different classification code than a bookkeeper. Who spends little time in the factory. This means that it’s extremely important to verify that each worker has been assigned the appropriate classification. You can save a lot of money by following this one piece of advice.
Check for Workers’ Compensation Safety Rewards
It is possible that the number of accidents that take place at work will decrease after you begin putting some of these ideas into action. Check with your insurance company to see if they will reduce your premiums in recognition of the fact that your business has been safer for the past year. These kinds of safety rewards are typically distributed after a period of one year during which there were fewer claims filed. These rewards are not guaranteed. So, it is important to check with your insurer to determine whether or not safety rewards are currently being offered.
Get Workers’ Compensation With EZ
Most businesses are required by law to carry workers’ compensation insurance. Doing so will not only protect your business but will also protect your employees. Keeping your employees safe, though, does not have to be a financial burden on your business. There are a lot of different ways to encourage safety routines and programs, all of which will help you cut down on the amount of money you have to spend on workers’ compensation. Your employees will be able to return to work as soon as they are medically cleared to do so if the best practices for claims management are implemented and adhered to in a timely manner. Not only will production return to normal, but also the costs associated with workers’ compensation will decrease.
If you’re looking for the best workers’ comp policy, come to EZ for free instant quotes from one of our licensed agents. And, if you already have workers comp benefits but would like to shop around, we can help you look for a better deal. Your EZ agent will be well-versed in the regulations in your area. They will be able to advise you as you shop around for the best policy at the most affordable price. To get started, simply enter your zip code in the box above. Or give us a call at (855) 694-0047 to speak with one of our licensed agents. Also be sure to check out our blog for more resources focused on helping business owner save money and stay protected.
Workers’ compensation and disability insurance are similar policies, but workers’ compensation covers both the company and the employee from injuries and illnesses that happen at work. While disability insurance covers an employee for medical problems that happen outside of work. Workers’ compensation insurance and disability both help workers who are sick or hurt and can’t work to earn money. Workers’ compensation insurance is something that most states require companies with employees to have.
It pays for a worker’s medical bills if he or she gets sick or hurt at work. It can also help make up for a worker’s lost income if they can’t work for a while. Disability insurance replaces a person’s lost income if they are hurt or sick outside of work and can’t work because they are handicapped. Most of the time, this coverage is not required. However, some states, like California, have state disability programs that require all qualified workers to have coverage.
Workers’ Compensation Insurance
In most places, employers are required to have insurance for workers’ compensation. But if you don’t have insurance, you could be held responsible for paying for any accidents you get on the job. If you or a worker needs long-term care, these costs can be much higher than the cost of insurance. After getting hurt or sick at work, workers’ compensation can help in three important ways: it pays for medical costs for emergency or ongoing care, pays for lost wages while the person is recovering, and protects the employer from claims. When it’s required by state law, not having coverage can leave you open to serious fines from state regulators and legal action from your workers.
The boss also has other duties, such as telling workers what their legal rights are. This is done by putting up health and safety signs at work. Such as the name of the insurance company and how to report an accident. If a worker gets hurt on the job, the boss generally has to give them a claim form within 24 hours of finding out about it. Find out more about cases for workers’ comp.
Benefits of Workers’ Compensation
Salary Replacement
Most of the time, someone who applies for workers’ compensation will get some of their lost pay back. But it won’t be as much as their full pay. Most policies cover about two-thirds of the gross pay of the recipient. Even though the payout is usually not taxed at the federal or state level. People who get money from Social Security Disability or Supplemental Security Income may have to pay taxes on that money, though.
Workers’ compensation insurance also covers the cost of medical care for a worker who gets sick or hurt on the job. This could mean going to the hospital, having surgery, or taking medicine. If you get sick or hurt at work and it’s so bad that you need more than one treatment. Workers’ compensation will pay for that care. It will also cover accidents that come from doing the same thing over and over again. It’s important to know that most workers’ compensation plans will only pay for medical costs related to injuries that happened at work. For example, a building worker could get paid for injuries they got when they fell from scaffolding, but not for injuries they got on the way to work.
Survivor Benefits
If your employee dies because of something that happened at work, workers’ compensation can help pay for their funeral and give widow benefits to their family.
Disability Insurance
Disability insurance is different from workers’ compensation in many ways. In this case, an employee’s illness or injury that keeps them out of work doesn’t have to happen at work. Depending on the claim, the benefits may be paid for a few days, weeks or even for life. Disability insurance is generally split into two types:
Short-Term Disability Insurance – Benefits for short-term unemployment last from three to six months. Many employers give this coverage as part of a group insurance plan. The premiums can be paid by either the employer or the employees.
Long-Term Disability Insurance – Long-term disability gives disability benefits for more than one year and is for disabilities that last longer or are permanent. Most people buy this from an insurance company on their own. But some employers give it as an option that the employee can pay for through payroll deductions.
Disability insurance is generally not required by law like workers’compensation. Many workers choose to add their own private plans to the disability insurance that their employers already pay. Depending on the person’s situation, these policies can work with government-funded social security disability as well. As an employer, you might offer disability benefits as a way to make your employees happier and keep them on your payroll. This is because with disability insurance, employees know that if something comes up in the future that makes it hard for them to work, they won’t be left on their own with no options.
Benefits of Disability Insurance
Flexibility
Most of the time, employers can choose a plan that works for both them and their workers. For example, an employer might choose a “guaranteed issue” plan. Which lets workers buy coverage no matter what their health is like right now. Disability insurance also comes with payment flexibility. The company, the employee, or a combination of the two can pay the premiums, either before or after taxes.
Lower tax deductible premiums
Most of the time, group prices are less than individual rates. As a business tax deduction, you can use company-paid insurance that was paid before taxes.
How They Help Employer’s and Employees
Workers’ compensation helps workers with more than just medical care and lost wages. It can also protect employers from having to pay for this kind of care out of their own pockets and keep them from getting sued at the same time.
When an employee accepts a workers’ compensation settlement. They give up the right to sue their company for an accident that is covered by the settlement. This keeps the company from having to pay for expensive lawsuits and lets employees get the help they need right away. Since a workers’ compensation claim can be processed much faster than a lawsuit. Even when it’s not required, many employers give disability coverage because it can be a cost-effective way to keep their employees from having to pay a lot of money because of an accident or illness.
Another thing to think about is that the benefits from workers’ compensation may not be enough for some people who make more money. In many places, workers’ compensation insurance can only replace a certain amount of lost income. So some employers and employees buy disability insurance to make sure they are financially safe.
When You Need Workers’ Compensation Insurance
Depending on the workers’ comp rules in your state, you may need workers’ comp coverage as soon as you hire your first employee. But some states set the bar a little higher. Some states require this coverage for independent contractors who work in jobs that are more dangerous, like construction. For example, California requires employers with one or more workers to provide this service to any regular worker in the state. Even if they work alone, roofers must have their own insurance. Businesses with five or more staff in Missouri are required to have workers’ comp. Independent workers, one-person businesses, and owner partnerships don’t have to pay.
Most states don’t require sole proprietors and contractors with no staff to get workers’ compensation insurance. But some states do for more dangerous jobs. No matter what you do for a living, this coverage may be needed to apply for some contracts. Some companies require their contractors to have their own workers’ compensation insurance. Because it lowers the company’s liability if a contractor gets hurt on the job. Many workers buy this insurance because it protects their money. If you are a sole proprietor or an independent contractor, your normal health insurance probably won’t cover you if you get sick or hurt at work. If you can’t work because of an accident, you can also recoup some of your lost pay through workers’ comp.
State-Specific Disability Plans
Employers are required to take part in state disability insurance plans in the following states:
California
Hawaii
New Jersey
New York
Rhode Island
Puerto Rico
How EZ Can Help
If you are in need of disability insurance for your employees or need commercial insurance to safeguard your business, EZ is available to provide assistance. Our agents collaborate with leading insurance firms around the country. To ensure the identification of optimal insurance coverage for both your business and its employees. Indeed, it is possible to get substantial cost savings amounting to hundreds of dollars annually by collaborating with your financial plan to choose the most optimal insurance coverage. If you require any further clarification, please do not hesitate to contact us at 855-694-0047.
One of the most important concerns for both workers and businesses is the health and safety of their workforce. Workers’ compensation insurance and occupational accident insurance are two important insurance policies. They each come into play when it comes to the protection and safety of the workplace. In spite of the fact that both offer financial aid in the event of a workplace injury, there are substantial differences between them in terms of their structures, coverage, and the conditions under which they are applicable.
Workers Compensation
Companies that employ a minimum number of workers or employees who work a specific number of hours per week as defined by law are required to comply with the workers’ compensation requirement, which is a state-regulated requirement. The minimum number of employees varies from state to state. In some states, it means one or more employees, while in others, it means five or more. For more information on state-specific workers’ compensation requirements, visit the U.S. Department of Labor’s Worker’s Compensation page.
Workers’ compensation provides payments for wage loss, medical treatment and related expenditures, and rehabilitation for employees who sustain an injury on the job or who become ill as a result of elements that are present in their workplace environment. In addition, the insurance policy provides coverage for employer liability, which means that businesses are afforded some degree of protection in the event that an employee decides to file a lawsuit in connection with their workers’ compensation claim. More frequently than not, the costs of legal defense are covered up to the limitations of the policy. It is still the responsibility of employers to ensure that their employees are working in a safe environment.
Occupational Accident Insurance
Occupational accident insurance is a policy that provides benefits to independent contractors and employees who are not protected by a workers’ compensation program. This sort of insurance may give medical, disability, and accidental death and dismemberment benefits. But it is not state-regulated, unlike workers’ compensation. Wage loss benefits, medical expenditures, and rehabilitation costs for workers or insured independent contractors may be paid by policies, but only up to policy limits. Employers can determine their coverage and deductible amounts based on their own risk tolerance.
Workers’ compensation is more expensive for businesses, but it provides more complete coverage, particularly in terms of their own liability, which is not covered by occupational accident insurance. Employers who purchase occupational accident insurance may be exempt from the mandatory workers’ compensation system in several states. While the employer still has a legal commitment to employees who are injured or killed on the job, it is significantly less expensive than workers’ compensation. Employers receive statutory benefits through workers’ compensation, however when purchasing occupational accident insurance, you must make the following decisions:
The limit of liability to carry per accident.
The deductible to assume per accident.
The level of disability coverage to provide.
The level of death benefits to provide.
Companies will still be liable to their employees for legal responsibilities that are not covered by occupational accident insurance. Choosing the wrong coverage selection might expose a company to significant financial losses – a danger that workers’ compensation insurance protects against.
How They Differ
Workers’ Compensation
Mandatory Coverage – Workers’ Compensation Insurance is a state-mandated program that mandates employers to provide coverage for employees who are injured or ill at work. The standards and regulations may differ from one state to the next.
No-Fault System – Workers’ Compensation is a no-fault system, which means that employees are eligible for payments regardless of who caused the job accident. This method is intended to give injured workers prompt compensation without the need for lengthy court battles to identify fault.
Eligibility – In the US, workers’ comp is generally available to all employees, regardless of fault or negligence. It is mandated by state laws to ensure that employees are protected in case of work-related illnesses or injuries. Whether they’re a full-time employee, part-time worker, or seasonal staff, they’re typically covered under workers’ compensation. That is if your company meets the legal requirements.
Covered Benefits – Workers’ Compensation often pays for medical bills, rehabilitation costs, and a portion of an injured employee’s salary while they are unable to work. Long-term compensation may be awarded in the case of permanent impairments.
Employer Immunity – When covered by Workers’ Compensation Insurance, employers are generally protected from lawsuits made by employees for occupational injuries. This exemption is a trade-off designed to expedite the procedure and ensure that injured workers receive early compensation.
State Regulated – Workers’ Compensation programs are governed by state agencies. Each state has its own set of laws governing coverage criteria, benefits, and claim management.
Occupational Accident Insurance
Voluntary Coverage – Occupational Accident Insurance is often bought by employers to provide additional protection beyond what Workers’ Compensation may provide.
Fault Considerations – Occupational Accident Insurance, unlike Workers’ Compensation, usually considers fault when deciding compensation. Coverage may be limited if an employee is deemed to be at fault for their injury.
Flexible Coverage – Employers can tailor Occupational Accident Insurance coverage to their specific requirements. Medical bills, disability benefits, accidental death benefits, and other benefits may be covered. The scope of coverage, however, is determined by the specific policy chosen.
Eligibility – Occupational Accident Insurance is designed specifically for workers who are not eligible for workers’ compensation, such as independent contractors and other workers. Due to the fact that they are not typically covered by regular workers’ compensation plans, individuals who are self-employed, freelancers, and gig workers are examples of individuals who can benefit from occupational accident insurance. These non-traditional workers, who may be exposed to a variety of unique dangers and difficulties, are afforded an additional layer of protection by occupational accident insurance.
Excludes Certain Risks – Certain hazards or activities may be excluded from coverage under occupational accident insurance policies. And employees may be required to meet specified requirements to be eligible for compensation.
No Employer Immunity – Occupational Accident Insurance, unlike Workers’ Compensation, does not protect companies from employee lawsuits. If an employee has this coverage and suffers a working injury, they maintain the ability to sue their employer.
Choosing The Right Coverage
Consider Legal Requirements – Employers must comply with state-mandated Workers’ Compensation requirements. Failure to do so can result in legal consequences. While options, many consider Occupational Accident Insurance to be an additional layer of protection.
Evaluate Risks and Budget – It is important for employers to evaluate the dangers that are associated with their industry as well as the financial repercussions that could result from injuries that occur on the job. It is possible for occupational accident insurance to provide supplemental coverage that is tailored to specific requirements.
Communicate With Your Employees – Important is the transmission of the available insurance coverage in a clear and concise manner. It is important for employees to be aware of their rights under Workers’ Compensation as well as any additional coverage that may be given by Occupational Accident Insurance.
Consult With An Insurance Agent – When it comes to navigating the complexity of Workers’ Compensation and Occupational Accident Insurance, it might be helpful for companies to seek counsel from insurance professionals. They have the ability to help select the coverage that is best suitable for the specific conditions of your company.
Wrapping Up
EZ is the place to go if you are seeking workers’ compensation insurance. We take great satisfaction in making your shopping experience as simple and stress-free as possible. Not only do we provide our consumers with our undivided attention, but we also provide entirely tailored service and quick outcomes. Once you have completed our form, you will immediately be provided with free estimates from one of our representatives. A person who will comprehend your requirements from the very beginning. To ensure that you make the greatest choice possible and obtain the best coverage at the best price, we want to make sure that you do so. Make sure you check out your quotes right away because none of our services cost you anything.
For any questions, please do not hesitate to call us at (855) 694-0047. You’ll speak with a local insurance agent that is able to provide answers to all of your questions. In addition, we can assist you in locating the workers’ compensation policy that is most suitable for your company. Or for free instant quotes just enter your zip code into the box below.
Your small business can benefit from many different kinds of commercial insurance, including policies like general liability, commercial property, and small group health coverage. One of the most important policies to add to that list is workers’ compensation insurance.
With this type of policy, small business owners can protect their employees and themselves from the financial fallout of work-related injuries and illnesses. But do you actually need to carry this kind of coverage, or is it just good to have? Not only that, but how do you select the most appropriate workers’ compensation policy for
your business, and what steps should you take to
safeguard against worker’s compensation claims?
What Is Workers’ Compensation?
First, let’s explain what workers’ compensation is. Workers’ compensation, or workers’ comp, is an insurance policy that provides financial support to workers who are injured or become ill on the job. Employees who become ill or injured on the job are entitled to workers’ compensation benefits, within certain parameters, regardless of who was at fault: the employee, the employer, a coworker, a customer, or anyone else.
What Injuries Does Workers’ Compensation Cover?
Injuries that occur on the job are covered by workers’ compensation insurance for companies of all sizes, and regardless of how they occurred (such as a fall from a ladder). To give another example, if a delivery driver is in an auto accident while working, they may be entitled to workers’ compensation benefits.
Workers’ comp will generally also cover illnesses that are caused by workplace conditions. The state’s definition of “work-related illness” can include things like occupational lung disease, which has been linked to things like chemicals on the job and airborne particles. But be aware that different states and fields have different sets of regulations.
In addition, in many cases, employees can claim workers’ comp benefits for repetitive strain injuries like carpal tunnel syndrome, or for chronic conditions like back pain that manifest after a long period of time.
Workers’ Compensation Laws by State
Every state has its own set of laws and regulations when it comes to workers’ compensation. Below we’ve highlighted the basics for each state. If you would like more information about your state’s workers’ compensation laws and available policies, check out our state-by-state guide.
Alabama’s Workers’ Compensation Division is in charge of the state’s workers’ comp program. In Alabama, workers’ compensation insurance is mandatory for any business that regularly employs five or more people. In addition to being mandated by law, this coverage serves to safeguard both employees and the company.
Workers’ compensation not only benefits your employees by helping them pay for medical expenses and replacing a portion of their lost wages, but it also benefits you by shielding you from double payments, penalties, and fines, and by reducing your liability in the event of an accident on the job.
Any company in Alaska with one or more employees must have workers’ comp coverage. The only exception is if you have been authorized to self-insure (i.e., pay workers’ comp claims as they arise out of your own pocket rather than maintaining an insurance policy). In Alaska, workers’ compensation insurance is obligatory for nearly all workers, but this rule does not apply to the following groups of employees:
Part-time babysitters
Non-commercial cleaning staff
Employees hired to harvest crops, and other temporary or part-time workers
Officials in amateur sporting events
Contracted entertainers
Employees who work in commercial fishing
Taxi drivers who are employed under contracts
People who are receiving state subsidies for temporary help while performing required employment tasks
Players and coaches on professional hockey teams, so long as they have health insurance
Arizona operates under a “no fault” system for workers’ compensation. Because of this, it doesn’t matter who or what caused an accident at work, an injured worker is always entitled to medical care and compensation. The Industrial Commission of Arizona (ICA) handles workers’ compensation claims. Since its inception in 1925, the ICA has grown to include two departments: Claims and Administrative Law Judges.
The claims division’s employees can help, but they can’t give you legal advice. You can ask them anything you like about workers’ comp laws and they’ll know the answer. Hearing requests are sent from the Claims Division to the ALJ’s Hearing Division. Claims disputes, employer disputes, and insurance company disputes are all dealt with by the ALJ department.
When it comes to making sure that workers’ compensation laws in Arkansas are followed, it’s up to the Arkansas Workers’ Compensation Commission. The Commission is responsible for keeping tabs on workers’ compensation claims and benefits paid out across the state.
To legally protect your staff, a workers’ compensation insurance policy (or state approval to act as a self-insurer) is a necessity. In addition, the cost of workers’ compensation insurance must be covered in its entirety by your business; employees should not be required to contribute in any way. Failure to comply with these laws may result in civil penalties and the loss of liability protections afforded by workers’ compensation insurance and state law.
If you have employees in California, you must follow the state’s workers’ compensation laws. There are three things that must be done in order for your company to be in compliance:
Purchase workers’ compensation insurance to cover all required employees.
Provide new hires with a workers’ compensation pamphlet or brochure.
Put up a “Notice to Employees” poster around your workplace.
Additionally, it is illegal in the state of California to require employees to contribute to or offset the cost of workers’ compensation insurance. In contrast to health insurance and other benefits, there cannot be any payroll deductions required to provide coverage. In return, they generally can’t sue you if they get sick or hurt on the job.
The Colorado Division of Workers’ Compensation (DOWC) administers the state’s workers’ compensation system, which was established by the Colorado Workers’ Compensation Act of 1915. Workers’ compensation insurance is obligatory in Colorado for nearly any company with employees.
These cases are the exception to the rule:
Self-employed
Corporate officers
Limited liability company members
Workers’ compensation is optional for these workers but is still available if desired.
Any Connecticut business with one or more employees is mandated by law to have workers’ comp coverage. One notable exception is that companies do not have to carry insurance for domestic workers who put in fewer than 26 hours per week. Workers’ compensation insurance is required by law for all other employees, whether they are part-time, full-time, or seasonal.
In addition, being a business owner, member of an LLC, corporate executive, sole proprietor, or independent contractor does not necessitate workers’ compensation coverage. But even if this is the case for you, you may want to consider purchasing workers’ comp insurance because of the high cost of medical care. Workers’ compensation policies typically cover medical expenses and lost wages, while individual health insurance plans may not.
Any company with employees in Delaware must have workers’ compensation coverage in accordance with state law. Employees will be protected in the event of an accident or illness on the job, and your company will be protected from lawsuits as a result of this mandate.
Delaware law makes an exception for farms and ranches. But if they so choose, these businesses can still carry policies for their staff. If they don’t, they could be held responsible for any accidents that happen on the job. The Delaware Workers’ Compensation Fee Schedule is available for use as a resource for businesses and insurers in determining how much to pay for medical care for employees who have been injured on the job.
Workers’ compensation coverage is mandatory in Florida for businesses with four or more employees, per state law. However, the precise coverage you need will depend on factors such as the nature of your business, the size of your staff, and the types of employees you have.
In Florida, a workers’ compensation policy is mandatory for the following industries:
Businesses that employ at least one person in the construction industry. Keep in mind that corporate officers and members of limited liability companies (LLCs) are also considered employees.
Agricultural businesses employing at least six people. Coverage is also required if 12 temporary employees work more than 30 days in a season, but no more than 45 days in a calendar year.
Out-of-state employers with employees in Florida must have a workers’ compensation policy with an approved insurance carrier.
Contractors who use self-employed or independent contractors must ensure that they have workers’ compensation coverage for them before beginning a project in the state.
Any Georgia employer with three or more regular, temporary, or seasonal workers must carry workers’ comp insurance. Some workers, however, are exempt from this rule:
Railroad employees
Government employees in the United States
Farm laborers
Domestic employees
Workers’ compensation payments are based on the employee’s degree of injury or illness. Depending on the severity of the injury or illness, workers’ compensation benefits may be paid out for as long as 400 weeks.
In Hawaii, any company with employees must carry workers’ compensation insurance. This holds true for all workers, whether they are temp workers, seasonal workers, permanent workers, or full-time workers. Nonetheless, the laws requiring workers’ compensation in Hawaii are subject to a number of exemptions. The law does not require insurance for the following business owners and executives:
Independent contractors and sole proprietors
Business partners
Any corporate executive who owns at least half of the company
Members of limited liability companies (LLCs), if they are individuals (rather than business entities) and stand to receive at least 50% of the LLC’s value if the company is liquidated or sold.
You should seriously think about getting workers’ comp insurance even if it’s not mandated by law. It’s usually a good idea because individual health insurance policies rarely cover injuries sustained on the job, and those that do often don’t cover any lost wages.
Workers’ compensation insurance is mandatory in the state of Idaho for any business with one or more employees. Included are both regular and temporary workers, such as those employed during the summer and winter seasons. To comply with Idaho’s workers’ compensation laws, a policy must be in place before any employees can be hired. According to Idaho law, independent contractors fall under the category of employees, as well. To find out if your contract workers need insurance, talk to a representative from the Industrial Commission’s Employer Compliance division.
Workers’ compensation may not be mandatory in Idaho for some industries or classes of workers. Some examples are:
Domestic workers
Workers covered by the federal workers’ compensation law.
Pilots for dusting or agricultural spraying (these are only exempt under certain conditions)
Real estate brokers and salespeople who work on commission.
Volunteer ski patrollers
Secondary school athletic officials (grades 7-12)
Casual employees who work irregular hours and are unrelated to your business.
You may also be exempt if you are the owner of your business and:
You have no employees.
Your employees are your family and live in your home.
Workers’ compensation insurance is recommended even if your company is exempt from having to carry it. If you don’t have it, employees who get hurt or sick on the job can file a lawsuit against you.
Workers’ compensation insurance is mandatory in Illinois for most businesses. More than 91% of workers in Illinois are now covered by workers’ compensation insurance thanks to the state’s workers’ compensation law. Read up on the Illinois Workers’ Compensation Act to ensure you’re following the state’s legal requirements for workers’ compensation. Here are a few of the most crucial rules to remember:
Even if your employees are members of your family, you generally need coverage.
If you intentionally and deliberately fail to obtain coverage, you could be subject to a minimum $10,000 in penalties.
Employees have 45 days to inform their employers of an illness or injury.
Every six months, the Illinois Department of Employment Security updates its average weekly wage report.
Workers’ compensation benefits in the state of Illinois are subject to a three-business-day waiting period. This means that benefits will be paid out to an employee if they are still injured or ill on the fourth day following an accident or illness. If your worker misses work for more than two weeks in a row, they are eligible for compensation for those days. They will receive this benefit until they are healthy again.
Most employers in Indiana must carry workers’ compensation coverage. Workers who meet the criteria for independent contractor status as established by the IRS are a notable exception to this rule. A Workers’ Compensation Clearance Certificate and a $20 filing fee must be submitted to the Indiana Workers’ Compensation Board if any of your employees fall into this category. Independent contractors operating as sole proprietors are also subject to these rules.
There are some exceptions to the general rule that all Iowa employers must have workers’ compensation insurance. The following are examples of such exceptions:
Sole proprietors
Members of a limited liability company (LLC)
Partners in a partnership
Corporate executive officers owning at least 25% of common stock in the business.
Workers related to you.
Casual employees, whose work isn’t done for business purposes.
Employees earning less than $1,500 annually.
Some businesses are exempt from the state’s regulations, including those in the agricultural sector. Even if you are not required to have it by law, workers’ comp insurance is probably a good idea. Without insurance, you might have to foot the bill for a worker’s medical care if they get sick or hurt on the job. Employees who become ill or injured can also sue your business.
Workers’ compensation insurance is required by law in Kansas, with a few exceptions. Certain types of employers and employees are not included:
Employers in specific agricultural occupations
Firefighters who work for relief associations
Independent contractors who work in real estate
Employers paying no more than $20,000 in annual gross payroll.
Keep in mind that the $20,000 threshold applies to all payments, including wages earned outside of Kansas, for the purposes of a workers’ compensation exemption. Pay for partners and dependents of sole proprietors is not included.
Any company in Kentucky with even one worker must have workers’ comp coverage. You’ll also need proof of insurance, or a certificate of insurance, in the form of a letter from your insurer, outlining key provisions of your policy. Insurance certificates must be prominently displayed in the workplace in Kentucky. Kentucky’s workers’ compensation law provides an exemption for the following categories of workers:
Agricultural workers
Members of a religious group or sect that are morally opposed to insurance coverage
Housekeepers in a private residence with fewer than two other regular employees
Any person performing home improvement, maintenance, or repair work for a religious or philanthropic organization in exchange for food or other support for a period of fewer than 20 days.
Employees in Kentucky can actually opt out of workers’ compensation coverage by filing a Form 4 Waiver with the Department of Workers’ Claims. Once the waiver is issued, it will remain in effect until it is revoked. If a worker gets sick or hurt on the job but has declined insurance, they can still sue their employer in court. Here, the burden of proof shifts to the worker, who must show that the employer was negligent or malicious.
The state of Kentucky prohibits employers from requiring employees to sign a Form 4 Waiver as a condition of employment. Employees’ waivers are only valid if they are signed voluntarily. If businesses require employees to sign Form 4 Waivers, they risk legal repercussions.
If you have even one employee in Louisiana, state law mandates that you purchase workers’ compensation insurance. This includes all workers who are:
Full-time
Part-time
Minors
Seasonal workers
Keep in mind that you might not need workers’ compensation insurance if you don’t have any employees. If a corporate executive owns more than a predetermined percentage of the company, they can often get out of paying for this insurance. It’s also worth noting that the workers’ compensation regulations you must follow will change depending on the nature of your company. But, in general, if you have workers, you’ll need one of these policies in Louisiana.
Workers’ compensation insurance is mandatory in the state of Maine for most businesses. However, this law does not apply to the following employers and employees:
Employers in agriculture or aquaculture with seasonal or casual workers, if they have at least $25,000 in employer liability insurance and $5,000 in medical payments coverage.
Agricultural or aquacultural businesses with six or fewer employees that have at least $100,000 in liability insurance and at least $5,000 in medical payments coverage.
Domestic workers in a private home.
Sole proprietors who don’t have any employees.
Independent contractors hired on a project basis who are not full-time employees.
You are required to carry workers’ compensation insurance unless you are exempt. Without it, employees who get hurt or sick on the job can sue you for damages. Fines and criminal charges could also be levied against you and your company.
Both full-time and part-time workers in Maryland must be covered by workers’ compensation insurance. But the state of Maryland does not mandate workers’ compensation for agricultural employers with fewer than three employees, or an annual payroll of less than $15,000. Workers’ compensation insurance is optional in the state of Maryland for sole proprietors, partners in a business partnership, and independent contractors. But if you are in this category, you may want to consider buying this insurance to safeguard yourself against the high cost of medical care.
No matter how many employees you have or how many hours they work per week, you are required to carry workers’ compensation insurance in the state of Massachusetts. The only exception to this rule is domestic service workers, who must work a minimum of 16 hours per week in order to be eligible for workers’ compensation coverage. Moreover, sole proprietors are exempt from needing workers’ compensation insurance.
The Department of Industrial Accidents (DIA) is responsible for enforcing the workers’ compensation law in Massachusetts. They do not, though, have authority over the rates or class codes used to calculate workers’ compensation premiums. Instead, the Workers’ Compensation Rating and Inspection Bureau of Massachusetts (WCRIBMA) establishes these rates and codes.
Most businesses in Michigan are required to have workers’ compensation insurance by the Workers’ Disability Compensation Act. Workers’ compensation insurance is required if your business has three or more employees, or if any single employee works more than 35 hours per week for 13 weeks or longer.
In Michigan, workers’ compensation insurance is mandatory for both public and private sector employers.The state law, though, is not strictly applied in the following cases:
Employers with agricultural workers, unless they have three or more employees working more than 35 hours per week for 13 weeks.
Housekeepers and other domestic workers
Sole proprietors who are classified as self-employed.
Family members working as employees for a relative
Independent contractors
Workers’ compensation insurance laws and regulations in Michigan are very important to learn, since businesses risk financial penalties for noncompliance.
The Workers’ Compensation Act of Minnesota specifies the rules governing workers’ compensation in Minnesota. In the state of Minnesota, workers’ compensation insurance is mandatory for all businesses. However, there are a few cases where this law does not apply:
Household employees in a private home earning less than $1,000 in a three-month period.
Farm workers who do not earn more than a certain amount of money, as well as the farmer’s or employer’s immediate family members (spouse, parent, or child) who also work on the farm.
Casual employees who work only once or infrequently and are not employed permanently or on a regular basis.
If you have five or more employees in Mississippi, you are required by law to carry workers’ compensation insurance. But there are a few exemptions to the workers’ compensation rules in Mississippi. Workers’ compensation insurance is optional in your state for the following categories of workers:
Domestic workers
Farm workers
Employees of non-profit organizations
Religious or cultural organization employees
Independent contractors
Employees of the federal government
Certain maritime or transportation workers who are covered by federal workers’ compensation laws.
The state of Mississippi now has no-fault workers’ compensation insurance thanks to the Workers’ Compensation Act. That means that employees won’t have to worry about covering the costs of medical care or lost wages due to an injury on the job, regardless of who was at fault.
Any company in the state of Missouri with five or more employees is required by law to carry workers’ compensation coverage. All LLC participants and company executives need to be covered. In addition, if a construction company employs even one person, it must have insurance. Workers’ compensation insurance is not mandatory in the state for the following categories of workers:
Farm workers
Domestic workers
Some real estate agents
Direct vendors
Owner-operators of commercial motor vehicles (commercial truckers)
Consider purchasing a policy even if you don’t think you need it because your company has fewer than five workers. Without workers’ compensation, your company would be responsible for covering the cost of an injured worker’s medical treatment out of its own funds. In addition, if an employee is hurt or gets sick while on the job, they could sue your business.
Businesses operating in Montana are subject to stringent regulations regarding workers’ compensation. Unless exempt, every company that employs people must have workers’ compensation insurance. This rule applies to all companies, regardless of whether their workers are regulars or temp workers. With that being said, workers’ compensation insurance is not necessary for all types of employees, including:
Domestic or household workers
Commission-based salespeople in real estate, securities, or insurance
Newspaper deliverers
Freelance writers who are paid per article
Licensed barbers or cosmetologists employed by a cosmetology firm on a contract basis
In accordance with Nebraska law, any company with at least one employee must maintain workers’ compensation coverage. The following, though, are not covered by Nebraska’s workers’ compensation laws:
Railroad companies
Domestic workers who are employed in private residences.
Businesses employing agricultural workers.
Employees of sole proprietorships, partnerships, and LLCs are exempt from the requirement to carry workers’ compensation insurance as well. In addition, the state does not require workers’ compensation for corporate executives who own more than 25% of their company’s common stock. Executive officers of nonprofits in the state who earn less than $1,000 per year are also exempt.
Any of the above can buy this type of insurance if they choose to, though. This is a smart move because medical insurance typically does not pay for lost wages and only partially covers injuries sustained at work. If a company’s top executive wants to purchase workers’ comp insurance, they must inform both the insurance provider and the company secretary.
Workers’ compensation insurance is mandatory in the state of Nevada for any employer, be they an individual, a business, a nonprofit, or a publicly traded company with employees. The term “employee” refers to anyone who works for a company either directly or through a contract of hire or an apprenticeship. There is an exemption, though, for casual workers not related to your business who worked for less than 20 days and were paid less than $500.
Nevada is one of only a handful of states that requires workers’ compensation insurance to be carried by sole proprietors, independent contractors, subcontractors, and their employees. Unless they qualify as an “independent enterprise,” they are employees.
The state of New Hampshire mandates that all businesses carry workers’ compensation insurance. Employees who become ill or injured on the job are eligible to receive workers’ compensation benefits after four days of disability. But there is no need to wait the standard three days if:
The disability lasts for at least 14 days.
They return to a temporary, alternative job within five days.
The typical compensation for an injured worker is 60% of their regular weekly wage. Gross earnings in the 26-52 weeks prior to the injury will be added up and then divided by the number of weeks to get an estimate of their average weekly salary. Their weekly allotment will be based on their starting salary if they haven’t been with the company for 26 weeks.
Workers’ compensation does not apply to people who are sole proprietors, partners, or independent contractors. However, you have the option to purchase workers’ compensation if you fall into this category. Considering the high cost of healthcare, this is a prudent move, especially for those in dangerous professions.
Officers of corporations and members of LLCs are exempt from workers’ comp as long as their company has no more than three executives. But once a fourth executive or LLC member is brought on board, workers’ compensation insurance must be purchased. Subcontractors with no employees may also be required to obtain insurance by the project’s general contractor.
The state of New Jersey mandates that all businesses have workers’ compensation coverage. Even if your New Jersey business is an LLC or only hires seasonal or part-time employees, you are still required by law to carry workers’ compensation insurance. If you are unable to provide proof of insurance, you may be subject to a fine or criminal charges. There are some types of employees/business owners for whom workers’ compensation is not mandatory in New Jersey:
The state of New Mexico has strict requirements for employers to carry workers’ compensation insurance. Businesses with three or more employees are required to carry workers’ compensation insurance, and all construction companies, regardless of size, must do the same.
The state considers anyone who works for a company to be an employee of that company. The “three or more” rule applies to business owners who also perform work within the company. The mandated coverage extends to both full-time and part-time employees, as well as seasonal and remote workers. But there are a few exemptions to these rules:
Household employees
Real estate brokers
Employees of the federal government who are covered by the Federal Employees Compensation Act or other federal programs.
Contractors who work on their own
Even if insurance isn’t mandated in New Mexico, residents are urged to protect themselves by purchasing this type of coverage voluntarily. This will safeguard your company from legal action and provide financial security if they incur medical expenses. An Election to be Subject form must be filed with the Workers’ Compensation Association (WCA) before an exempt employer can voluntarily purchase coverage.
Workers’ compensation insurance is mandatory in the state of New York for any business with employees. There are narrow exceptions to this rule that an employer can take advantage of under state law. Having worker’s compensation insurance is recommended even if you are exempt. Without workers’ compensation, an employee who sustains an injury while on the job may be responsible for covering the full cost of their treatment out-of-pocket because their regular health insurance policy may not cover occupational injuries, and they may sue you for damages.
Businesses with three or more employees in North Carolina must comply with the NC Workers’ Compensation Act (NCWCA) and obtain workers’ compensation insurance. There are some exemptions to this rule in North Carolina due to the broad definition of “employee.” For example, workers’ compensation is not required for people who are self-employed or who are members or partners in a limited liability company.
Before hiring any staff in North Dakota, most companies are required by law to obtain workers’ compensation insurance, but some workers in North Dakota do not have to be insured. If they can prove their independence, independent contractors are exempt from having to purchase workers’ compensation. The individual asserting independent contractor status must provide evidence to support their position.
A determination by North Dakota Workforce Safety & Insurance (WSI) that an individual is exempt from workers’ compensation because they are an independent contractor will remain in effect for the duration of that calendar year. In order to receive an exemption, businesses or contractors should get in touch with WSI and ask for a “Independent Contractor Verification Application.”
The state of Ohio requires all businesses with employees to have workers’ compensation coverage. Officers of a corporation are employees unless they are serving pro bono. The following, though, do not fit Ohio’s definition of an employee:
Domestic workers earning less than $160 per quarter, such as cooks or gardeners.
Most volunteers
Workers’ compensation insurance is mandatory for those working part-time, but in the event of an injury, the part-time worker’s benefits would be determined by a formula that factors in the person’s typical working hours.
In Oklahoma, almost all businesses are mandated to carry workers’ comp coverage. Your state’s laws regarding workers’ compensation may provide exemptions for certain categories of workers, employers, and business owners:
People who are self-employed (sole proprietors)
Members of a limited liability company (LLC) who own at least 10% of the capital.
Members of a partnership
Stockholders in a business who own at least 10% of capital.
Family businesses with five or fewer family-related employees
In addition, independent contractors are not eligible for workers’ compensation coverage because they are not considered employees. To determine whether an individual is an independent contractor or an employee, the state of Oklahoma employs a rigorous, multi-factor test. The government takes into account the following:
The contract’s nature
The degree to which the principal employer has control over the work.
Whether the individual works in a specific occupation or runs a business for others
Whether the individual works under supervision or on their own
If your worker is considered an independent contractor, you are not required by Oklahoma law to provide them with workers’ compensation coverage. But you should still look into workers’ compensation even if your employees are exempt, because gaps in coverage can leave your company vulnerable to lawsuits.
Having workers’ comp insurance is a legal requirement for most businesses in Oregon. With that being said, workers’ comp is optional for the following types of workers:
People who work in a private home providing a domestic service, such as home health aides
Gardening, maintenance, repair, or remodeling workers hired by a homeowner.
Casual workers
Employees with annual earnings of less than $500
The state of Oregon does not mandate that you purchase workers’ compensation insurance for these workers, but you are free to do so if you choose. Lack of workers’ compensation coverage can leave you and/or your business vulnerable to lawsuits, so it’s a good idea to look into it even if your employees are exempt.
Employers in the state of Pennsylvania must cover their employees with workers’ compensation insurance. Workers’ compensation benefits in Pennsylvania include payment of a portion of lost wages and medical costs for any employee who sustains an on-the-job injury, regardless of whether they work full-time, part-time, or seasonal hours. If all of a Pennsylvania business’s employees fall into an exempt category, like railroad workers, longshoremen, federal employees, and domestic workers, the business is exempt from carrying workers’ compensation insurance.
If you’re a sole proprietor or self-employed, you don’t have to worry about getting workers’ comp. But self-employed workers in Pennsylvania are still eligible for lost wage and other benefits under a workers’ compensation policy, so it is a good idea to purchase coverage even though it is not mandated by law. It’s also possible that a business that wants to hire you as an independent contractor will be hesitant to do so if you don’t have your own insurance.
If you or your employee are exempt from workers’ compensation coverage, you must file an exemption application and supporting documentation with the Bureau of Workers’ Compensation of the Pennsylvania Department of Labor and Industry.
If you have employees in Rhode Island, the law requires you to carry workers’ compensation insurance. Posters showing proof of workers’ comp insurance, including the name of your insurance provider, must be displayed in the workplace. There is a potential $250 fine for not doing so.
You can include an employee in your workers’ comp policy even if they are exempt from required coverage. In the event of an accident on the job, this can help safeguard both them and your company.
Businesses with four or more employees in South Carolina are required to carry workers’ compensation insurance. All employees, whether full- or part-time, as well as unpaid or compensated family members, are counted here. This is also true for nonprofit organizations.
Subcontractors must be included in the general contractor’s insurance policy unless they have their own policy. If an employee of a subcontractor is injured on the job, the general contractor can avoid legal trouble by relying on the subcontractor’s workers’ compensation coverage. There is no legal requirement for sole proprietors, partners, independent contractors, or members of an LLC to purchase workers’ compensation insurance for themselves.
Even if it’s not mandated in your state, you should get workers’ comp insurance. Injuries sustained at work may not be fully covered by your health insurance, leaving you with costly out-of-pocket expenses. In addition, unlike workers’ comp, health insurance does not compensate for income loss.
Unlike in many other states, businesses in South Dakota are not mandated to have workers’ comp insurance. But in order to protect themselves from potential lawsuits, businesses are strongly encouraged to purchase workers’ compensation insurance. Purchasing workers’ compensation insurance will shield you from liability should an employee sustain an injury on the job and sue you for negligence.
If you’re self-employed or working on a contract basis, getting this insurance may be required or simply make good financial sense. Work-related injuries may not be fully covered by health insurance, even if you have it. Furthermore, unlike workers’ compensation, health insurance will never pay for lost wages in the event of an illness or injury.
In Tennessee, having workers’ compensation insurance is not only recommended, but mandated by law. Businesses with five or more employees in Tennessee, including family members, part-time workers, and corporate officers, are required to carry workers’ compensation insurance.
Furthermore, construction businesses and trades with one or more employees are required to carry workers’ compensation. If you are a sole proprietor, partner, officer, or LLC member of a construction company, though, you may qualify for an exemption. Employers in the coal mining industry must cover their workers with workers’ comp insurance.
Even if your business’s size makes it exempt from being required to carry workers’ compensation insurance, you can still purchase a policy. An “Exempt Employers Notice of Acceptance of the Tennessee Workers’ Compensation Act” must be filed with the Tennessee Bureau of Workers’ Compensation prior to the purchase of any such policy. You will have to submit Form I-8 to the state to opt into carrying workers’ compensation insurance, and you must also use that same form to notify the state when you no longer wish to carry workers’ compensation insurance.
Unlike the majority of other states, Texas does not mandate that businesses have workers’ compensation insurance, though businesses that opt out still need to inform both the state and their employees that they do not provide workers’ comp. Having said that, there are specific categories of businesses and employees who must be covered by workers’ compensation. If you are a sole proprietor, independent contractor, or otherwise self-employed, you may wish to protect yourself financially by purchasing workers’ compensation insurance even though it is not mandated by law. Potential customers may insist that you carry this coverage.
And, if you work in a hazardous field or perform physically demanding tasks, investing in workers’ compensation insurance is a prudent financial move. If you sustain an injury at work, your health insurance provider may not pay for all of your necessary medical care. In addition, unlike workers’ compensation, health insurance never pays for lost wages.
Most employers in the state of Utah need to have workers’ compensation coverage. Workers’ compensation insurance must be purchased to cover any and all employees beginning with the first hired. Employees of sole proprietorships, LLCs, partnerships, and independent contractors are not required to carry this coverage, though.
The corporate officers and directors of your company may or may not be required to carry workers’ compensation insurance. But you will be required to apply for an exemption from the Utah Labor Commission and notify your workers’ compensation insurer if you choose not to purchase workers’ comp. Even if it is not mandated by law, investing in workers’ comp is a sensible financial move. If you get hurt on the job, your health insurance may not pay for all of your medical expenses. In addition, unlike workers’ compensation, health insurance never pays for lost wages.
The state of Vermont requires all businesses with employees to carry workers’ compensation insurance, with the following exceptions:
Sole proprietors or partners in unincorporated businesses
Members of limited liability companies (LLCs) and corporate officers
Casual workers, or those who are not employed in the core functions of the business.
Someone who participates in amateur sports.
A person employed in agriculture or other farm jobs whose employer has an annual payroll of less than $10,000.
Certain elected officials and volunteers
Vermont law mandates that you have workers’ compensation insurance if an independent contractor provides labor for your project. You are not responsible for providing insurance if the contractor is working alone.
Businesses with three or more regular or temporary employees in Virginia must have workers’ comp coverage. In addition, businesses that contract out work to outside parties must count those contractors as employees for the purposes of workers’ compensation.
In Virginia, sole proprietors who employ neither regular employees nor independent contractors are exempt from the requirement to carry workers’ compensation coverage. Virginia’s Workers’ Compensation Commission (VWC) does not require sole proprietors to file an exemption or waiver form. With that being said, the state treats you as an employee for workers’ comp purposes if you are an executive or corporate officer at your company. But it does allow you to opt out of insurance coverage if you so choose. To opt out, you will have to:
Have valid workers’ compensation coverage for your company’s other employees.
Fill out a Rejection of Coverage form and submit it to the Virginia Workers’ Compensation Commission.
File a copy of the form with your insurance company.
In the state of Washington, workers’ compensation insurance is mandatory for any company with employees. Coverage is typically obligatory if you have any employees, including independent contractors and part-timers. However, the following employees are not subject to the state’s workers’ compensation laws:
Domestic workers, when there is only one employed, and they do not work more than 40 hours per week.
Gardening, maintenance, and repair workers in private homes
Musicians and entertainers at specific events
Children under the age of 18 who are employed by a parent for farm work.
Cosmetologists and barbers who rent or lease their space.
In the state of West Virginia, workers’ compensation insurance is mandatory for any company with employees. There are a few loopholes in West Virginia’s workers’ compensation laws, though. You won’t need workers’ comp insurance for:
Fewer than three employees who work temporary jobs lasting no more than ten days per quarter.
Five or fewer agricultural workers
Domestic workers
Church employees
Athletes in professional sports
Temporary state employees
Emergency service volunteers
Longshore and harbor workers
Workers’ compensation insurance is optional for sole proprietors and independent contractors in West Virginia. If you fall into this category, though, it is highly recommended that you purchase insurance to cover the costs associated with a work-related injury. Injuries sustained on the job are not always fully covered by health insurance, and lost wages are never covered, unlike with workers’ comp.
Almost all employers in Wisconsin are required to carry workers’ compensation insurance. All employees, whether full- or part-time, as well as their dependents of any age, must be insured. The Wisconsin Workers’ Compensation Act mandates insurance for almost all workers, but there are some exceptions depending on the nature of the job. Exceptions to the need for workers’ compensation include:
Domestic workers
Volunteers, including those in nonprofit organizations, who are paid in cash or other items worth $10 or less per week.
Members of a religious sect
Employees of Native American tribal enterprises (including casinos), unless the tribe chooses to waive sovereign immunity and voluntarily participate in state workers’ compensation.
The majority of real estate brokers, agents, and salespeople
Certain federal employees who are covered by federal workers’ compensation programs.
Most employers in Wyoming are required by law to purchase workers’ compensation insurance to cover their employees. Those who are exempt from mandatory insurance coverage include:
Casual workers
The majority of professional athletes
Domestic workers in private households
Private duty nurses who work for an individual
Employees of the federal government
Volunteers for some organizations
Although some Wyoming businesses may be exempt from carrying workers’ compensation insurance, it is important to note that all businesses in the state are required to register with the Division of Workers’ Compensation and Unemployment Insurance. Furthermore, the following business owners are exempt from the provisions of the Wyoming Workers’ Compensation Act regarding workers’ compensation insurance:
Independent contractors and sole proprietors
Partners
Limited liability company (LLC) members
Corporate executives
The aforementioned proprietors are free to invest in a workers’ comp policy if they so desire. Getting workers’ comp is a smart financial move, because medical insurance won’t compensate you for lost wages and may not fully cover injuries sustained on the job.
EZ Can Help
Even if you have only one non-family employee, it is likely that you will need to include the price of workers’ compensation insurance in your business budget. But don’t worry: an EZ agent can tell you exactly how much coverage you need, and find the right policy for you, at the right price. And if you’re also considering group health insurance, general liability insurance, commercial property insurance, or any other policies for your small business, we can help you find the best policy – or the best bundle – around.
Please get in touch if you have any questions about our small group medical, general liability, and workers’ compensation insurance. Licensed EZ insurance agents can assist with determining which state regulations apply to your business and can explain your insurance options once you give us some information about your company, its needs, and your risks. After they get to know you and your business, your EZ agent will work with you to locate a policy that meets your requirements at a price you can afford. Call 877-670-3538 right now to get started.
Workers’ compensation insurance is a key part of most companies’ risk management plans. Workers compensation coverage pays for lost wages and medical expenses when someone is injured on the jobsite. Most states require all businesses to have workers’ compensation insurance of some sort. But does the same rule apply to 1099 workers? 1099 workers, also known as independent contractors, are usually put in their own separate category from typical W2 employees. With that said, it’s important to address the question of—do business owners who have 1099 employees need workers’ comp? Read on to find out!
Understanding Workers’ Compensation Insurance
Workers’ compensation coverage protects employers and employees when there is an injury or illness that takes place in the workplace. If an employee gets hurt on the job, this insurance covers their medical costs and pays them a portion of their wages. Additionally, workers’ comp is important for business owners because it protects against lawsuits brought on by employees.
In terms of legal requirements, it’s important to take a look at the guidelines for the specific state you’re operating out of. Generally speaking though, in most states workers’ compensation is a requirement for businesses of all sizes. Some other states allow businesses with a small number of employees to not obtain this coverage. For example, in Florida, companies with 4 or less employees in non-construction industries are exempt from workers compensation requirements.
W-2 vs. 1099 Employees
A W-2 employee, also referred to as a traditional employee, is a formally employed individual working for a company or organization in the United States. These employees work directly under the control of their employer and in turn, their employer withholds taxes from their wages. W-2 employees make up the majority of America’s workforce. As mentioned above, almost all employers have to provide this type of employee with worker’s compensation insurance.
On the other hand, 1099 workers actually aren’t considered employees. They are independent or self-employed contractors. Unlike W-2 workers, 1099 workers manage themselves and are responsible for their own taxes. Since they are freelancers and not employees, it’s often believed that workers’ compensation coverage is not required. While this is usually true, it’s not always that straightforward.
Do 1099 Contractors Need Workers Compensation Insurance?
The simple answer is no. There is no law stating that businesses must provide workers compensation insurance to 1099 workers. Since 1099 workers are self-employed, they’re generally expected to have their own insurance for things like healthcare and liability coverage. With all this said, in certain scenarios businesses are still held liable for injuries sustained by a 1099 contractor.
One situation that’s more common than you’d think is the misclassification of contractors. For example, if a company classifies someone as a 1099 contractor who isn’t, they will be held liable if there is a workers’ comp claim. This is not to mention the many other penalties that come along with employee misclassification. Another example where a business could be held liable is when the work agreement lacks a proper contract. In this case, since there isn’t a clear definition of the work agreement, the 1099 contractor may argue that they are effectively working as an employee. While these scenarios are usually few and far between, it’s important to always have work agreements in writing. Also be sure to look into your state’s and industry’s specific requirements.
Protecting Your Business and Contractors
So we learned that workers compensation insurance usually isn’t required for 1099 contractors. With that said, there are some things that you should do to avoid the risks associated these workers:
Make sure they have their own insurance coverage: As briefly mentioned, since 1099 workers are employed by themselves, they should have their own insurance. Liability coverage is the most important thing to look for.. Many business owners require their 1099 contractors to have liability coverage. If this is the case for your operation, be sure to let them know ahead of time.
Explore contractor-specific coverage options: For an extra layer of protection, you might consider exploring insurance plans that are designed specifically with 1099 contractors in mind. While the best practice is for these workers to have their own coverage, providing contractor-specialized coverage goes the extra mile in protecting yourself and the worker.
Have a clear definition of the relationship between yourself and your contractor(s): Before the rubber hits the road, it’s crucial to define the workers’ relationship to you. It’s a good idea to have this in writing in case anyone ever tries to deny your claim. Additionally, make sure that you state that the contractor is not eligible for the same benefits as a W-2 worker and that they must provide their own insurance coverage.
The Main Takeaway
Mistakes in the workplace can be costly, especially if you don’t have the proper insurance policy in place. While most businesses have to provide their employees with workers’ compensation coverage, we’ve learned that 1099 contractors are completely different. With that said, even if it’s not a requirement to provide these people with workers’ comp, it’s crucial to understand the risk and to take the proper precautions.
When it’s all said and done, issues involving 1099 contractors and claims are usually avoidalbe with clear communication, and accurate record keeping. Additionally, we suggest that you always require any 1099 worker to show proof of their own insurance coverage before starting a job. If you’re ever even a little bit unsure about coverage details, reach out to an insurance professional, like the experts we have at EZ.Insure.
If you’d like to learn more about workers compensation, or other essential business coverages, EZ.Insure is the place for you. Our simple platform lays out all the best local insurance options, making it EZ to choose the best coverage. Our blog also has a plethora of informational articles aimed at helping business owners and individuals stay protected. To learn more, just enter your ZIP code at the top of the page, or call us at 888-694-0047.
Employee fatigue has become a major worry for both workers and employers in today’s fast-paced and demanding work environments. Employee hours are increasing longer as our economy demands more and more from its workers. This frequently implies that employees can work much beyond the regular work week, putting them at risk of tiredness and fatigue. It is true that when we are weary, we are more prone to mishaps. We are less aware of our surroundings and cannot respond as swiftly to avoid injury. They can also have a significant impact on a company’s financial health.
Worker Fatigue
Fatigue is more than just feeling tired. Fatigue is a state of exhaustion that has persisted for an extended amount of time. It can have a significant impact on many aspects of an employee’s life. People are not designed to work for hours on end with no breaks. Our bodies require at least 7 hours of rest and recharge per day. Here are some examples of fatigue symptoms:
When employees are tired, their reaction time can slow down a lot. This could be dangerous or even deadly at some jobs.
Making decisions slowly or not at all. When employees are too tired to remember what to do, they often make bad choices. This effect on tired workers is very important because in some places of work, a bad choice can put a lot of people in danger.
Lack of attention span. It is harder for employees to focus on certain jobs when they are tired. If they can’t think straight, they might forget to do their work, which could lead to a dangerous situation.
Dozing off at work due to lack of sleep or rest.
When employees are tired, they might have any of these symptoms: aches and pains in their muscles, a change in their appetite, gastrointestinal issues, sleepiness, anxiety, headaches, or emotional distress.
Imagine that you have to do the same job every day, week after week, with nearly no breaks. Over time, this can and will lead to accidents. When our brains are tired, we have a higher tendency to mess up when we’re figuring things out. For businesses in fields where measures are important, this could be a major problem. Being tired, we might not pay as much attention to our surroundings. If you work with tools or operate heavy machinery, this is especially dangerous.
Impact Of Fatigued Employees
The costs associated with overworked employees go beyond the immediate issue of decreased production; they permeate many other parts of business operations, which has an effect on the bottom line. Employers have a responsibility to acknowledge the significance of treating fatigue in the workplace, putting into action initiatives that encourage employee well-being, and ultimately cultivating a work environment that is both healthier and more productive. Employers have the ability to lessen the financial burden of weariness and contribute to the long-term success of their businesses if they make investments in the health and satisfaction of their workforce.
Decreased Productivity
One of the most direct consequences of employee fatigue is a decline in productivity. Over-tired workers are likely to experience reduced focus, slower reaction times, and impaired decision-making abilities. This drop in productivity can lead to lower output, increased errors, and a general decline in the quality of work, all of which contribute to financial losses for employers.
Fatigue often leads to increased absenteeism as employees may find it challenging to meet their work commitments. Regular absences can disrupt workflow, result in missed deadlines, and require additional resources to cover the workload gaps. This not only affects immediate productivity, but can also result in additional costs associated with temporary staffing or overtime payments to cover absent employees.
Higher Accident Rates
Fatigue is a known contributor to workplace accidents. Over-tired workers are more prone to making mistakes, and their diminished alertness increases the risk of injuries and accidents. Workplace incidents not only incur direct costs such as medical expenses and potential legal liabilities, but can also lead to increased insurance premiums for employers.
Increased Healthcare Costs
Fatigue is associated with various health issues, both physical and mental. Over time, exhausted employees may experience a decline in overall health, leading to increased healthcare utilization and associated costs for employers. This includes expenses related to medical treatments, doctor visits, and potential long-term disability claims.
Employee Turnover
A workforce experiencing chronic fatigue is more likely to suffer from burnout and dissatisfaction. This dissatisfaction can contribute to higher employee turnover rates as workers seek environments that prioritize their well-being. The costs associated with recruiting, training, and onboarding new employees can be substantial for employers.
Lower Innovation and Creativity
Fatigue not only affects routine tasks, but also hampers creativity and innovation. Over-tired employees may struggle to think critically, solve problems, or contribute fresh ideas. This can hinder a company’s ability to adapt to changing market dynamics and innovate, potentially resulting in missed opportunities and revenue growth.
How You Can Prevent Employee Fatigue
It can be dangerous for employees to work when they are tired. According to research, being tired is just as bad for the brain as driving while drunk. Memory, balance, focus, decision-making, and movement skills are all affected by fatigue in workers. It also leads to about 13% of accidents and injuries at work every year. It’s true that you can’t suddenly make sure your employees get enough rest to do their job safely and well, but these tips can help companies make jobs safer by keeping workers from getting too tired at work.
Educate Your Employees
In some of the most significant incidents that have ever occurred in the workplace, fatigue has been identified as a contributing cause. It is important to provide training to all employees, particularly supervisors, in order to identify signs of exhaustion in workers. When employees are aware of the indicators, they are able to take greater precautions to ensure that they get sufficient sleep at night. For those in charge, bringing it to the attention of workers and encouraging them to take breaks is helpful.
Think About How You Schedule Shifts
Employees who work shifts that are late at night or overnight are more prone to experience high levels of fatigue. When scheduling staff, try to avoid arranging them for shifts that are irregular or rotating. Additionally, fatigue tends to develop tremendously during a shift that lasts for twelve hours. Employees should be given at least a 24-hour rest in between 12-hour shifts, and overtime should be prohibited for those working those schedules.
Enforce Breaks
In order for workers to recover from repetitive tasks, it is the responsibility of employers to guarantee that they receive their permitted breaks. It is possible to restore essential functions to the brain and boost focus with as little as fifteen minutes of break time.
Avoid Extended Shifts When Possible
According to the recommendations of the Occupational Safety and Health Administration (OSHA), companies should make every effort to prevent their employees from working more than forty hours per week or working odd shifts whenever it is feasible to do so. Some examples of uncommon shifts include working two shifts in the same day, such as working four hours in the morning and then returning for a three-hour shift in the evening. Another example is working two shifts in a single day. It may also involve shifts that are not consistent with one another, such as working an evening shift, then a morning shift, and then continuing on to work overnight shifts. Please do not hesitate to get in touch with OSHA directly if you consider your schedules could potentially compromise your safety in accordance with this recommendation.
Paid Sick Leave
If you’re a business owner, paid sick leave might seem like an extra cost to think about, but new paid sick leave isn’t just a perk for workers. It’s also good for business. Employees who can take paid sick leave are less likely to miss work, which is good for business. Being sick at work makes you much less effective, and there’s a chance that you could spread the infection to other people. Putting your whole staff at risk to meet business goals is a very unprofessional thing to do. It can also cost a lot more in the long run than just giving employees a few sick days a year.
One thing we can say for sure is that using employee scheduling tools to track and manage your staff is a must if you want to make your business run more smoothly. Without a doubt, it can be very helpful for people who have problems with their workers being too busy or people who don’t want it to happen in the first place.
Finding Business Insurance With EZ
We are able to assist you in obtaining commercial insurance to safeguard your company as well as group health insurance for your employees. To ensure that you are able to get the most suitable insurance coverage for your company and its employees, our representatives collaborate with the most reputable insurance providers around the country. In fact, we are able to save you hundreds of dollars annually. We do this by working with your budget to locate the most suitable coverage for you or your family. If you have any inquiries, please do not hesitate to contact us at the following numbers: 877-670-3531 for assistance with group health insurance, and (855) 694-0047 for assistance with commercial insurance. You can also simply enter your zip code into the bar below for free instant quotes.