Small businesses face a number of challenges in their day-to-day operations, including supply delays, market uncertainty, compliance issues, employee injuries, and cost calculations. Workers’ compensation can be a time-consuming and financially-draining hurdle to clear for small business owners if their employees suffer job-related injuries on-the-clock.
When dealing with a workers’ comp case, a small business owner should abide by and fully understand the intricacies of workers’ compensation. For more information, talk to a reputable workers compensation attorney like Schwartzapfel Lawyers or review the following list of seven things small business owners need to know about workers’ compensation.
1. What is workers’ compensation?
Workers’ compensation is an insurance policy that covers an employee in any and all pertinent medical costs. These policies provide medical benefits and wage replacement, in case of injuries or illnesses contracted in the course of their employment.
Under the terms and conditions of a workers’ compensation policy, a beneficiary understands after receiving compensation, the employee forfeits the right to sue his or her employer for negligence. In turn, the employer agrees to pay the workers’ compensation premiums for as long as the accident-sufferer is still employed by them.
The contribution can be made to the self-insurance of workers’ compensation funds, depending on the specific insurance policy an employee has.
2. Workers’ compensation covers accidents from illness to injury to death
Workers’ compensation is a comprehensive insurance policy that covers everything, including ambulance costs, any recommended therapies, hospital stays, surgical procedures, physical rehabilitation, and rounds of antibiotics, painkillers, etc. The package also covers any wages lost (for days, weeks, or months), when an employee is unable to return to work following an occupational injury.
In the case of fatal injuries, the policy pays death benefits by supporting the family of the deceased and by covering all funeral expenses, cremation services, etc.
3. It is a requirement in all the states except Texas.
In nearly all 50 states in the U.S., except for Texas, there’s some form of workers’ compensation law anchored in already-passed legislation. In matters of the state, the workers’ compensation laws are distinguished from disability insurance or unemployment benefits, as both vary in their eligibility criteria.
While the state of Texas recognizes the need for workers’ compensation, employers are not mandated to have worker’s compensation insurance for their employees. The state, however, warns employers of the risk of personal injury lawsuits, if they don’t take proper precautionary measures.
4. Exact requirements are set by the state
Each state sets its own requirements and qualifications for their workers’ compensation policies that are in line with the specifications of their state legislation. State requirements vary in terms of who can benefit as an employee, included and excluded injuries, types of injuries and illnesses, proof of injury or illness, statutes of limitations, and employer defense points against claims.
Employers defense specifications are available to protect them from instances/accidents where employees suffer from self-inflicted injuries, engage in willful misconduct and get injured in the process, or incur injuries while under the influence of drugs or alcohol.
5. If you’re uninsured, personally paying a claim can be wildly expensive
Workers’ compensation costs are quite substantial, averaging several tens of thousands of dollars per claim. Incurring such costs can be overwhelming, especially for an uninsured small business owner, who then has to pay the claim, personally.
As a business owner, it’s crucial to cushion oneself from such compensation costs by insuring the business. As a means of protection, allocate a budget for the premium contributions towards each individual’s workers’ compensation coverage. It’s important to note that even if you’re insured, you may still face a personal lawsuit.
6. Self-insurance may be an option
For large companies, self-insurance is a viable, cost-saving option. Self-insurance offers a small business more choices (made possible by custom health packages) and allows a company to access and claim data.
Even though most small business source insurance coverage from large companies, self-insurance is slowly gaining popularity among mid-sized and small businesses, due to the recent changes in healthcare regulations and the rising costs. For small businesses, self-insurance is a worthwhile pursuit, as there is potential to avoid compacting costs associated with the Affordable Care Act.
7. OSHA investigations may attract fines and penalties
All workplaces are subject to the standards and regulations set by the Occupational Safety and Health Administration (OSHA) to protect workers from work-related injuries and complications. When a worker is injured or falls ill at work, OSHA may come in to investigate the incidents.
If the agency determines that the employer is at fault, and therefore deemed responsible for said injuries and illnesses, it can lead to devastating fines and penalties and can even cost the business its reputation. These situations can debilitate small businesses that rely on word-of-mouth in their community.
As demonstrated through the above points, workers’ compensation is a necessity for small business owners to help shield them from costs related to claims and potentially-damaging gossip following devastating incidents of injury and illness.
The secret to smoothly running a business is to abide by each state’s provisions and laws surrounding workers’ compensation. If faced with a related lawsuit, it’s advisable to involve the services of workers’-compensation attorneys for a better outcome.