Workers’ Comp: What Small Business Owners Should Know

Work-related injuries happen no matter how hard you try to make your workplace safe, and if you’re a small business owner, you probably already know that you have a legal obligation to protect your team members through workers’ compensation. Before we get into your responsibilities as an employer, let’s talk about what workers’ comp entails.

What is workers comp?

Workers compensation, commonly referred to as workers comp, is a system of insurance that reimburses an employer for damages that must be paid to an employee for injury occurring in the course of employment. For example, workers comp will protect the business and the employee if an employee slips and falls in the warehouse. 

No matter who is responsible for the workplace injury, the employee can receive workers’ comp benefits and in return, the business owner will be protected from lawsuits related to the injury. Since workers’ comp is legally required in almost every state, having adequate coverage and following policy requirements helps ensure you won’t have to pay fines or face imprisonment. 

Why should businesses have workers’ comp?

Workers’ comp insurance protects your business and assets, pays for an injured employee’s medical treatment, and replaces a portion of lost wages if a job-related injury causes lost time for work. While most large companies know that they need workers’ comp coverage, many small businesses don’t. The small businesses whose employees primarily work desk jobs may skip coverage assuming that accidents are unlikely, however, doing so could result in legal penalties and fines. It could also mean that an accident or injury at the workplace could drain your budget and involve you in a lawsuit. Carrying workers’ comp insurance protects you, your employees, and your business.

Filing Workers Comp: Small business owner responsibilities 

Below are some guidelines for understanding how to file claims for workers’ comp:

1. If the injury is severe, employers should get immediate emergency medical treatment for the employee. For minor injuries, employers should let the injured employee leave work to get medical attention.
2. Employers should immediately submit an employer’s report of injury form to their workers’ comp insurance carrier.
3. Employers should give an injured employee a workers’ compensation claim form and instructions for filing workers’ comp within 24 hours of the injury.
4. Employers should provide the injured employee with information about their workers’ compensation rights and workers’ comp benefits.
5. Employers should respect all rights of an employee under workers’ comp law.
6. Employers should provide their workers’ compensation insurance carrier and their attorneys with requested follow-up documents, workplace visits, or interviews.
7. Employers should allow the employee to return to work upon recovering.
8. Employers should notify their workers’ compensation board if they suspect an employee has filed a fraudulent workers’ compensation claim. 

Understanding your state’s policies

Keep in mind that workers’ compensation laws vary by state, and not all employers are required to purchase workers’ compensation. Generally, it is an employer’s responsibility to provide coverage depending on the number of employees, type of business, and type of work. Another thing to keep in mind is that certain states may exclude certain types of workers such as domestic employees, farmers, and seasonal workers. You can visit the U.S. Department of Labor’s state workers’ compensation system map to locate your social workers’ compensation agency and learn the workers’ comp laws in your state.

Determining the coverage you need

Many factors impact the coverage your business needs, such as the number of employees you have, the risk exposure, and your business’s history of workplace accidents. For example, a large construction business (considered a high-risk industry) will typically pay higher premiums and need more coverage than businesses where employees work at an office. To determine the right coverage for your business, contact a trusted insurance agent.

Workers’ compensation cost

The cost of workers’ compensation can vary from business to business. There are four major factors that influence premium costs: location, industry, payroll, and claims history. As we mentioned before, workers’ compensation is regulated by U.S. state law, so each state’s system is different. The likelihood of employee injury is also taken into consideration when determining your base rate. You can influence final costs by maintaining a safe workplace, earning credits for a low history of work comp claims, formal safety programs, etc. 

Reporting a claim 

Timing is of the essence when it comes to filing workers’ compensation claims and reports. Once a claim is reported, the process is handled by the insurance company, allowing you to focus on running your business.

What isn’t covered by workers’ comp

Workers’ comp doesn’t cover all lawsuits over employee injuries, it only covers what the state requires them to cover. To protect against lawsuits in these instances, you may need additional coverage such as employer’s liability insurance. 

To find out how best to protect your business in all possible scenarios, consult a Webb Insurance agent so we can provide you with recommendations on how you can avoid the most common workplace injuries and create a safe working environment for you and your employees.