As a responsible employer, you know how important it is to have workers’ compensation insurance for your employees. Beyond making good business sense and being the right thing to do, it is usually a legal requirement. But what are the workers compensation laws and how do they relate to you? Let's explore.
What Is Workers Comp?
Workers compensation insurance is a type of insurance that provides employees with medical benefits and wage replacement if they are injured or contract an illness on the job. As a small business owner, you would be the one purchasing such a policy to cover your employees. What may surprise you, however, is that self-employed people can also get workers’ comp to cover themselves.
What Is Workers' Compensation Law?
Basically, workers compensation laws, also known as workmans comp laws are the many laws put in place dictating the coverage employers need to provide their employees. They include details on who can make a claim, how they must make that claim, for what, and when.
Why Is There Workers’ Comp Law?
There are two basic reasons that workers compensation insurance laws exist.
- To protect employees – There is an obvious level of protection that workers' comp laws provide. That is, the payments and coverage of medical expenses and salary should a person be injured or get sick as a result of their job. This money can be essential in helping the person recover, and keeping their family afloat in the meantime. More than that, however, workers’ comp laws save claimants time and energy. Instead of suing and enduring a trial, they are more quickly reimbursed by their policy, and don’t risk a court loss in which they may receive nothing.
- To protect employers – Of course, workers comp also protects you, as a business owner. Premiums are a small price to pay when you consider the alternative. If, a worker broke his leg on the job, think of the damages you’d have to pay out of pocket for the ambulance, hospital fees, and rehab, and you already know what we mean. Without insurance, an employee accident could put you out of business.
In addition to covering all sorts of expenses, carrying such insurance also helps you position yourself as a professional in your field. For example, if you’re in the building business, workers compensation for contractors is often a requirement for bidding on contracts. If you don’t have it, your company won’t even be considered for the job.
Is There a Difference Depending on the State?
What is the law for workers compensation depends on where you live. That's because each state has its own laws in terms of workers’ comp, as well as its own state-based system for handling it. As such, you will find different workers’ comp laws in New York, California, Nebraska, Utah, and Tennessee. That is, every state where it's mandatory, which is all of them except for Texas at the moment.
However, although the system is run by the state, and purchasing workers’ comp is mandatory, you have to do so voluntarily. That means you need to proactively go out there and do it.
To complicate things a bit more, there are two types of policies that states cover. Part One is generally compulsory coverage, while Part Two is not.
More than state laws, it’s important to note that workers compensation laws can differ even on the county level. As such, it is always important to do a thorough check in the area in which you are operating.
Also note, there are what are called federal workers compensation laws. These, however, don’t mean the feds are involved. Rather they are U.S. Department of Labor laws that deal with how federal workers are covered and reimbursed.
Who Can Make a Claim and When?
When it comes to workers compensation laws, there are a few obvious initial requirements to make a workers’ comp claim. The first, of course, is that the claimant is a worker. Second is that their employer has workers’ comp coverage. In addition, there are time restraints in terms of making a claim. So the claim must be made according to the state’s deadline for reporting.
The other big factor is the reason for making a claim. Just because a worker is sick or injured doesn’t automatically make them eligible. Rather, their sickness or injury must be work-related. That is, caused as a direct result from the work that they do.
What Would Be Considered a Valid Claim?
There are many examples of on-the-job illnesses or injuries that would make for a valid workers’ comp claim. The main factor in determining eligibility is direct cause from one’s work or work place. This can be breaking one’s arm falling from a ladder, getting sick from chemicals being used, hearing loss from a loud work environment, carpal tunnel syndrome from repetitive motion, and sometimes even stress from resulting injuries. The list is long and quite inclusive. Mostly it depends on providing proof as to how and when the illness or injury occurred.
As for the types of claims that can be made, they include medical expenses, loss of income, retraining, permanent injury, and survivor benefits.
When and How to Dispute a Workers Compensation Claim
There are a number of reasons why a workers’ comp claim may not be accepted. For example, if the injured or ill party was doing something in violation of your policy. This is particularly relevant in more dangerous lines of work in which the activities that are and aren’t covered by your policy are explicitly detailed.
If your worker was drunk or under the influence of drugs, you could also dispute their claim. And, needless to say, if the injury or illness wasn’t related to work, then again, that wouldn’t be a legitimate workers’ comp claim.
When you’re the boss, you know that business insurance is vital to your long-term success. While workers compensation laws ensure you purchase such a policy, your needs don't end there. You may likely benefit from general liability insurance, professional liability insurance, and commercial auto insurance as well.
Ultimately, take a look around and do inventory, assessing your business risks and needs. Then purchase the right insurance policies to cover them. This will help protect you, your employees, and your business growth.