One of the most significant requirements for any business is workers’ compensation. The insurance covers illnesses and injuries that workers suffer while at the workplace, or due to the nature of the job they do. In this article, we delve deep into these and more reasons why any business needs workers’ compensation. But before we do that, let’s explain what workers’ compensation is.
What Is Workers’ Compensation
Workers’ compensation, also simply known as “workers comp”, is a program that provides benefits to employees who have been or become ill on the job. Essentially, workers’ comp is a disability insurance program for employees. Workers who become ill or get ill on the job get healthcare benefits or cash benefits – or both.
No matter how careful you are or the amount of protective measures you put, some workplace accidents and injuries are inevitable. It could be an injury from machinery or tools, an occupational illness, or a slip and fall in the office. You need to anticipate these unforeseen events. Now let’s get into the legal reasons why any business needs workers’ compensation.
It’s a Requirement by Law
Worker’s compensation is a government-mandated requirement and every business must comply by the coverage for their employees. Essentially, you have a legal obligation to take care of your workers at the workplace. Whether you’re a computer repairs shop or running a big corporation, you’ll have to take workers’ comp.
Workers’ compensation is handled by individual states in the USA. Texas is the only state that does not make it mandatory for employers to maintain workers’ compensation insurance.
Employer Liability for Injuries and Illnesses
The business or company is liable for any injuries and illnesses that workers suffer at the workplace. This is especially the case in companies or industries where employees are prone to various risks or hazards at the workplace. Car mechanics, for example, may suffer injuries while doing repairs to vehicles. Any business needs worker’s compensation to ensure that when such employees get injured, they don’t have to go into their pockets to pay for the treatment – the company pays for the treatment.
You’d want to take the cover for your employees because it is faster to finance the treatment. Employees get the benefits quickly, allowing them to get the treatment quickly and heal faster. In addition, this minimizes the chances of a disgruntled employee coming back to sue the company.
The insurance takes care of both medical costs and rehabilitation costs. Examples of medical costs include hospital admission costs, cost of hiring an ambulance, cost of medicines, cost of rehabilitation and therapy sessions, checkup or examination costs, and long-term costs of dealing with disability cases. These are expensive costs for a business, assuming many workers get injured. Through premiums paid for the workers’ comp policy, the company can avoid these expensive medical costs.
Workers’ Claims Are Handled by a Third Party
A company may be perceived as biased when handling employee claims because it’s assumed the company will go for a deal that favors the company the most – at the expense of the employee. For example, the company may be accused of not paying enough compensation. This may ultimately lead to lawsuits. Therefore, one of the good reasons why any business needs workers’ compensation is to stay neutral in cases of claims.
Let’s say you run a forklift service business and one of your workers gets injured while operating it. If you do not maintain workers’ comp for the employees, you’ll have to use company resources to pay for the treatment. The company may want to use the least amount of money possible, which may not be enough for the treatment and recovery of the employee.
An insurance company acts as a mediator in such injury and compensation cases, relieving the company of any accusations of bias and possible lawsuits. Through the mediator, both the company and the injured employee walk away satisfied.
Properly Utilize Employees
Workers are protected by law on various grounds. For example, they have a right to sick leave. You cannot force a sick or injured employee to report to duty. Doing so may lead to lawsuits – if the employee can prove they were injured or sick. Forcing injured or sick employees to work puts them at risk of more injuries. Therefore, you need your employees to be fit throughout the year.
Frequent injuries can slow down your business. If you run an auto business, an injury to your best workers means a reduction in production. But if they’re well taken care of by the workers’ comp, the workers will be able to resume work as soon as possible and minimize absenteeism.
Protection From Employee Injury Lawsuits
A sound legal reason why any business needs worker’s compensation is to avoid employee injury lawsuits. As a business owner, you want to avoid workers’ compensation cases, and one of the best ways to do that is by taking workers’ comp. In case an employee still sues the company after compensation, the insurance company will cover it.
Workers can sue a company for negligence or failing to prevent work-related accidents. By taking workers’ comp, you’re relieving yourself and the company of the responsibility of having to deal with these issues and cases. Remember, most workers’ comp insurance will cover these lawsuits as employer’s liability insurance. If an employee files a lawsuit, the insurance company pays for court expenses, attorneys fees, settlements, and judgments.
Taking the insurance policy also protects you from expensive compensation in scenarios where employees contributed to their injuries or illnesses. If you disapprove an employee’s claim as a company, the worker may still sue you. However, the insurance company has legal grounds to disapprove workers’ compensation claims. Some legal grounds include substance abuse, workplace fights, and commuting.
Claims may also be disapproved if the injuries are claimed after layoffs or firing. Ex-employees, or employees who have been fired, are not eligible for workers’ compensation benefits. To enjoy the benefits, one has to be an active employee of the company. This is one of the legal protections and reasons why any business needs workers’ compensation.
A company protects itself from lawsuits because by agreeing to receive workers’ compensation, the employee effectively gives up their right to sue the company.
Compensation for Lost Wages
Employees who miss work and wages due to injuries arising from the workplace are entitled to get compensation for the lost wages. A high-risk industry like directional drilling service puts employees at various types of injuries that can put them out of work for a significant period. Any business needs workers’ compensation to ensure these injured employees are adequately compensated. This is because workers’ compensation policy does not only take care of medical expenses but also compensation for lost wages.
The employee does not get full payment as they would otherwise get when on duty – they receive partial payment. For example, if they have missed work for three months due to injuries, the insurance company will pay them a specific partial payment to compensate for the wages lost in the three months. The company is also relieved of the burden of paying an employee who is not at work for a specific duration.
Protect the Business Reputation
Your business is as good as the reputation it has. It is possible for your business or company to get sued for having a history or reputation of ignoring injured staff or not paying them enough. When you don’t have workers’ compensation coverage, employee injuries may be seen as expenses that inconvenience the operation of the business.
Taking workers’ comp coverage protects your business reputation, especially if the nature of your business is already considered controversial, such as pawn brokers. People will already have expectations that such a business may not compensate their employees incase of illnesses or injuries. Any business needs workers’ compensation to protect itself from such negative perceptions and protect its reputation.
Your business reputation extends the industry and makes it an attractive place to work at. A business in a high-risk industry that takes workers’ compensation gives potential employees a sound reason to be willing to work in the company. A dog boarding business with workers’ comp will find it easy to attract and hire employees compared to a similar business without workers’ insurance.
Few Exceptions
It is difficult to come by any exceptions with regard to workers’ comp. To be on the safe side and minimize the possibility of engaging with workers compensation attorneys, you should maintain workers’ comp for all your workers.
Although some exceptions are there, they vary from state to state. For example, in Florida, businesses with less than four employees are exempted from the workers’ comp mandate. However, if you operate your business in Massachusetts, you’ll be required to take the cover regardless of the number of employees.
Cover Fatal Accidents
Some accidents at the workplace may lead to death. This is a heavy responsibility to the company. The company has to compensate for the death and ensure the surviving family gets appropriate compensation. The company may not be in a position to estimate the right amount for compensation in such cases. One fundamental reason any business needs workers’ compensation is to fairly compensate for such fatal accidents.
Most workers’ compensation insurance plans cover death benefits. The employee’s dependents or surviving family members can use the compensation for funeral and burial costs. Furthermore, the policy can provide financial assistance to the dependants.
One of the best ways to minimize fatal accidents at the workplace is to hire professionals or workers who are well-trained in the use of the specific machines and tools they’ll use at your workplace. The easiest way to find these employees is through industrial staffing agencies. You can find the nearest agencies by searching online. For example, searching for industrial staffing tulsa ok will bring you results of these industrial staffing agencies in Tulsa, Oklahoma.
Death benefits can also cover employees outside the workplace premises. Maybe the employee was delivering the company’s goods to a client, using a company car. Maybe the employee was attending a business conference on behalf of the company. If the employee gets injured or dies outside the workplace premises in such scenarios, they’re entitled to benefits.
Enjoy Tax Credits
One of the legal methods of reducing the amount of tax your business is required to pay is by maintaining workers’ compensation policy. This is because workers’ compensation policy payments are tax deductible. Therefore, one of the reasons why any business needs workers’ compensation is to cut down on the amount of taxes they’re required to pay. Workers compensation is a legitimate business expense you can use to reduce the amount of tax you’re required to pay.
Types of Workers’ Compensation
The type of workers’ comp that should be taken largely depends on the type of business, type of employees, the type of work employees do, and state labor laws. The requirement for a tailored electronic enclosures firm in Texas could be different from those in California. Overall, workers’ compensation can be classified as either coverage A or coverage B.
Coverage A includes all state-mandated benefits for injured or ill employees. These benefits include medical care, salary replacement, rehabilitation, and death benefits. With the exception of Texas, all states in the US have these requirements. However, the benefits vary from state to state. In addition, many states exclude some employees from eligibility. For example, independent contractors are not entitled to workers’ compensation benefits.
Coverage B pays the ill or injured employee benefits that exceed the minimum required by coverage A. In many cases, coverage B is paid after a successful lawsuit brought by an employee for misconduct or negligence by the employer. This is despite the fact that workers waive the right to sue when they accept workers’ compensation. However, some states restore the right of employees to sue their employers in some strictly-defined circumstances.
Getting workers’ compensation coverage is mandatory and essential, even if the employees are your family members. You’ll be protecting your business or company from expensive medical costs arising from workplace illnesses or injuries. You also need to protect your business’ reputation in the industry. This list of reasons why any business needs workers’ compensation should guide you into making good decisions that protect your business from various forms of liabilities.
