The day a small business hires its first employee can feel like the first day it really comes into its own as a company. That’s exciting, but it’s also means taking on big responsibilities. Employees can make a business grow and thrive, but employers have significant legal obligations toward the people they hire. In many states, one of those obligations is to carry worker’s compensation insurance. The purpose of worker’s compensation is to pay the medical bills, rehabilitation costs, and lost wages for employees who are injured while performing work-related duties.
Most states (but not all of them) require a business to carry worker’s compensation insurance, but even if it’s not legally mandated, it’s a good idea. You don’t want your business to be on the hook for the huge bills a serious medical situation can incur. It’s also very important to be fully aware of just what worker’s compensation covers, what it doesn’t, and how it works. When you’re ready to start looking at resumes and making hiring decisions, it’s time to get up to speed on worker’s compensation and understand both your employees’ rights and your own. Here are a few things you might not have known about worker’s comp that you’ll want to keep in mind as your business moves forward and expands.
- Think You’re Too Small To Need Worker’s Comp? Better Check!
Laws can vary depending on the state you’re located in and the type of business you’re operating, but in many cases even a single employee is sufficient for the legal requirement for you to carry worker’s compensation insurance to kick in. Before you say “you’re hired!” to your inaugural employee, make sure you haven’t forgotten to make sure your worker’s comp requirements are met,
- You Can Still Get Sued
Even if you have worker’s compensation insurance, an employee can still sue you for an injury received on the job. Cashing in on a worker’s comp claim means they forfeit the right to sue, but worker’s comp doesn’t provide compensatory damages for pain and suffering and future lost earning potential. If an employee is injured at work due to negligence on the part of their employer, the employer’s landlord, or the manufacturer of products or equipment they were working with, it might make better financial sense for them to forgo worker’s comp and file a personal injury lawsuit. The best way to prevent this from happening is to be vigilant about maintaining good safety training and operational standards and doing everything you can to make sure your employees are working in the safest environment you can provide. Which leads us to…
- Better Workplace Safety Means Lower Costs
Of course, you want to take good care of your employees, but it’s worth remembering that a safer workplace and fewer claims means lower worker’s compensation insurance premiums. If you want to save money on your insurance rates, do everything you can to prevent workplace accidents from occurring in the first place!
- Fraudsters Probably Aren’t Out To Get You
It can be tempting to think that an employee with a seemingly minor injury is just looking for an easy payday when they’re filing a worker’s compensation claim, but studies and investigations have shown that actual fraud is pretty uncommon, possibly as low as 1-2% of claims. That’s not nothing, but remember, worker’s comp only pays for medical and rehabilitative costs and a percentage of lost wages. Most people who file claims aren’t looking for a get rich quick scheme, they’re just looking to cover their bills and get back to work.
- Worker’s Comp Covers More Than You Might Think
Worker’s compensation cases don’t have to start at the actual job site. An employee injured on the road while driving for work related purposes, or while participating at an offsite company event, can file legitimate claims. It doesn’t matter if they’re at fault for their own injury, either—if it happened in the course of performing their job duties, that’s a worker’s comp claim. And don’t think that making all of your employees fill out 1099 forms means they won’t be considered employees for legal purposes if something happens! There are criteria that have to be met to properly classify a worker as an independent contractor, so don’t go that route thinking it’s an easy way to avoid the responsibility of providing worker’s compensation insurance.
Carrying and paying for insurance isn’t one of the parts of being a business owner you dream about, but it’s an important element to keeping your employees secure, protected, and safe. When you’re fortunate enough to have a business that grows to the point where you need to hire employees, remember to get worker’s compensation set up so workplace accidents don’t derail your operations.