June 5, 2019
Blog Did you know that over 4 million American workers are injured every year? Of course, workers in industries such as construction and manufacturing are at higher risk of workplace injury. But office workers are not immune. Repetitive motion tasks, lifting, and even slips or falls can also cause injury.
This is why all US businesses are required by law to carry a minimum amount of workers’ compensation insurance. This insurance is there to cover any claims filed by an employee who is injured on the job.
But what are the penalties for not having insurance for workers’ compensation? Let’s take a closer look.
What Am I Required to Purchase?
Before we look at the penalties of not having insurance, let’s review the specifics of what employers are required to carry.
In the state of Florida, any business with four or more employees is required to carry workers compensation insurance. It does not matter whether those employees are part-time or full-time.
Depending on your industry, these rules might be slightly different. If your business is in the construction industry, you will need to purchase insurance even if you have only one full-time employee. Companies in the agricultural industry do not need to purchase insurance unless they have at least six employees.
The rules are also different if you work with independent contractors, rather than having employees. It is your responsibility to make sure your contractors are carrying insurance. If they do not, their injury could become your liability.
Remember that these rules only apply for the state of Florida. if your employees travel across state lines for work, make sure the policy you purchase complies with those states’ rules as well.
How Will the Government Know If I Don’t Purchase Insurance?
It’s one thing to make a law, it’s another thing to enforce it. So, if these are the requirements for carrying workers’ compensation insurance, how does the government ensure businesses are doing so?
Generally, there are two ways that the state would learn of a business’s failure to purchase insurance. The first is through a random inspection, and the second is employee injury.
State investigators regularly conduct investigations of workplaces. They do this in all industries, but particularly in riskier industries such as construction, manufacturing, and medicine.
If your business is inspected and does not have insurance, you could be cited during an inspection. We’ll get into the specifics of what that would entail in the next section.
The second scenario would be having an injured employee sue your business. At this point, the fact that your business did not carry insurance would come out in the litigation. More on that later.
What Happens If I’m Investigated?
If the state learns that your business does not have workers’ compensation insurance during a routine inspection, it will take civil action.
First, the state will issue a stop work order. This prevents the business from continuing operations until the employer complies with the law and pays the issued fine. Typically, the fine for a first offense is equal to double the amount that the employer would have paid in an annual premium.
In addition to being fined for not carrying any insurance, a business can be fined and issued a stop-work order if they carry less insurance than they should. This also applies if the business attempts to conceal information to make it appear that they need less insurance.
For instance, this could include concealing payroll to appear to have fewer employees or understating employee responsibilities to make their job appear less dangerous.
Simply put, any business operating without workers compensation insurance is operating illegally. Doing so can put your business’s future in jeopardy.
What Happens If an Employee Makes a Claim
The penalties are fairly clear if your business is issued a fine for failing to carry workers compensation insurance. But the financial ramifications of being sued when you do not carry insurance can be hard to anticipate.
Typically, an employee who is injured or becomes sick as a result of their job would file a claim with their employer’s insurance. The insurance company would then cover the cost of the illness or injury in accordance with the policy.
If the employer does not have an insurance policy, they may be held responsible for covering all of the employee’s medical bills. Additionally, the employee would have the right to file a civil suit against the employer in the form of a tort action. Once an employee files a tort action, they would be able to recover more than they would have been eligible for in a workers’ compensation claim.
The risks to the employer are also heightened because they have fewer options for contesting their liability for the employee’s injury. The employer cannot claim that the injury was caused by another employee’s negligence or by the assumed risk of accepting employment. The employee is also allowed to sue for noneconomic damages, such as pain and suffering, which they would not be eligible for under workers’ compensation.
The Penalties for Not Having Insurance Aren’t Worth It
Ultimately, the penalties for not having insurance to cover workers’ compensation just aren’t worth it. Not only could your business end up being fined, but you could also be saddled with some large bills if an employee is injured and files suit.
Ready to make sure your business has the coverage it needs? Reach out today to get a free online quote.
