Workers’ compensation boasts a long and complex history. The idea of paying a worker for injuries sustained on the job goes back to the Ancient Sumerians over 4,000 years ago.
However, things took a few steps back after the Middle Ages set in. Workers often lived in nobles’ estates, and the noble was expected to care for them. Many didn’t bother.
The modern system of workers’ compensation can be traced back to Otto von Bismarck of Prussia. Bismarck was a conservative, but to satisfy liberals, he created a government compensation program for injured and disabled workers.
Modern law states that it’s the employer’s responsibility to pay injured workers, and most companies buy insurance to help. However, workers comp insurance changes as the company grows. We’ll examine that in more detail in this article.
What Is and Isn’t Covered
When talking about workers’ compensation, it’s essential to clarify what it covers. Workers’ compensation covers injuries or illnesses sustained during and as a direct result of work.
For instance, if you work a double shift and get into a car accident because you fell asleep on the ride home, workers’ comp is not going to cover any of your injuries.
Work may have been responsible for your tired state, but it wasn’t responsible for the accident. It didn’t happen at work, and it was technically self-inflicted. You were the one driving during the accident, and nobody forced you to drive home.
Self-inflicted injuries are another matter that isn’t covered by workers’ compensation. If your job isn’t somehow directly at fault for your injury, you don’t qualify for workers’ comp.
You also may not qualify for compensation if you were injured because you broke a rule. Things get a bit complicated here. If the rule wasn’t well-enforced or another realistic reason an employee may not have known about the rule they broke, their claim might be approved.
However, if someone knowingly broke a rule that they were expected to follow, they can be denied benefits.
The Case for the Self-Employed
Workers comp insurance changes based on the size of the company, with larger businesses typically being more expensive to insure. The size of the company is determined largely by the number of employees.
At the lowest rung is the self-employed, who often don’t have workers’ compensation insurance. The main reason for this is that self-employed people often don’t have employees. It would be strange if the person holding the insurance is also the only person capable of drawing it.
People have attempted to get around this. Their solution was to sue themselves for the injuries or damages they caused. Usually, these kinds of cases are thrown out for obvious reasons.
Large Companies vs Small Companies
The required workers’ compensation premiums differ by state as well as the number of workers. Some states don’t require employers to have workers’ compensation insurance until they have 5 or more employees.
The reason higher premiums are paid for more employees has to do with how premiums are calculated. The premium rate goes up for every time payroll exceeds a certain amount. More employees mean more money on the payroll, which means a higher premium.
Type of Work
Insurance premiums also differ based on the type of work your company does. This has to do with how dangerous the job is. In jobs where workers are exposed to dangerous materials or conditions, they are more likely to be severely injured.
The most dangerous jobs, according to this standard, are construction and landscaping. Meanwhile, the least risky jobs include accounting and working in IT. However, even these can cause repetitive strain injuries.
Repetitive strain injuries can describe many different afflictions, including Carpal Tunnel Syndrome. The good news is that repetitive strain injuries are covered by workers’ comp insurance.
State laws are going to affect workers’ compensation claims in a few different ways. For instance, every state has its own set of standards regarding workers’ compensation. While the framework is mostly the same, there are always little details that are different.
In most states, there are penalties for not having workers’ comp insurance. Texas is the exception. It’s the only state where employers aren’t legally required to have workers’ comp insurance.
On the other end of the spectrum is California, where failing to have insurance can cost you $100,000. Other states also have high costs for breaking this law. Instead of charging a lump sum, they make the employer pay smaller fees for every few days without insurance.
Certain states, such as North Dakota, require employers to purchase workers’ comp insurance from the state.
Workers’ compensation is dependent on state minimum wage laws. This ties into the number of workers a business has. Since premiums are determined based on payroll, a higher minimum wage will result in a higher premium.
How Workers Comp Insurance Changes and Why
Workers’ comp insurance changes depending on each company’s situation. We’ve addressed a few factors that will likely affect insurance premiums in this article, but these are only a few factors.
You might want to do more research and find out what the others are, and for entertainment. The stories that come out of law and insurance can be very entertaining.
For more information on various aspects of workers’ compensation, check out our website.
You may be concerned about how the current COVID 19 pandemic is affecting workers’ compensation. We can help