workers comp business man in a suit deciding who pays for workers comp
workers comp business man in a suit deciding who pays for workers comp

clock February 6, 2020

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Who Pays for Workers Compensation? Everything Employers Need to Know

Injuries at work are down more than 40% since 1970. But, accidents still occur every day in workplaces around the country. Regardless of your industry, creating a safe environment for your team is important. And, you also have to provide workers compensation if your employees get injuries on the job.

There are many myths and misconceptions surrounding workers compensation. Although it’s required by law, it varies according to your State. So, who pays for workers compensation? The truth is, many business owners don’t know. For this reason, it’s important to understand these claims and how employees receive payment for their injuries.

In this article, we’ll define workers compensation. We’ll also discuss who pays for this benefit and the coverage options they have available.

What is Workers Compensation?

Workers compensation is a legal requirement for all companies in the US. In this structure, employees receive compensation if they suffer an injury on the job. This includes coverage for lost wages as well as medical expenses due to the injury. Employees can also claim disability payments and other request payment for any other cost related to the injury.

Although it’s a requirement in most states, all of them have their own worker’s compensation laws. These may have slight differences. But, the main goal for these laws is to reduce legal disputes in these cases. To ensure this, you have to understand a few points about workers comp.

It’s Required for All Employers

Keep in mind that almost all States have workers compensation laws. What’s more, these may be applicable to all of your employees.

Depending on where you are, this also applies to part-time workers and contractors that work on-site. Your location will also tell you the types of injuries that qualify, proof requirements, and the statute of limitations. That said, many states also offer protection in case the employee is under the influence of drugs and alcohol.

Covers Accidents and Long-Term Conditions

In simple terms, worker’s compensation provides a replacement for your employees’ wages when get hurt. One of the biggest misconceptions of this law is that it only covers accidents.

On the contrary, it also includes conditions that may be due to workplace conditions. And, if an injury has long-lasting repercussions, it also provides long-term coverage as well. For instance, your employees may suffer repeat injuries. These may cause chronic pain and require long-term care, so the compensation would cover those costs too.

There are Some Exceptions!

There are many different types of accidents that occur in the workplace. Workers compensation covers a wide list of these. But, there are some that are not within its scope. This will depend heavily on your State and industry.

In some places, self-inflicted injuries, violating company policy, and similar cases don’t qualify for compensation. Keep in mind that there are some gray areas, so it’s always best to have a legal advisor on call.

Employees Have the Right to Claim Workers Compensation

It’s important to understand that workers have the right to claim compensation. This means that employers should not discriminate or mistreat employees who file a claim. In other words, you can’t fire, suspend, or retaliate against team members that exercise this right. Instead of this, supporting your employees will help create a culture of trust and transparency.

The Costs May Vary

Workers compensation usually comes in the form of an insurance policy. Depending on the structure and provider you choose, these policies may vary in cost and coverage. Make sure you weigh all your options. Some workers compensation providers are more suitable for small businesses. Other specialize in bigger companies with larger workforces.

Who Pays for Workers Compensation?

There are many different business structures you can opt for. But, you always need to ensure your workers receive payment for injuries on the job. From self-employed workers to limited liability companies, all of these need to abide by workers compensation laws.

In most states, employers need to pay for workers compensation insurance. The insurance itself may come from a number of different providers. That said, employers should ensure workers will receive adequate compensation for any injuries on the job.

Employers can choose to get insurance from State-run providers and private companies. In the right circumstances, businesses may also choose to self-insure their employees as well.

State-Run Insurers

Some states have their own worker’s compensation program. These work essentially like a policy purchased from a private company. But, it’s usually handled by one of the State’s departments.

In this structure, employers pay premiums to the State Department. When employees file a claim, they receive payments from the organization in charge. This can be the commerce, labor, industrial relations, or another department that’s part of the State.

Employers that choose State insurers don’t usually have many employees or workplace accidents. If your company operates in a high-risk industry, then you may want to consider providers that specialize in these fields.

Private Companies

The vast majority of states allow employers to purchase workers comp insurance from private providers. These cater to companies of all sizes that operate in a variety of industries. That said, remember that not all states allow you to get private workers compensation insurance. Always make sure you check your local laws to ensure you’re allowed to opt for this.

Self-Insured Businesses

Some companies are large enough to self-insure their employees. In other words, they can guarantee they have enough assets to cover any potential injuries. These companies have to prove they have enough capital to back up this claim. And, in many cases, they hire private firms to manage their compensation program.

Learn More About Workers Compensation Laws Today!

Workers compensation is one of the laws that all businesses need to pay attention to. The tips above should help you understand how this process works. And, you should also be clear on who pays for workers compensation.

Looking for the best private workers compensation insurance provider? Get in touch and our team will be glad to help.

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