Small business owners need to plan and strategize, not always to make a profit, but often to make ends meet. This is why a worker injury, accident, or lawsuit could leave many business owners struggling to survive. Whether your employees work in an office or behind a grill, worker injuries and accidents should be taken seriously and prevented when possible to protect your business and your assets. With workers’ compensation laws, many business owners want to know, when do I have to pay?
What is workers’ compensation?
Workers’ compensation law protects both businesses and employees, providing a quick and minimal payout in the event that an employee is injured “in the course of performing work related duties.” In most states, employers are required to pay for workers’ compensation insurance that will kick in anytime your workers suffer an injury. Depending on where you live and how big your business is, you may be exempt if you have fewer than three or four employees or if your company has enough assets, you may be able to self-insure.
Workers’ compensation benefits
So, if your employee falls down the stairs or gets cut with a kitchen knife, they must report the injury and file a claim with their workers’ compensation insurer. Your workers’ compensation insurance carrier will pay medical as well as disability benefits according to a state-determined formula. The main difference between workers’ compensation and other personal injury claims is that benefits are capped at medical costs and lost wages. Workers cannot collect any additional compensation for pain and suffering or other alleged losses related to the accident.
What’s the worst that can happen if I don’t have insurance?
New employers, start-ups, and small companies may be tempted to skirt workers’ compensation law requirements. You may wonder, “What’s the worst that could happen if I don’t carry insurance?” Things can get messy and expensive quickly. Any employer that operates a business without workers’ compensation insurance that complies with state law could face fines, criminal prosecution, as well as civil lawsuits that will go beyond the cost of workers’ compensation insurance.
How much is workers’ compensation going to cost me?
Small business owners are justly concerned about the additional costs associated with workers’ compensation insurance. Depending on your state, the rates will vary, but most states use a similar formula that takes into account your classification risk and the payroll of your employees. Every occupation is given a “risk classification” determined by the frequency of injuries and severity of injuries. Clerical workers will be given a lower risk classification and lower rate than those working in factories or on construction sites. Remember that your premiums can go up or down depending on the safety record of your business and whether you offer health insurance.
Can an employee sue their employer after an injury?
Workers’ compensation programs are intended to minimize lawsuits and costs associated with claims and give employees an immediate remedy in the case of an injury. In most states, workers’ compensation benefits are the exclusive and sole remedy in the event of an accident or injury. There are some instances where an employee can file a personal injury claim against their employer, for example, if that employer doesn’t have proper coverage, if the employer was in violation of OSHA standards or safety regulations, or acted negligently.
Take immediate action to prevent lawsuits and liabilities
The best way to prevent liabilities and lawsuits is to follow state and federal workers’ compensation laws and to take action in the event of an accident or injury. Employers must post a notice of compliance on the job site. They should also make sure that their employee gets immediate medical attention and relief and file a report of the injury that should be sent to your state workers’ compensation board office. This report should also be mailed to your insurance carrier. Employers should always document accidents that result in injuries, especially if the injuries result in loss of work time or require medical treatment.
Lawsuits stemming from injuries
Beyond workers’ compensation a lawsuit could stem from gross employer negligence. If your employee was injured because of your intentional or egregious conduct, the employer may have a successful personal injury claim against you. Violation of OSHA and other industry safety precautions, failure to cure a property defect, or if you knew or should have known of an onsite danger, you could be held personally liable. In these cases, the employee must go beyond proving simple negligence. One of the benefits of workers’ compensation is that it prevents employees from filing a personal injury claim for every work-related injury. This caps benefits but also reduces the time and resources that can go into defending these claims.
Contractor versus employee claims
Employees are covered by workers’ compensation; however, you could still be on the hook if a contractor or freelancer is injured while on the job. These personal injury claims will hinge on proving negligence on the part of the business, such as failure to cure a property defect or follow safety regulations.
Workers’ compensation and car accidents
Are you liable if your employee is involved in a car accident? It depends. If your business involves delivery or the worker is in the course of performing work related duties while in the car, their injuries will likely be covered by workers’ compensation insurance. In general, employees who are commuting to and from work are not covered by workers’ compensation.
Employers have a duty not to retaliate
Can you fire an employee who files a lawsuit or who files a workers’ compensation claim? The answer is unequivocally, “No.” One way to get dragged into another lawsuit is to retaliate, even if you think the employee is making false claims or over exaggerating an injury. Workers’ compensation laws provide remedies to injured employees and protect against discrimination for those who file claims. Employees have the right to bring civil actions against their employer in the event of “retaliatory discharge” or any other discriminatory conduct resulting from their workers’ compensation claim. Retaliatory conduct includes firing, as well as subtler types of discrimination such as lowered salary, demotion, or reduced hours.