Workers’ comp is absolutely vital for employers to understand and be in compliance of. Failing to do so can not only cause immense headaches down the line, but also cost business owners money and valuable time trying to correct any mistakes made. However, many employers unfortunately do not grasp what they need to about workers’ comp in order to avoid these hassles.
To fix that, we are going to answer some questions you may have about workers’ comp, including what it is, who is covered by it, and what it covers.
What is Workers’ Compensation?
Workers’ Compensation Insurance (commonly referred to as workers’ comp or work comp) is a state-mandated program that provides compensation to employees who suffer work-related injury or illness while on the job.
By providing monetary awards to injured employees covered under workers’ compensation, employers can lessen or hopefully eliminate risk of litigation by the injured employee. Specific workers’ comp guidelines vary state-to-state, but there are some general principles that can generally be applied across the board.
Who is Covered by Work Comp?
All W-2 employees should be covered under your workers’ compensation insurance.
This generally does not include unpaid volunteers or independent contractors (1099 employees).
However, employers need to be careful in this regard. Misclassifying an employee as a 1099 independently contracted worker when they do not meet the requirements and should be considered a W-2 employee can land you in seriously hot water.
Additionally, if you hire an independent contractor that does not have their own valid and current insurance, you may be required to cover them under your workers’ compensation insurance policy.
This is why it is vital that you verify that any independent contractors you hire:
- Carry their own insurance.
- Their insurance plan is valid and up to date.
Even if you have employed an independent contractor previously, you should still confirm that you have their most up-to-date insurance information and their coverage remains active. Regardless of the strength of your professional or personal relationship with an independent contractor, you should always make sure to collect a current and valid certificate of insurance when hiring a 1099 employee.
Taking this step will not only make your life easier in the event of a workers’ compensation audit from your insurance carrier since you will already have the paperwork you need on file, but will also protect you from potentially huge fees to retroactively cover contractors under your plan. Worse yet, if it is discovered you employed an uninsured independent contractor, some insurance companies may decide to penalize you through raised premiums or even dropping your coverage completely if they believe the risk in covering you is too great.
There are also state-specific regulations you need to be aware of.
What Does Work Comp Cover?
Workers’ Compensation applies a variety of monetary categories for covered employees who suffer a work-related injury or illness. The injury or illness does not necessarily have to occur while at work to be covered if it is still work-related. For instance, if the injury or illness occurs while doing work-related travel, it still may be covered by workers’ comp.
On the other hand, work-related injuries and illness may not be covered under certain circumstances, such as the employee being intoxicated or if they were somehow in violation of company policy at the time the injury or illness occurred.
Here are some different ways in which a covered employee may be covered by a valid workers’ compensation claim:
Specific medical services covered by workers’ comp differ state-to-state. However, generally services covered include hospital and doctor visit expenses to diagnose and treat the injury or illness, and frequently also include assistive equipment such as wheelchairs.
Workers’ comp will cover medical services for therapeutic and rehabilitative care needed due to the work-related injury or illness. This includes services such as physical therapy necessary not only for recovery from an injury, but also any training required in order to return to work.
Workers’ comp covers workers for income lost while unable to work due to work-related injury or illness. The exact amount of compensation received depends on a few factors, especially:
- Severity of the injury or illness.
- Impact on worker’s ability to perform their job.
- Are they completely unable to work?
- Are they able to perform their job, but for reduced hours?
- Are they unable to perform their job, but able to perform a different job for their employer?
- Amount of time unable to work due to the injury or illness.
- State-specific guidelines that may limit the amount received.
If a work-related injury or illness prevents a worker from being able to return to their previous job, workers’ comp may also cover vocational training and other associated expenses in order for the worker to transition to a new job.
Our Workers’ Comp Services and Philosophy
Here at Employers Resource, we can handle the worker’s comp services you need in order to put your focus back where it belongs—running your business. We have work comp and safety programs that not only provide incredible insurance coverage for you and your employees, but also reduce risk and encourage safety in order to reduce injuries and workers’ comp claims.