Small and large businesses alike all must follow certain federal regulations regarding employment and labor law. But states’ laws on Worker’s Comp Insurance can vary.
Usually, workers’ compensation laws will effectively make the employer immune from any liability (such as for negligence) above the amount provided by the workers’ compensation insurance. But worker’s compensation insurance is mandated by some states and not required by others, depending on factors such as the size of the business, and the laws surrounding worker’s comp can vary from state to state. For example, covered employers in Pennsylvania are immune in all circumstances (nevertheless, other responsible parties like manufacturers, subcontractors, etc. can still be liable). But in New Jersey, if an employee can prove that the employer intentionally or recklessly caused the harm, the employer can be held liable for amounts surpassing the amount provided by the workers’ compensation statutory framework.
Here in California as well as many other states, all employers are required to carry Worker’s Comp Insurance by law (even if they have only one employee). Failing to have workers’ compensation coverage is a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year, or both. Additionally, the state issues penalties of up to $100,000 against illegally uninsured employers.
Not in California? Find a comparison of all the states that require worker’s comp insurance here: http://www.nfib.com/article/workers-compensation-laws-state-by-state-comparison-57181/ Be sure you know of your current state law, and have resources available for quick access. If you’re still unsure about how workers comp affects your business, find your state official here to answer your questions: http://www.dol.gov/owcp/dfec/regs/compliance/wc.htm.
After all, you never expect the unexpected, and when it comes to taking proper care of your employees, it’s better to be safe than sorry, an make sure you’re in compliance with your state regulations. If you are unsure about the insurance you need, contact your broker to determine what is required to keep you in compliance and protected.