Worker’s Compensation insurance covers an employee in case of injury on the job. With the continued increase in business expenses related to employment, business owners often look for ways to cut costs and often consider skipping having worker’s compensation insurance due to its high cost, especially in fields such as construction, trucking, and other industries with a greater risk of injury.
This is not only unwise, it is illegal in most states. Each state has its own set of requirements which is too difficult to list in this post, however, there are some things that are generally true. Following are some scenarios that could occur for failing to have the proper insurance.
- You Could Be Fined:
Failing to have workers’ compensation coverage is often considered a misdemeanor punishable by either a fine or imprisonment in the county jail. Additionally, if the lack of coverage is discovered after an employee injury, you may be assessed additional penalties for non-compliance. - Stop Order:
If the state labor commissioner determines an employer is operating without workers’ compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained. There may also be a fine per employee on the payroll at the time the stop order. - Civil Action:
If an employee gets hurt or sick because of work and you are not insured, you are responsible for paying all bills related to the injury or illness. If you are illegally uninsured and an employee gets sick or hurt because of work, that employee can file a civil action against you in addition to filing a workers’ compensation claim.
Please note that business owners are usually held personally liable for injuries occurring to employees if uninsured, and the fact that the business is an entity will not prevent them from being required to pay the awarded costs to an employee.
Workers’ compensation insurance coverage can be purchased through an agent or a broker from any of the privately licensed insurers authorized to write policies.
Don’t risk penalties or jail time for not having coverage for your employees in case of an accident. It just isn’t worth it. For more information on the specific requirements in your state, see http://www.nfib.com/article/workers-compensation-laws-state-by-state-comparison-57181/.