Dealing with a work injury can be overwhelming and intimidating, both for small business owners and their employees. From not knowing the right steps to take to wondering if your business may be at risk because of an on-the-job accident, the process can be full of uncertainty. On top of everything else, small business owners have to discern fact from fiction as they research workers’ compensation.
To make things a bit easier, we’re laying out eight common workers’ compensation misconceptions (and the facts) that small business owners should be aware of.
Right off the bat, most states do require workers’ comp insurance for any business with one or more employees. However, a couple of states don’t require it and many states have exceptions for businesses with just a few employees or certain types of employees.
Regardless of whether it’s required by law, providing workers’ comp insurance coverage to your employees is still the responsible thing to do. Without workers’ compensation insurance, small business owners can be stuck paying for medical bills and legal expenses associated with employee injuries and accidents out of pocket.
Employees can become injured in any number of ways. Hazards like operating heavy machinery or working on a manufacturing line are only a couple of ways accidents happen. The truth is, employees can get injured at work in seemingly simple ways like slipping and falling or developing chronic conditions like repetitive motion injuries over time from seemingly low-risk jobs.
Just because your employees are put in relatively low-risk situations doesn’t mean there isn’t a chance they could still be injured on the job. The best way to protect yourself and your business from the financial impacts of an employee injury is with workers’ compensation insurance.
This myth is rooted in truth, but it’s a little more complicated than many small business owners think. While you don’t need to provide workers’ compensation when you hire a contractor or subcontractor, you should still make sure that they carry their own workers’ compensation insurance before signing a contract.
Making proof of insurance part of the requirement for contracting is a smart practice because if a contractor is injured on the job and isn’t insured, you could be held responsible for their injury. To avoid financial risk and potential legal liability, it’s a best practice to always require subcontractors to show you proof of insurance before working together.
Plenty of small business owners with less than a handful of employees (fewer than the legal threshold for required workers’ comp in many states) fall into this same mindset. But with the option for affordable workers’ compensation insurance coverage, do you really want to risk it?
The average workers’ compensation claim pays about $41,000, which is a substantial amount of money for most small business owners. It might only take one on-the-job accident to wipe out a small business’s liquidity. In the long run, small business owners are much better off paying the premiums for a workers’ compensation policy than paying out of pocket for employee injuries.
Another common misconception business owners have is that they only need to provide workers’ compensation for their full-time employees. The truth is, whether part-time or full-time, employees can still be injured on the job and therefore need to be covered. The only thing that may change based on employment status is the amount of premium you pay. Since workers’ comp insurance premiums are based on payroll, covering part-time employees can be less expensive than covering full-time employees.
It makes sense that many business owners think they don’t need to worry about providing workers’ compensation for their employees who work remotely. However, employers are responsible for providing a safe work environment for all employees which means providing workers’ compensation to employees working from home, as well as those who work on-site.
Your cost may not be any different, but it’s important to mention any remote employees and their work locations when obtaining your workers’ comp insurance policy.
Plenty of small business owners employ family members to help with things like bookkeeping and administrative tasks. Maybe your family members are even executives who help run the business. Either way, it’s important that business owners who employ family members remember that even though they’re family, they’re also employees.
Some states have exceptions to their workers’ comp laws if you only employ a few people and they’re all related, but as we saw with myth number one, the lack of a legal requirement isn’t a good reason not to carry workers’ comp insurance.
It’s important to understand that workers’ compensation insurance seeks to protect both parties in the event of an on-the-job accident. The benefit for employees is having their medical bills and other costs paid for without an out-of-pocket burden. For employers, the benefit is not having to pay large bills out-of-pocket and the benefit of being legally not at fault for a compensable injury, illness, or accident.
Workers’ comp insurance is designed for those worst-case scenarios, and you should never be afraid of filing a claim. In fact, discouraging an employee from reporting an accident or filing a claim (or retaliating against an employee who does) is illegal in most states.
The bottom line is that no matter how safe you try to keep your business and your employees, accidents happen. The most important thing is that you have the right workers’ compensation insurance in place, so you aren’t left paying expensive medical bills out of pocket and accepting legal liability for a workplace accident. If you need help finding the best workers’ compensation insurance for your small business, you can get a quote online from Pie in minutes. Or, speak with a licensed agent who works with Pie Insurance.