Employers are legally responsible for ensuring their workers have a safe working environment. If a worker suffers an injury or incurs a work-related injury, the employer will have to bear the cost of resulting damages.
In most states, workers’ compensation coverage is mandatory for all employers. Even if you establish a business in a state that doesn't require workers’ compensation coverage for your type of business, the pros outweigh the cons, so it's best to have one.
What is Workers’ Compensation?
Workers’ compensation is a system that offers benefits to injured employees or those who contract an illness at work. Usually, the program compensates workers for medical expenses and lost wages resulting from a workplace-related accident or injury.
In return, the worker loses their right to sue their employer for damages suffered. While some states allow some small businesses to operate without needing to carry workers’ compensation insurance, damages suffered by employees under such circumstances can expose you to lawsuits that could ruin your brand’s reputation and bring your business down.
Filing a Claim Under Workers’ Compensation
The workers’ compensation process is straightforward, or so it should be. It involves the employee reporting the injury to the employer or their representative.
As the employer, you must guide the employee in filing the necessary paperwork. After the employee files the paperwork, you report the accident to the insurer, who then approves or disapproves the claim.
An employee's claim may be denied for several reasons, such as lack of sufficient evidence or providing conflicting information. A workers' compensation lawyer can advise you on what to do if your claim is denied and represent you when filing an appeal.
Workers’ Comp Works on a No-Fault Basis
Workers’ comp insurance works on a no-fault basis. A no-fault basis means that the employee does not need to prove the employer was negligent in their conduct to be eligible for compensation.
The same applies to the employee. They will still be eligible even when they are partly to blame for the accident, except if the accident occurred while they were intoxicated or were engaged in an activity outside their scope of work.
To access compensation under the workers’ compensation program, the employee only has to prove that they suffered an injury or incurred an illness from the workplace while engaged in activity within their scope of work.
You Are Not Entirely Free from Being Sued
While workers’ compensation insurance guarantees some level of immunity from lawsuits resulting from work injuries and illnesses connected to your business, there are situations where your employees could sue you for damages suffered in a work-related injury.
A typical example is if you ask an employee to do a task outside their work scope and skill set, resulting in an accident. Under such circumstances, the employee may sue you for additional damages outside workers’ compensation.
Another situation would be where gross negligence is at play, for example, failure to clear a hazard while knowing it exists, resulting in an accident. Under such circumstances, the employee, through their lawyer, may choose to file a lawsuit to recover extra damages that could include punitive damages.
Workers’ Compensation Claims Lead to Higher Premiums
Workers’ compensation shields you from liability resulting from work-related injuries and illnesses. However, it does not absolve you of the responsibility of providing a safe working environment for your employees.
Insurance premiums increase with every claim to keep employers motivated to ensure their work environments are accident-free.
So, if you have several claims in one year, you can expect to pay higher premiums the following year, and they keep rising until your business can reverse accident trends. On the other hand, an accident-free record will see premiums fall every year.