For a number of employers’, workers’ compensation insurance is like a journey into the unknown. What is it? Why do I need it? How does it protect me and my employees? Well, we’re here to tell you.
Let’s start with what it is. Workers compensation is a form of insurance that covers the medical and rehabilitation costs of your employees if they’re hurt on the job. usually, having insurance that covers these costs means employees give up their right to sue your business for negligence. In turn, they get peace of mind knowing they can recover for work-related injuries without the complexity of a lawsuit.
Right about now you might be saying that this is great, but why does my small business need it? Your small business should have workers’ compensation insurance because nearly every state requires it. Even if your state doesn’t make it mandatory, your customers might not do business with you unless you carry it. State-levied penalties for not having workers’ compensation can be overwhelming for any business.
Workers’ comp requirements vary from state to state, because of this, talking to an attorney, like Zea Proukou who is a worker’s compensation attorney in Rochester, can really help provide clarity of these complicated laws. To give you an idea of these complicated laws, farming employees and self-employed persons are exempt in some states, but not others. Not to mention you have a business to run. Trying to work your way around these complicated laws takes time and money, time you should be spending on growing your business.
So what does all of this cost? Cost is determined by the workers’ compensation board in your state, but most states use a similar formula to calculate rates. To keep it simple, each occupation is assigned a “risk classification” determined by two factors, frequency of injury at work and severity of the injury. Then the classification is assigned a dollar amount based on the risk. For example, clerical workers in New York might have a classification of $1.25, a lower risk. If an office manager makes $600 per week, the workers’ compensation premium for that employee would be $7.50.
While it’s great to have a workers’ comp policy in place, if you don’t educate your employees, you could be running into some massive costs. The best way to reduce injury and illness is to make sure your employees are well informed. Have detailed safety and health education training programs in place. The main goal of these types of programs is to train you and your employees in the recognition, avoidance and prevention of dangerous and unhealthy working conditions. The best programs are those that meet OSHA standards. It’s proven programs that meet OSHA standards have less accidents and more productive employees. This standard gives you guidelines for incident reductions. Poorly planned and executed programs can only lead to more costs and headaches.
These workers compensation laws are difficult to navigate. It is important to not let the complications and unclear presentation of these laws steer you away from having a worker’s comp policy for your small business. Failure to have such a policy opens the door to a number of things, all of which are very expensive for you and the business you helped build. So be sure you protect it.