Workers' compensation insurance helps protect employers when employees suffer a work-related injury or illness, facilitating medical attention, wage-replacement, and other benefits while employees recover. Here are answers to some frequently asked questions about workers' compensation.
Q: What is workers’ compensation?
Workers’ compensation insurance provides medical and lost wage benefits to workers who are injured on the job. It generally covers:
- Medical treatment and care
- Lost wages during recovery
- Disability benefits
- Funeral expenses in case of a work-related death
- Legal costs from work-related injury or illness lawsuits
Q: Are employers required to have workers' compensation insurance?
A: Most states require employers to have workers' compensation insurance. Notably, Texas is the only state that doesn't require private employers to carry it, but some states exempt very small employers, or have specific rules regarding coverage.
For example, in some cases, employers have the option of purchasing insurance from a licensed insurance company or through a state insurance fund. In some states, larger employers may also have the option of seeking state approval to self-insure.
Q: If I have workers' compensation insurance, can an employee sue my company for work-related injuries?
A: With limited exceptions, if an employer carries workers' compensation insurance, the employee can only bring a claim for work-related injuries and illnesses through the workers' compensation system. Depending on the state, there may be exceptions, such as when an employer's intentional actions resulted in the injury or illness.
Q: What happens if I don't carry workers' compensation insurance?
A: If your state requires workers' compensation insurance and you don't carry it, you may be subject to significant fines and penalties and may be ordered to stop all work your company is performing. Additionally, if an employee has a work-related injury or illness and you fail to carry workers' compensation insurance, you may be held responsible for all costs related to the injury or illness.
Q: For workers’ compensation purposes, does it matter who is at fault for the injury or illness?
A: Employees are generally entitled to workers’ compensation benefits even if they are responsible for the work-related injury or illness. However, some states have exceptions, such as when a worker is intoxicated by drugs or alcohol when the injury occurred.
Q: What is considered a work-related injury for the purposes of workers' compensation?
A: The definition of covered injuries and illnesses varies by state. Typically, the injury or illness must be a direct result of the employee's job. Check your state law for more information.
Q: What should I do when an employee reports a work-related injury or illness?
A: The workers' compensation process can differ from state to state, but it is ultimately the employer’s responsibility to report a work injury or illness to the insurance carrier and state. Make sure you comply with your carrier’s guidelines and your applicable state regulations for responding and reporting a work-related injury or illness once notified. Generally, you should:
- Ensure that the employee receives proper medical attention. To help contain medical costs, send employees to in-network providers if permitted by state law and your policy.
- Notify your workers' compensation carrier of a potential claim as soon as possible. They will likely ask for your policy number, details of the illness or injury, the employee's personal information, hire date, position, title and wage information.
- Provide a workers' compensation claim form to the employee.
- Complete your state's first report of occupational injury or illness and OSHA Form 301 (if required).
- Send the claim form and the accident report to the claims administrator (and your state workers' compensation board if required).
Q: Are employees who are injured while working remotely (e.g., at home) entitled to workers’ compensation?
A: In general, an employee injury or illness is covered under workers' compensation if it is a direct result of the employee's job, regardless of the location it occurs. As mentioned above, workers' compensation laws vary by state, and employers are encouraged to work with their workers' compensation carriers and legal counsel to assess and address workers' compensation risks among their remote workers.
Q: How is my workers' compensation premium determined?
A: In general, the annual premium is based on factors such as your payroll, industry classification and job classifications, and your company's past history of work-related injuries.
Q: How can I reduce my workers' compensation costs?
A: Here are some tips for helping reduce workers' compensation costs:
- Implement an effective health & safety program. Employers can promote a safe work environment through written safety guidelines, effective training, and the regular evaluation of work practices to identify and eliminate safety hazards.
- Establish injury reporting protocols. Clearly communicate in a written policy that employees must report work-related injuries and illnesses to your company as soon as possible. Many employers also ask employees to report near-misses so that steps can be taken to prevent future injuries from occurring. Train supervisors on how to respond to injury and illness reports.
- Investigate promptly. Conduct a thorough investigation of any incident that results in lost work time or medical treatment as soon as possible. To help uncover the cause of the injury and prevent reoccurrence, have a trained investigator interview the employee(s) involved and any witnesses.
- Maintain regular contact. Maintain regular contact with the injured employee to check in on their progress and return-to-work plans. These conversations can keep both parties updated and demonstrate the company's concern for the injured worker.
- Use effective return-to-work practices. To reduce the number of lost workdays, consider offering modified or light duty as an interim step in the recovery of an injured employee. Require the employee to provide you with a note from their doctor clearly outlining any restrictions or recommendations. Additionally, consult your insurance carrier to determine whether there are any incentives available for workers to participate in rehabilitation and vocational counseling or other programs.
Q: What can I do if I believe a workers' compensation claim is fraudulent?
A: While the vast majority of workers' compensation claims are legitimate, employers should still guard against fraudulent claims. If you are acting in good faith and you suspect a fraudulent claim, consult your insurance carrier or third-party administrator to work with legal counsel to determine next steps.
Conclusion
Workers' compensation laws vary from state to state, so make sure you understand and comply with the rules that apply to your business and employees.
Workplace Safety: Key Responsibilities for Small Businesses
The federal Occupational Safety and Health Act (OSH Act) requires covered employers to maintain a workplace that is free from recognized hazards. The following are several key areas to know, and the employer responsibilities regarding workplace safety.