WORKERS COMPENSATION
INSURE THE SAFTEY OF ALL YOUR EMPLOYEES WITH OUR RELIABLE WORKERS COMPENSATION
WHAT IS WORKERS COMPENSATION
WHAT IS WORKERS COMPENSATION
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of their employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the negligence.
No matter how small a site or project, there are potential risks construction employees face on the job. These team members are at higher risk of injury than workers in other industries and could be harmed while carrying out tasks during a normal workday, such as:
Falls, slips, and trips — The greatest risk for construction workers is falling or slipping from ladders, roofs, and scaffolding which can result in injury or even death.
Transportation injuries — The second most common cause of construction injuries are transportation related. Construction workers are at risk of being hit by vehicles in work zones or on roadways.
Other injuries — Construction workers are at risk for contact injuries from power equipment, collapsing structures, or falling objects. They also may be exposed to harmful environments, substances, fires, or explosions.
WHY YOUR BUSINESS NEEDS WORKERS COMPENSATION INSURANCE
State laws require most employers to carry Workers' Comp Insurance in case employees are hurt on the job.
When purchasing workers' compensation insurance, an employer is buying the following protections:
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Medical services needed to treat the workplace related injury or illness
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Temporary disability payments to the employee to help replace lost wages
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Permanent disability payments to the employee to compensate for permanent effects of the injury
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A death benefit for the employee's survivors in the event of a fatal injury
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Legal representation for the employer by the insurance carrier
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Protection for the employer against most lawsuits for on-the-job injuries/illnesses
Whether your business is large or small, or if you have employees, it is in the company’s best interest to get workers compensation insurance. Depending on your industry, it’s possible that some independent contractors that your company hires are deemed as employees. If you hire independent contractors and pay them by the hour, it is possible that the state could view them as an employee rather than a contractor.
WHAT DOES WORKERS COMPENSATION INSURANCE COVER
MEDICAL COVERAGE
A business should take every practical measure to prevent worksite injuries and illnesses, but sometimes accidents happen anyway. When an employee is injured and needs medical attention, the employer can be (and usually is) responsible for covering the cost. Your policy can pay for those emergency room visits, ambulance rides, and other medical bills.
LOST WAGES
When you purchase a Workers Compensation Policy, you will have the option of covering a percentage of your employees’ wages when he/she is not able to work. On top of the inconvenience of losing an employee it may cost your business money to complete a job shorthanded or to search for a replacement. In the construction industry, time is money.
LONG TERM CARE
Unfortunately, some workplace accidents may leave an employee incapacitated for an extended amount of time. These situations are bad all around but with the proper workers compensation coverage, both parties can rest assured the financial burden of the accident will be taken care of. This is very important when dealing with work on a construction site.
LEGAL FEES
Accidents may happen at any moment and can also take place in the workplace. Sometimes your own employees can believe you or the company itself is at fault and want to take legal actions. With the proper plan, all of your legal expenses will be covered by your insurance if you are sued by your own employee.
DO I REALLY NEED IT?
If you are a sole proprietor, and you do not have any employees or independent contractors performing work that is an integral part of your business, you’ll need to decide whether you want to purchase a policy to cover yourself (and your subs―see below). Typically, if you as a business owner are injured on the job site and cannot work, and you have health insurance, then your health insurance will cover any medical costs. Beware, some health insurance companies will not cover work injuries, so be sure to check with your health insurer. However, you’ll still be responsible for the deductible and you will not be covered for lost wages. For that you’ll need a Disability Insurance policy. There are many flavors of DI―short term, long term, and even Business Overhead Expense (BOE) insurance which can help to cover the costs of your business overhead if you are injured.
If you ever have anyone working for you, even on a temporary basis, workers’ compensation coverage is required for ALL employment, and employers are liable for anyone they hire, including independent contractors and subcontractors if they are deemed employees under state law. If you hire a subcontractor or independent contractor and they cannot supply you with proof of workers’ comp insurance, then you are required to cover them via your policy.
A company that provides workers’ comp coverage to its employees will need to provide the same coverage to anyone that is hired to perform the work of the business. If you hire subcontractors or independent contractors for a job, you need to require that they provide proof of workers’ compensation insurance, otherwise you are legally responsible to provide the coverage and your insurer will charge you for them. If the independent contractors you hire can pass ALL of the State’s tests of not being employees, then you are not responsible for providing workers’ compensation for them.
GETTING CERTIFICATES OF INSURANCE FROM YOUR SUBS
The first step is making sure any sub who will be issued a 1099 at the end of the year has provided you with a Certificate of Insurance. But you can’t just file it away- you need to look at it! Make sure the certificates show workers’ compensation coverage is being provided. You'd be surprised how many small contractors have general liability coverage but no workers’ compensation coverage. Also check the dates―certificates of insurance must cover the period when the subcontractor worked for you, and should be updated annually for people you work with on an ongoing basis. We suggested collecting this paperwork prior to hiring the sub to do the work. If you have a subcontractor agreement, make sure that carrying liability insurance and workers’ comp is a condition to the agreement. If you don’t get certificates of insurance, you will be charged for subcontractors by your insurer as if they were your employees both for liability and workers’ compensation coverages.
HOW CAN I MINIMIZE THE COST OF WORKERS' COMP INSURANCE?
The #1 factor in determining your workers’ comp rates is how your employees are classified. Different types of work have different levels of risk. For example, an office manager or clerical position might cost around $0.40 per hundred dollars of payroll. But on the higher end, a high-risk category like roofing or ironwork could carry a rate of around $25.00 per hundred dollars of payroll. For general contractors it may be useful to distinguish between carpentry and millwork as these categories carry different rates.
Make sure you have set up your payroll reports so that you can break out hours and dollars paid by classification code. If you use QuickBooks, you can set this up under Payroll Items. If the payroll records do not document the hours spent in each kind of work, all the employee’s payroll will go into the most expensive classification applicable. You’ll also need to be able to break out any Overtime from regular wages. A little extra effort in time tracking and documentation could save you big bucks when it comes time for your audit.
Safety is the #2 factor in determining your insurance rates. If you have fewer claims, your rates will be materially lower than if you do have claims. The insurance rate depends upon the employer’s payroll, experience rating and the type of work performed. A work injury can affect an employer’s safety record and experience rating for a 3-year period. Too many claims, and your options for coverage may be limited to the assigned risk pool.
WHAT'S THE RISK OF NON-COMPLIANCE?
A labor department auditor or investigator could show up unannounced on one of your job sites, and a DOL audit could take months to complete, possibly resulting in thousands of dollars of penalties or assessments of past due contributions. An Unemployment Insurance (UI) audit may take considerable time, but a workers’ comp investigation is usually completed in a matter of weeks or months. The workers’ comp penalties are higher than the UI penalties, and are in addition to having to purchase workers’ comp insurance. Why do so many companies take the risk? Businesses can save up to 30 percent on labor expenses by classifying workers as independent contractors rather than employees. The construction industry is under the microscope due to a long history of not correctly classifying employees. The chances are you will have to deal with this at some point, so bite the bullet, make sure all your employees are on payroll, check that all your subs are carrying workers’ comp, and you can be confident you’re in compliance. The other risk is that if no workers’ compensation benefits are received, there’s no limitation on the injured worker’s ability to sue your business for whatever damages the court will award as well as your being responsible to pay all the benefits the worker would have been entitled to under workers’ comp. You might be trading immediate savings on your workers' compensation premium for exposure to legal damages which could easily exceed the normal general liability policy limit of $1,000,000. And if an employer has no workers’ comp and a worker is injured, the employer is personally liable to the employee for medical benefits, wage replacement, and any permanent disability caused by the injury.
