FAQ: What Is Workers’ Comp And As A Business Owner, Do You Need To Provide It?
Dan Levenson August 20, 2015
Every small business owner providing workers’ compensation for the first time probably has a lot of questions about what it is, why they need it, and what it covers. It’s possible you’re one of those small business owners, perhaps one in the tech industry, where you may not think protection of your employees is completely necessary.
The fact of the matter is that this type of coverage is mandatory in many states, even if you do not have employees. Check with your attorney or your state’s Department of Labor after reading the information below.
Ultimately, anything can happen to an employee in any industry. Complacency is a state of mind that’s easy to acquire if you’ve never experienced anything bad happening before. Regardless, even computer and IT consultants are vulnerable.
Considering that most consultants work on-site with clients, you already have a major risk on your hands as a business owner. Even if you don’t initially think that working directly with computers has any method toward accidents, traveling automatically does. Your employees and independent contractors have to travel to work; an accident could occur while driving there, making you responsible for injuries.
Physical injuries could technically happen on the job as well, including injuries from lifting any heavy equipment or improper working conditions.
Lawsuits could happen so fast and suddenly that you need preparation to handle the possible financial challenges. In general, what questions do you need answered about workers’ comp? Take a look at these common questions and the detailed answers you need.
What Is Workers’ Comp?
You can define workers’ compensation as a no-fault insurance in the event one of your employees suffers an injury while on the job. Moreover, it protects you from lawsuits or any liability incurred when an employee gets injured and sues you, the employer.
It’s an insurance that’s especially valuable to small businesses since a lawsuit could permanently ruin a company. Your own tech consultant business likely has a small staff and limited budget that could easily be destroyed by legal action. Just one lawsuit from one of your employees could place your business in jeopardy.
What Workers’ Comp Covers
When one or more employees get injured, they obviously start to lose wages from being unable to work. Workers’ comp helps them recover those lost wages, which can end up being considerable if the injury takes months (or years) to recover from. Medical expenses get covered as well, which makes workers comp so much better than most health insurances.
As mentioned above, you’re protected from liability if an employee decides to sue over their injury. The premiums on workers’ comp aren’t as much to pay when you consider how much you’d have to pay for injuries without any coverage. Also consider that even if you win your case, you still have major legal expenses, which still place you in financial danger.
What Workers’ Comp Doesn’t Cover
FindLaw reminds that workers’ comp does have some logical limitations in many states. If an employee was under the influence of alcohol or drugs when the injury occurred, sometimes workers comp won’t cover costs. Plus, if it’s determined that any injury was self-inflicted, all coverage gets denied.
The same goes if one of your employees becomes injured from not following your company policies. Some employees may even think they’re automatically covered if injured off the job. This isn’t true, even if an injury occurred during off hours while traveling.
Workers’ comp is just one of many types of insurance coverage available for your business. If you’d like to learn more about the different types of coverage that exist and which ones apply to your company, download a free copy of our guide, Insurance For Businesses 101: What Are The Options And Who Are They For?