Workers’ Compensation (WC) can be a complex issue for small business owners to navigate. Each state has different workers’ compensation legislation, and related laws can change often. In fact, in the state of Texas, worker’s compensation coverage is not even required by law.

It’s no wonder why we encounter business owners asking questions about WC such as, “Why do I need it? and, “How can I afford it?” If you’re asking yourself similar questions, here we’ve provided 5 important workers’ compensation facts every business owner needs to know.

5 Workers’ Compensation Facts Business Owners Need to Know

    1. Even if you’re not required to have it, you still need it – In states such as Texas where workers’ compensation isn’t mandatory, many business owners wrongly believe it’s a business expense they can forego. However, even though coverage isn’t required by law, all businesses are accountable to the state’s workers’ compensation laws for injured workers. That means that without workers’ compensation insurance in place, you are putting your business at significant risk. Companies without workers’ compensation can face high fines, as well as potential lawsuits, if an employee gets injured on the job and can prove that their employer was negligent. Because of this alone, many small business owners opt to be covered by a workers’ compensation insurance plan.
    2. What not having workers compensation can cost you – As an employer, not having workers’ compensation can cost your business a lot of money if someone gets injured on the job. Medical bills and lost wages will be compensated to the injured party along with death benefits, heaven forbid the injury be fatal. Not only will you have to pay all of this “out-of-pocket”, but while your employee is out, your business will suffer from the loss of productivity and possibly even lose customers/contracts.
    3. Occupational Accident Insurance isn’t an alternative to workers’ compensation – Occupational Accident Insurance (OAI), an alternative of sorts to workers’ compensation, provides substandard coverage for employers/employees. Interestingly enough, under Texas law, it is unlawful for an insurance agent to offer up OAI as a substitute for workers’ compensation insurance. Here’s the difference between Occupational Accident Insurance and Workers’ Compensation Insurance.
       
      Occupational Accident Insurance

      • -Contains limits for coverage and you, as the employer, are responsible for paying above those limits.
      • -You have the burden of proving your case against the claim

       
      Workers’ Compensation Insurance 

      • -Your policy will have $1M to $11M in coverage.
      • -In a lawsuit, the employee has the burden of proving the injury.
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    5. Workers’ compensation can help retain key employees – Any time you offer a coverage or benefit to an employee, it can help to keep him or her onboard. For businesses with employees that work with heavy machinery or dangerous equipment, or in an occupation that is considered hazardous, robust workers’ compensation coverage is vital not only for the risk management of the business, but for employee peace of mind as well. For workers in higher risk occupations, the fear of becoming hurt and subsequently overwhelmed with medical expenses is very real. Offering workers’ compensation ensures employees who become injured will be fully cared for without the risk of depleting their savings account for medical care.
    6. Providing workers’ compensation isn’t as hard as you think –  If you think workers’ compensation coverage is cost prohibitive for your business, think again. Businesses can obtain affordable workers’ compensation coverage through a Professional Employer Organization (PEO).  A PEO will also provide safety training for your employees, handle and close claims effectively, help you efficiently manage your risks and make sure your company is covered with the most cost-effective and highest-quality insurance. Plus, a PEO will work with the injured employee to ensure he or she gets back to work quickly.

 

Don’t make the mistake of leaving your business at risk of state fines and employee lawsuits. Workers’ compensation is a must-have for every business. For more information on workers’ compensation, as well as other PEO service offerings, be sure to download our free eGuide The Best Keep Secret for Small Business Success.