Workers’ compensation has been a great development for both employers and employees. Originally created to prevent insolvency of employers due to extreme damage claims, it has also allowed employees to receive the care they need from work related injuries without the need of litigation. Workers’ compensation has been with us so long and become such an integral part of the employment process that it is sometimes taken for granted just how varied the applicable laws are across the country. Unfortunately, this complacency often gets employers in trouble.
Employers who seek to take advantage of the protections provided by workers’ compensation must ensure they remain compliant with the law in their jurisdiction. Every state has its own laws to determine how employees must be covered and how they must be classified for rating premium. Most states also use state specific class codes and have different requirements for who is obligated to carry workers' compensation insurance.
A brief look at how workers’ compensation applies across a few states gives us some idea of the diversity of application. Virginia law requires that an employer who regularly employs more than two part-time or full-time employees carry workers' compensation. However, the District of Columbia requires all employers to carry workers' compensation insurance, and North Carolina singles out trucking companies in requiring all to carry workers’ compensation. Additional rules can also apply if employees travel out of state. For example, because Virginia does not have reciprocity with other states, a Virginia endorsement on an outside state workers’ compensation plan will need to be obtained if you have employees working in Virginia, even temporarily.
Another mistake many employers make is believing that other forms of insurance can substitute for workers’ compensation. Other types of insurance, such as Occupational Accident Insurance, have been offered by employers as a means of providing coverage for their employee’s on-the-job injuries, without the greater cost of a workers’ compensation plan. However, these insurance policies can still leave the employer liable for damages as the policies are not a substitute for workers’ compensation under the law; they also tend to cover less injuries and pay the employee less in benefits.
An employer’s best practice is to determine if they are required by their jurisdiction to have workers’ compensation. If so, the employer should review the company procedures to ensure that it will be compliant with the law. An example of a procedural safeguard issue would be an employer in North Carolina who asks its drivers to carry a workers’ compensation policy, but only obtains a certificate of insurance from the contractor. North Carolina requires coverage to be in place by either the owner/operator, or else the motor carrier, even if the operator is an independent contractor. If the employer doesn’t ensure the coverage is in place, and instead just relies on the provided certificate, it faces significant potential exposure. If the policy wasn’t properly in place at the time of an accident, the liability for injuries of a non-insured driver will travel from the operator up to the motor carrier, even if that operator is an independent contractor.
Navigating the workers’ compensation landscape can be confusing. The assistance of a professional can allow your company’s procedures to be compliant with the law and reduce liability exposure, while also reducing unnecessary expense on inefficient or useless policy programs. If you have any questions on this article or would like assistance in making sure your company is adhering to best practices, please contact Michael Jacquez (email@example.com) at (804) 377-1262, or Steve Setliff (firstname.lastname@example.org) at (804) 377-1261.