What is Workers' Compensation?

Workers compensation takes care of your employees if they were to get injured or become ill while on the job.  Coverage will help with medical expenses and wage replacement while the employee is out of work. Not only does it benefit your team but it also benefits you as the employer because an employee will have limited rights to sue if an incident occurs.

Who is required to have workers' compensation?

Laws regarding workers' compensation vary by state.  The laws are not always black and white either. Some states have exceptions for certain types of workers while all other types of workers are required to be covered by their employer.  If you are a sole proprietor running a small business with a team made up of immediate family members, you most likely are not required to carry workers compensation insurance. It is important to always check your state laws because failure to provide workers compensation when required can have serious and rather expensive consequences.  This could include anywhere from paying claims out-of-pocket, losing your right to conduct business in the state, to potential imprisonment. You can contact your state’s workers’ compensation official to double check that you are in compliance. This list from the U.S. Department of Labor has the contact information for every state.

How much does workers’ compensation cost?

Workers’ compensation is made up of different “classes”.  Similar businesses within the state with similar injury patterns are grouped together to define a “class”.  Rates for each class is determined by the loss of costs for all businesses in the class over the past 5 years. The cost of your premium will be calculated by your class and your payroll.

As an employer, you have a decent amount of control over how much your premium costs.  Your individual business’s loss history can work for you or against you. In other words, businesses with a history of being safe will be able to purchase premiums at a lower cost than a business with a history of being unsafe. We recommend finding a workers compensation provider that offers pay-as-you-go billing.  This method allows you to chip away at your premium with each payroll you run.  Otherwise, you will be paying the entire lump sum up front. 

Where can I purchase workers compensation?

An easy way to purchase workers' compensation is through your payroll provider.  By bundling workers' compensation with your payroll, you are able to use actual payroll data instead of estimated data to guarantee the most accurate premium.