Employers and small businesses rely heavily on their employees to make things happen. One thing that state laws require companies to do in return is to carry workers’ compensation insurance to cover workplace injuries. Coming into compliance with those state laws and maintaining that compliance is essential for several reasons: Not only does it protect the company’s workers, but it insulates the company from personal injury lawsuits and potentially other law enforcement actions.
The corporate compliance consultants at Corporate Investigation Consulting have helped companies across the country avoid these negative outcomes by reaching and maintaining a strict compliance protocol for their state’s workers’ compensation system.
Workers’ Compensation Laws Vary By State
Importantly, workers’ compensation laws are state laws – there is no overarching federal counterpart to make things uniform. While states tend to follow general patterns and require similar things of employers, the details can vary widely between one state and another. As a result, the answers to the following seemingly basic questions can be different depending on where your company is located:
- How much are injured workers entitled to receive?
- What happens if the injury was caused by a coworker?
- How do I process a workers’ compensation claim?
- What actions can I take against a worker for misconduct that happened after he or she filed for workers’ comp?
- Was the injury claim timely filed?
- Do I even need to carry workers’ compensation insurance?
This can create lots of confusion for company owners and other stakeholders and decision makers. That confusion can quickly lead to oversights and mistakes that expose the company to costly litigation and a bad reputation for not protecting its workers.
Hiring experienced consultants who understand the law in your state is essential if you want to avoid these bad outcomes for your company.
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The Consequences of Noncompliance with Workers’ Compensation Laws Can Be Severe
Failing to comply with your state’s workers’ compensation laws and requirements can lead to serious consequences that come from three different sides:
- The injured worker can sue your company for the accident
- Other workers and the public can view your company negatively for not providing for your employees
- State regulators can take legal action against your company
While the details vary between states, each consequence is worth delving into.
1. Your Company Can Get Sued
First and foremost, a company’s failure to provide workers’ compensation coverage to its employees can expose the company to personal injury lawsuits for workplace accidents.
Workers’ compensation is essentially a trade-off for companies and their workers. On the one hand, hurt employees are compensated quickly and with little effort on their part, without needing to show who was at fault for their injuries. On the other hand, those same employees agree to make use of the workers’ compensation system as the sole and exclusive remedy for their workplace injuries. They also agree to forgo some important types of financial compensation for their losses, such as for their pain and suffering.
Companies that do not carry workers’ comp insurance do not benefit from the protections provided by that exclusive remedy. Their workers can file personal injury claims against the corporation for the company’s alleged negligence in causing their injuries. Those lawsuits can recover the full range of financial compensation available to typical plaintiffs, including for their pain and suffering and other noneconomic damages.
2. Your Company’s Reputation Can Suffer
Particularly if the workplace accident was a severe or a fatal one, it is not unlikely that the incident will make it into the local or regional news. If the victim’s employer did not carry workers’ compensation insurance, they and their family will be deprived of what the public considers to be a dependable source of compensation for workplace injuries.
The negative impact that this can have on a company – particularly a small business that relies heavily on its good reputation to attract new clients and projects – can be crippling. In many cases, the costs of that lost business far surpasses what the business would have lost, had it maintained its workers’ compensation premiums and coverage.
3. Regulators Can Take Legal Action Against Your Company
Finally, some states enforce their workers’ compensation laws more vigorously than others. In those states, companies that do not uphold their legal obligations in carrying workers’ compensation insurance when necessary can face fines and other monetary penalties for their noncompliance.
A Basic Workers’ Compensation Compliance Checklist
While every workers’ compensation compliance strategy will be unique and will depend on the state’s laws and regulations as well as on the particular needs of the company, there are some steps in workers’ compensation compliance that are fairly universal. Here are eight of these typical components.
1. Figure Out If Your Company Needs to Carry Workers’ Compensation Insurance
Many small businesses are not legally required to carry workers’ comp. Even those that do not, however, may still choose to do so in order to better protect their employees and their company’s reputation.
2. Determine Compliance Obligations
If workers’ compensation coverage is required, the next step is to ensure exactly what that entails. Different states have different requirements, and often distinguish between different types of businesses and industries. Construction companies, for example, frequently have more onerous compliance obligations because of the inherent risks of their worksites.
3. Find the Best Insurance Provider to Meet Your Company’s Needs
There are a lot of workers’ compensation insurance providers out there. Their reputations vary, from companies that aim to protect your workers to those that will stop at nothing to protect their bottom line.
4. Post the Required Notices for Workers
State regulations generally require employers to post information about their workers’ compensation coverage in a prominent place for employees to see. Most employers satisfy this with a posting in a rest area or break room, though if your company does not have one of these places, you may need to get creative to comply with this requirement.
5. Create and Maintain a Reliable Injury Reporting and Claims Process
Workers should know who to report their injuries to, and should rest assured that their report will not be ignored or frowned upon. It should also be easy for workers’ to fill out the claims forms.
6. Promote a Safe Workplace
Companies that want to reduce the costs of their workers’ compensation premiums should take all the steps necessary to prevent workplace accidents. This includes promoting safety in the workplace and fixing any potential dangers on the worksite.
7. Recordkeeping
Workers’ compensation regulations require companies to keep records of incidents and injuries that happen at work. This allows regulators to spot dangerous workplaces and single them out for more extensive inspections. Failing to uphold this recordkeeping obligation can expose your company to penalties.
8. Review Coverage Needs Regularly
Companies should regularly review their workers’ compensation coverage needs to ensure they are still in compliance with the law without paying more than what is necessary.
Frequently Asked Questions About Corporate Investigation Consulting and Workers’ Compensation Compliance
How Can My Company Get Sued for a Workplace Injury?
If your company is in compliance with your state’s workers’ compensation laws and regulations, it will generally be insulated from these lawsuits.
If you do not carry workers’ comp insurance, though, the hurt worker can file a lawsuit against your company, claiming that it was negligent in preventing the accident that hurt them. These claims often allege that you or your company was aware of the dangerous condition that caused their injuries, but failed to fix it.
Do I Need to Provide Workers’ Compensation for Independent Contractors?
Generally, no: Workers’ compensation is strictly for employees.
Things get complicated if the workers are misclassified as independent contractors. Just because the company and the worker agree that their employment relationship is that of an independent contractor does not mean that the worker is an independent contractor. The employment status of a worker is determined by how they are treated on the job, instead.
Additionally, many states recognize some workers as statutory employees. These are employees of a contractor that is doing work for your company, when that contractor does not carry workers’ compensation insurance. You may be found to be the statutory employer of those workers and would be on the hook for providing workers’ comp coverage if they get hurt on the job.
Why Should I Hire Corporate Investigation Consulting?
Corporate Investigation Consulting is a firm that is comprised of former federal investigators who know and understand how noncompliance with the law can lead to serious legal and financial consequences for companies. We use that knowledge and experience to help business owners and decision makers insulate their companies from serious allegations of wrongdoing and the reputational harm that can come with them.
Workers’ Compensation Compliance Consultants at Corporate Investigation Consulting
Business owners and executives should think twice about making big decisions on their workers’ compensation plans without experienced help, particularly if they do not have in-house legal counsel.
The workers’ compensation compliance consultants at Corporate Investigation Consulting are experts at all things compliance. Our investigators and corporate professionals know what is necessary under the law and how that applies to your company.
Contact us online or call our offices at (866) 352-9324 for experienced help that can save your company thousands of dollars in the long run.