Workers' compensation, or workers' comp, is a type of insurance designed to cover medical expenses if an employee is injured while on the job. The earliest comprehensive workers' comp laws were passed in 10 states in 1911 and before the decade was over another 36 states had passed similar regulations.
Workers' compensation is regulated on the state level except for government employees, who have a similar but separate insurance program. Almost all states require employers to purchase workers' compensation insurance, and the District of Columbia is no exception. In D.C. workers' comp is overseen by the Department of Employment Services (DOS). The DOS issues certificates of compliance and enforces penalties when a company is found to be non-compliant. It also processes claims, monitors payments, mediates disputes, and approves lump-sum settlements.
In D.C. you are required to have workers' comp insurance if you have at least one employee, and domestic workers who are employed for a minimum of 240 hours per calendar quarter must also be covered. Independent contractors do not need to insure themselves.
How to purchase workers’ compensation insurance in D.C.
Employers in D.C. must purchase their workers' comp insurance from a private insurer. It's a good idea to contact your business liability insurer and ask if they have discounts for multiple policies, much as you would do for your vehicle insurance. You can also check with business organizations that are specific to your field of business or the Small Business Administration.
Certain employers may qualify to self-insure if they provide proof they are financially able to pay compensation in the event of an employee injury. Self-insuring is determined on a case-to-case basis with the following factors taken into consideration:
- Size of business
- Financial stability of business employer
- Previous claims history
- Number of employees
What is the assigned risk plan?
The assigned risk plan is the National Workers’ Compensation Reinsurance Plan, administered by the National Council on Compensation Insurance (NCCI). The NCCI provides objective insurance costs and rates by gathering data and then analyzing industry standards. Although it is not a government organization and its recommendations and use is not required, the National Workers’ Compensation Reinsurance Plan is the standard used throughout the workers' compensation insurance industry. Most insurers use these standards to set the rates for each business's workers' comp policy. The following factors are taken into consideration when determining the assigned risk plan for your business:
Cost and needed information in D.C.
Workers' compensation in D.C. is about 30 percent lower than the rest of the country, so you're already ahead of the game by choosing D.C. as a location for your business. That being said, the exact cost of your policy will be determined by the assigned risk plan and the classification code determined for your business. Here are some examples of types of businesses and their corresponding classification codes and range of costs:
Door & Window Installation
As you can see the rates have a wide range from business to business as well as within each industry class code, and the area within your class code is where you can make a difference in your own business's policy premium.
The biggest area you can control to keep your premiums low is on the job safety. By training your employees in safe work practices and enforcing job safety rules you can prevent injuries, and that means fewer claims on your workers' comp policy.
The other major factor that will affect your premium is experience. Basically, the longer your policy is in force the less you'll pay. In D.C. an Experience Rating Eligibility is used which basically reviews your policy every two years to see if you qualify for a lower premium.
Why carry it?
The obvious reason you should carry workers' compensation insurance is because it's the law. Failure to cover your employees can incur stiff penalties including fines and imprisonment. It's also against the law to falsify information on your policy or to provide misleading information.
Aside from the legal repercussions, workers' compensation insurance benefits the employer as well as the worker. If your employee is injured or killed while on the job the insurance will cover medical expenses, lost wages, rehabilitation, and other expenses incurred by the injury. Workers' comp also protects you from lawsuits, even if you are found negligent in causing the injury.
The cost of not having insurance
In the worst case scenario, you could have an employee fatality at your workplace and be held responsible for medical and death expenses as well as face litigation from the employee's surviving family members. According to the Bureau of Labor Statistics (BLS) n D.C. violence by persons or animals was the number one cause of on the job deaths in 2016, followed by falls, slips, or trips.
Aside from fatalities here are the top three injuries reported as workers' compensation claims:
The Health Care Cost Institute reports the average emergency room visit in 2016 cost $1,917, so you can see how even a minor injury can be costly to your business.
If you employ one or more persons in D.C., you must purchase workers' compensation insurance. This includes domestic workers, so if you have a housekeeper, gardener, or nanny you should inquire about a policy.
The Department of Labor Occupational Safety & Health Administration (OSHA) provides information that is specific to different industries and will help you comply with your business's safety requirements. Contact the D.C. Department of Employment Services for the proper paperwork to show your policy follows the workers' compensation laws.