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Workers' compensation insurance can be confusing. Business owners often wonder if they need this kind of insurance for their business. Some even avoid purchasing it because they think it is just an extra insurance they don't need. However, it is required in certain states including the state of Pennsylvania, and it's a good idea in the others.
In this post, we'll take a look at what workers' compensation insurance does and why it's a good idea to get this insurance for your business. It is essential to know the law and make sure that you comply.
Why do you need workers' compensation coverage?
Workers’ compensation insurance is an insurance that pays for the medical costs and loss of work of qualifying employees who have a sickness or accident while on the job. As a business owner, you have a certain amount of liability. Some of this liability has to do with the building that you do business in or the vehicles that you use for business.
From a legal perspective, you may have to pay damages to anyone who suffers an illness or injury due to work conditions of any kind that contributed to the event. This can create legal problems for any claim in which you do not have coverage. It can even cause you to have criminal charges filed against you. This is because it is a law in Pennsylvania to carry workers’ compensation for these types of situations. Insurance is something you only need when someone files a claim, but you must purchase it beforehand. It's too late once there has been an accident.
For those who have not had a claim, it's not too late to get this critical insurance.
Like car, home, or other types of insurance, insurance is something you need to protect yourself from financial loss as well as to protect the integrity of your business in any situation. The courts always rule for individuals and businesses that are doing the right thing. Having adequate workers’ compensation insurance shows that you were doing your due diligence to take care of your employees as well as to protect the integrity and obligations of your business.
History of workers' compensation law in Pennsylvania
In 1915, The Pennsylvania Legislature signed into law the Pennsylvania Workers' Compensation Act, which required the state's compensation bureaus to implement administrative and appeal obligations to award employees damages for injury as a result of employment. Notice that, unlike a punitive or personal injury law case, the criteria for receiving such funds is not negligence. Instead, the accident or injury needs only to have occurred on the premises of or in the line of doing business for your company in which the injury occurred. The final part of this is that it must not have been the fault of the employee due to their carelessness or neglect of duties or procedures.
Workers' compensation protections
Workers' compensation protects both employees and employers. It protects employees because it gives them monetary benefits for their loss of work as well as injuries or medical expenses until they recover from the injury. It protects employers because it usually avoids any legal actions that the employee might take to receive compensation for these injuries or illness. So you avoid going through a court system and the associated legal fees.
Is workers' compensation mandatory?
States vary on the Workers' Compensation laws, but the state of Pennsylvania does require workers' compensation coverage for all employers. Employers who do not carry this insurance may be subject to lawsuits from employees and criminal prosecution by the state of Pennsylvania.
How to purchase workers' compensation insurance
If you are in Pennsylvania, you can request a quote and find out what it will cost to get workers compensation insurance for your business. Rates will vary according to your unique business characteristics and needs.
Factors that impact coverage
The factors that may impact your coverage amounts include the number of employees you have, the level of risk on the job, the total amount of your payroll, and other factors.
Your cost for workers’ compensation will also depend on any other claims you may have had in the past that could affect your liability status.
When to seek legal help
If you have had a workers’ comp claim and did not carry workers compensation insurance at the time of the claim, you need to contact an attorney for advice. The fact that you failed to carry to minimum liability compensation insurance puts you in a legally precarious situation. Get an attorney and legal help immediately in this situation as you could be facing both civil and criminal cases depending on the circumstances and severity of the injury.
Scenarios for not carrying insurance
If you are a business owner and you fail to carry workers’ compensation insurance in Pennsylvania, you risk one of the following things happening:
Lawsuits from injured employees
If you fail to carry insurance for workers’ compensation, you are opening yourself to potential lawsuits from employees who are injured on the job. It's also a mistake to think that just because you consider your business environment to be low-risk that nothing will happen. A natural disaster like a tornado, flood, or fire could occur at any time. An employee could be severely injured by slipping on a wet floor that they didn't know was wet. Any injury or illness suffered while on the job (either in the building or not) becomes a liability for you as a business owner. The only exception is when the incident was the employee's fault.
Loss of business license
If you fail to carry workers’ compensation, you could lose your business license due to legal concerns or your stock could plummet if you are a publicly traded company. Investors and shareholders will not want to invest in a business that is open to lawsuits and the state and federal agencies who grant business licenses may question your status and could yank your license.
Since Pennsylvania requires workers’ compensation, failing to carry it may even result in criminal charges. It's important to follow all laws and regulations and to stay in compliance to keep your business in good status.
Any of the above scenarios presents a severe situation for business owners. Do the right thing and obtain workers’ compensation insurance before you have a case.
List of Resources for Workers Compensation
If you need more information on finding workers’ compensation information in Pennsylvania, check out these resources to get started.
Pennsylvania Department of Labor
Business Workers Compensation Information
Frequently Asked Questions about Workers Compensation
Summary of Pennsylvania Workers Compensation Law