If your South Carolina business employs four or more people, you must purchase workers’ compensation insurance for your employees. This holds true whether your employees work full-time, part-time or seasonally. There are exceptions – agricultural employees, railroad and railway express company employees, the Textile Hall Corporation and those businesses with an annual payroll of less than $3,000. While partners, sole proprietors and LLC members are not automatically included for workers’ comp coverage under South Carolina state law, these individuals are welcome to cover themselves with their policy.
Workers comp insurance basics – and why you need it
If your business employs four or more people and is not exempt, purchasing workers’ comp insurance for your workers is a requirement, not an option. Workers’ comp insurance actually protects your business. By providing employees with workers’ comp insurance, your business is protected from lawsuits filed by injured workers. These workers would otherwise sue and seek monetary awards for the pain and suffering, along with medical expenses, associated with their injuries.
Purchasing workers’ comp insurance
Employers are 100 percent responsible for purchasing workers’ comp insurance for their employees. Requiring an employee to pay for any part of their coverage is illegal. Employers have two choices when it comes to purchasing workers’ comp insurance: They can buy it through an insurance company, or they can self-insure.
The South Carolina Department of Insurance regulates insurance rates for workers’ comp policies, but the market is competitive, and you can find the best deal for your business by shopping around. State law allows insurers to offer policy credits and discounts. If you cannot afford to purchase workers’ comp insurance on the open market, you may do so through state fund coverage. Whatever route you chose, your premiums are based on various factors, including:
- Number of employees
- Employees’ total wages
- Nature of the jobs – dangerous jobs bring higher premiums
- Employer’s previous claim and accident history.
Nationwide, the industries with the highest workers’ comp rates are construction, natural resources and maintenance. If your employees work primarily in an office, you’ll pay lower rates as the risk of serious injury is much less.
Going the self-insurance route is common, but employers must meet specific criteria to qualify, including financial standards. The South Carolina Workers’ Compensation Commission (SCWCC) approves all self-insurance applications. An employer may self-insure as a stand-alone business, or join a group self-insurance pool. These pools are regulated by the SCWCC, which mandates the amount of the surety bond each pool must maintain and necessary reinsurance.
As of 2015 – the most recent data available - the average cost for workers’ comp in South Carolina [pg 40] was $1.72 per $100 of covered wages. That amount was a decrease of seven cents over the prior four-year period.
The cost of not getting workers’ comp insurance
The cost of not having workers’ comp insurance should an employee become injured or disabled – or die as a result of his or her injuries – is twofold. Not only will the employer face a lawsuit from the injured employee or their estate that could wipe out the business, but they are also subject to fines from the SCWCC. If found at fault, employers may have to foot the employee’s legal bills. That alone can run into the five figures.
Even if you provide your employees with medical insurance, that insurance does not pay for job-related injuries. Workers’ compensation pays medical treatment, lost wages during recuperation or disability and lifetime compensation for permanent disability or disfigurement. Without workers’ comp, the employee could sue you for all of those costs, along with pain and suffering. If you were required to carry workers’ comp but did not comply, it is unlikely any other insurance your business carries would step in and pay any of these costs. Insurance companies are not in the business of paying claims for which they are not responsible, so don’t think other liability insurance you have will protect you. An employee who slips and falls and breaks their neck while on the job does not fall into the same category as a client or customer who has a similar experience.
One caveat: Failing to file the correct forms or documentation with the SCWCC can result in fines averaging $200 per occurrence.
More Information on South Carolina Workers’ Comp
For more information on South Carolina workers’ compensation laws, visit the SCWCC page here, or the FAQ page for employers. Contact your business’ insurance agent for information about workers’ comp coverage for employees or obtain quotes independently if you go the self-insurance route. If your insurer does not offer workers’ comp insurance, they can recommend insurers who do.
Workers’ Comp – the Bottom Line
No employer wants to pay for items that don’t benefit the business, but that’s never the way to think about workers’ comp insurance. Workers’ comp protects your company as much – if not more – than your employees. Any employee can get hurt on the job. With workers’ comp insurance, the employee’s needs are provided for, and your business won’t pay the price beyond the premiums.
Sources:
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http://www.wcc.sc.gov/Pages/FAQEmployers.aspx
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https://www.scstatehouse.gov/code/title42.php