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Employers in Wisconsin must carry workers’ compensation insurance if they employ three or more workers, whether part-time or full-time. The hiring of that third employee immediately triggers the requirement to provide workers’ comp. However, the workers’ comp insurance requirement in the Badger State is actually much narrower – an employer who has one full-time or part-time employee paid more than $500 per quarter must provide workers’ comp.
In some states, agricultural workers are not covered by workers’ comp statutes That is not the case in Wisconsin for farmers employing six or more workers on the same day for any 20 days during the year.
Why you need workers’ comp
If an employee is injured – or killed – on the job, workers’ comp covers related medical bills and wage replacement. In the case of employees who lose their lives from work-related injuries, workers’ comp provides the surviving spouse and/or minor children with death benefits.
Even if you provide your employees with medical insurance, that does not preclude the need for workers’ comp. When an injury is work-related, an employee’s medical insurance does not kick in. That is where workers’ comp comes in.
Note that workers’ comp only covers employees injured while working. Non-employees injured at a place of business are covered by liability insurance, so it is essential that employers maintain such coverage.
Benefits of workers’ comp
In many ways, workers’ comp benefits employers more than employees. Without this coverage, employers are at risk of a lawsuit any time an employee is injured at work. Workers’ comp is a no-fault system, so employees can receive medical care and wages while recuperating from their injuries. Without workers’ comp, a seriously injured employee would have little option but to file a lawsuit against his or her employer. Workers’ comp means that employers don’t have to worry about being sued by employees for work-related injuries.
Employers who don’t carry workers’ comp even though they are required to by state law don’t just face possible civil lawsuits from injured employees. Violating the law can also result in penalties. In Wisconsin, penalties for workers’ comp lapses is either twice the amount of the unpaid premium or $750, whichever is greater. An even more compelling reason to ensure your workers’ comp payments are up-to-date: The Wisconsin Workers’ Compensation Division has the power to close down companies whose employers do not provide required insurance until they obtain proper coverage.
Workers’ comp exceptions
Wisconsin allows very few exceptions for workers’ comp coverage. These exceptions include:
- Domestic servants
- Certain relatives of farmers
- Sole proprietors
- Members of partnerships or limited liability companies
- Members of certain religious sects
- Real estate agents, brokers and salespersons
- Native American tribal enterprises employees, unless the tribe agrees to voluntarily fall under the provisions of the Wisconsin Workers’ Compensation Act.
Employers do not have to provide workers’ comp for independent contractors, but Wisconsin requires such contractors to meet a stringent nine-part test.
Independent contractors must:
- Maintain a separate business
- Have a federal employment identification number
- Operate under specific contracts
- Be responsible for operating expenses under the contracts.
- Be responsible for satisfactory performance of the work under the contracts.
- Be paid per contract, per job, by commission or by competitive bid.
- Be subject to profit or loss in performing the work under the contracts.
- Have recurring business liabilities and obligations.
- Be in a position to succeed or fail if business expense exceeds income.
If an individual does not meet any of these nine points, they are not considered independent contractors under Wisconsin law and an employer must provide workers’ comp for them.
Out-of-state employers who have employees temporarily or permanently working in Wisconsin must provide workers’ comp coverage for that employee or employees. The “home” state’s coverage does not cover an employee working out-of-state.
What does workers’ comp cover?
Workers’ comp coverage begins on the employee’s first day at work. It covers all “reasonable and necessary medical expenses,” and provides temporarily disabled workers with 2/3 of their wages up to a predetermined yearly maximum. All injuries are documented by a doctor of the employer’s choosing.
If an employee is permanently disabled as a result of the injury, they may receive permanent partial disability benefits or permanent total disability benefits. The amount of the benefit is based on the disability’s severity.
If an employee dies as a result of the injury, workers’ comp provides burial expenses and death benefits to qualified beneficiaries.
If an employee recovers to a degree but cannot return to their previous job because of the injury, workers’ comp offers vocational rehabilitation and retraining.
Workers’ comp does not cover injuries on the job occurring because the employee was under the influence of drugs or alcohol. It also does not cover self-inflicted injuries, such as employees getting into a fight and hurting each other. If the employee was engaged in a criminal act when injured, workers’ comp will not kick in, nor will it if the employee was injured because he or she violated company policy.
While workers’ comp only covers job-related injuries, that does not mean the employee had to be at the actual workplace when the injury occurred. For example, if the injury occurred while the employee was traveling on business, it is covered by workers’ comp.
There is one caveat for employers. If a worker is injured because of a reckless action by the employer, he or she can bypass the workers’ comp system and file a civil suit. For example, if a manager in a moment of anger throws a heavy object and it hits and injures a worker, that’s a reckless action outside of workers’ compensation’s purview.
Purchasing workers’ comp Insurance
The state of Wisconsin does not write policies for workers’ comp insurance or provide such coverage. Employers can purchase workers’ comp insurance through an insurance agent and/or company. Currently, about 300 insurance companies are licensed to provide such coverage. If an employer is unable to find private market coverage, there is an alternative. If an insurance agent turns down an application or cannot find a company to offer insurance to an employer, that agent may submit an application to the Wisconsin Compensation Rating Bureau, which administers the state’s Worker’s Compensation Pool.
How much does workers’ comp cost?
How much you’ll pay for your employees’ workers’ comp coverage depends on various factors. These include the type of business and its inherent risk, the number of employees and any previous workers’ comp claims. For example, construction companies, which may put workers in potentially dangerous situations as part of the job, will usually pay higher rates than a company in which all employees work in sedentary office settings. If you have been in business a long time and have few, if any, claims, you can expect lower rates than a business without a good safety record due to its claim numbers or relatively short history.
Wisconsin permits private sector employers to self-insure for workers’ comp. These employers do not purchase workers’ comp policies but pay any claims out of their own monies. A business cannot simply decide to self-insure. Companies seeking self-insurance must apply to the Wisconsin Workers’ Compensation Division. The process includes submitting five years of audited financial documentation and data, along with proving claims management and safety expertise. Those companies approved for self-insurance must have excess insurance to protect themselves against possible claims.
For more information about worker’s comp in Wisconsin, visit these sites:
State of Wisconsin, Department of Workforce Development
Wisconsin Workers’ Comp Claim Handling Guidelines