The worker-force is the most important component of any company or firm. They contribute to the production capabilities of the company and are a valuable asset. But without certain legalities getting fulfilled, these workforces can quickly turn into liabilities for the employers. Employers have to ensure a safe working environment and guard the firm’s coffers against paying up for injuries. The employee in the unfortunate event of an accident or mishap gets his income covered via worker compensation insurance and the employers is protected from potential lawsuits. Worker insurance creates a system of collective liability wherein the worker relinquishes the right to sue the employer for any negligence and instead avails wage and medical reimbursement. This is called exclusive remedy.
Worker compensation structure varies from state to state and the employers have to be aware of the difference to protect the worker and the firm. It lists the kind of coverage the employee gets and what all injuries are covered. It also lists the distribution between how much coverage is given by the state and how much by private insurance agencies. Some states allow for sole proprietors and partnerships to not avail for worker insurance. Insurance is also not needed if the workers get paid commissions and not salaries. Also, Texas is the only state where employee coverage is optional, whereas other states have a threshold limit above which coverage is mandatory.
Points to Keep in Mind
- Worker insurance is not part of Business Owners policy (BOP).
- Occupational hazards and diseases due to exposure to substances and chemicals have to be covered.
- Accidents in vehicles for official trips are not covered under the policy.
- Terrorist attack, natural calamities and workplace are to be covered under the policy.
- Premiums are set according to the industry classification code and payroll base. Premiums would be higher for a mining company than a tutoring academy.
- Some states require the employers to maintain a database of any mishaps and accidents which has to be reported to the state-agencies and insurers within a specific no. of days.
- While employees travel to other states for work, the employee policy has to explicitly mention the states where the policy is offering coverage.
- Coordination with disability programs has to be maintained as well.
If your company needs worker compensation insurance, it is best to visit specific law firms dealing with such insurance types to give out the most intricate contract. There are a lot of minute details to be covered like when the exclusive remedy fails the employers. It occurs in cases of sexual harassment, deliberate attacks within office, violation of federal law regarding transportation and working of migrants etc, the employee can sue the employer. The exclusive remedy clause fails. So an expert legal advisor only would be able to tell you where and how to address the loopholes and how to get yourself out of legal tangles in tricky situations regarding insurance policy.