Injuries such as trips and falls are the most common in the workplace, and seem to always end with a large lawsuit settlement against a big company. However, as we know, the majority of businesses in the U.S are considered small businesses, so what happens if someone slips or falls at your workplace? What exactly is worker’s compensation?
This insurance covers medical costs and lost wages, as well as things like rehabilitation or physical therapy. It’s mandatory in many states, and highly recommended for all employers. The following flow chart gives you a broad-brush picture of how the coverage works.
Believe it or not, workers comp was set up to benefit both the employer and the employee. This type of insurance provides wage replacement and medical benefits to employees who are injured at work. In exchange, employees relinquish their right to sue their employer for negligence. Therefore, workers compensation insurance protects employers from costly lawsuits, while also assuring employees that they are guaranteed some coverage in case of illness or injury on the job. Seems like a win-win.
Whether you are required to by law, which just about all companies are, you should limit your liability by obtaining this insurance. According to the Payroll Center, “Every employer, individual, firm, association, or corporation, regularly employing three or more persons, part-time or full-time, shall provide workers’ compensation insurance coverage.” You can consult the U.S. Department of Labor’s workers’ compensation guidelines to determine your coverage requirements. Insurance is an area that is tricky, and a plan should be developed with both an insurance professional and an attorney. Their business is to mitigate risk, while your business is to maximize growth. Most entrepreneurs are risk takers by nature, so it is best left to the professionals to work with you on your insurance plan.
The ebb and flow of industrialism was at an extreme during the beginning of the 20th century. Upton Sinclair wrote The Jungle to expose the appalling working conditions in the meat-packing industry. His description of diseased, rotten, and contaminated meat shocked the public and led to new federal food safety laws. No one, other than perhaps the business owners themselves, would tolerate such conditions. Laws at the time were truly needed to provide for worker safety.
Fast forward a century and you find a bureaucratic, regulated mess. The shysters with law degrees are filing class action suits against corporate America every day. Legislation like the Americans with Disabilities Act (ADA) was enacted with altruistic need. Today it is a cesspool filled with rotten lawyers suing all so that a crazy (not medically proven) person can bring a dog into a restaurant. This has tilted the pendulum to the other extreme and must be stopped. Don’t get me started on the ADA.
Workers compensation cases prove upsetting for a small business because the community tends to be especially close. However, proper insurance coverage remains the key so accidents don’t become financially devastating. Handle this as you do other professional issues. Know the law and your requirements under it, and prepare for a worst-case scenario.