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A workers' compensation policy is a part of your legal obligations as a business owner. The process can seem far more complex than it is. Workers' compensation insurance can protect employees, but business owners need to understand what it is, how it works, who it covers, and how to make a claim.

Chances are, you’ve heard of workers’ compensation and are familiar with the basic concept—if an employee gets injured on the job, workers’ comp covers medical costs and lost wages. Unfortunately, it’s not exactly that simple. Here are four distinctions you need to understand about workers’ compensation for your business. 

1) Each state has its own rules about when and how workers’ compensation kicks in.

First, you need to know that workers’ compensation operates differently in each state. While most states require workers’ compensation coverage for all businesses of a specific size (five or more employees, for example), the details will depend on where your company operates. In states where workers’ comp is not required, businesses can still choose to have coverage.

2) Workers’ compensation doesn’t cover every type of on-the-job injury. 

A common misconception about workers’ compensation is that it covers any injury that happens on the job. In reality, many states have exceptions to workers’ compensation for self-inflicted injuries, unexplained falls, injuries during workplace recreational activities, or anything that occurs during the commute to and from work. Independent contractors are also often excluded from workers’ compensation coverage. Be aware of these limitations and make sure employees understand what’s covered.

3) Workers’ compensation is designed to protect employees and employers.

At first glance, it may seem like workers’ compensation is primarily designed to protect employees. After all, it’s employees who receive direct payments from workers’ compensation if they get injured. In reality, workers’ comp coverage offers a significant benefit to employers, too. As a general rule, when employees accept workers’ compensation benefits, they give up the right to sue the company. This is significant, particularly in cases where the company is truly at fault for the incident. For this reason, many businesses choose to purchase workers’ compensation coverage even if the state does not legally require it. 

4) Having workers’ compensation doesn’t justify an unsafe work environment. 

Having workers’ compensation in place doesn’t let companies off the hook for not maintaining a safe business environment. Ensuring that the workplace is safe is an essential step in preventing workers’ compensation claims. 

Additionally, complying with OSHA standards will help you maintain a clean, safe working environment. Take note of opportunities for employees to accidentally misuse equipment, slip and fall on the job, or overexert themselves throughout the day. Recognizing and addressing risks in your workplace will lower the chance of a workers’ comp claim being filed by one of your employees. If an injury does occur, make sure to file a claim right away and follow your state’s laws regarding coverage. Learn more about OSHA compliance and regulations here.

Merritt Business Solutions helps business owners prepare for the unexpected with simplified insurance and pay-as-you-go workers’ compensation solutions. As experts in the field, we’ll work with you to ensure that you have the right coverage for your needs. Contact us today to learn your options!

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