Are you starting a new business? If you plan on having employees, then there is a ton of requirements you’re going to need to meet before even opening your doors.

One of the most important is having worker’s compensation insurance in place. Workman’s compensation not only protects your employees, should they get injured on the job, but it also protects you as the employer.

And it’s not just for industrial or construction-based companies. Restaurants, retail stores, and pretty much any type of business should have workers comp.

How does workman’s compensation work, you may ask? There’s a lot that goes into it.

As a responsible business owner, you need to be aware of how to deal with on the job injury, and what the workman’s compensation laws are so that you are never in a sticky situation.

Keep reading to learn everything you need to know about this vital piece of insurance. 

What Is Worker’s Compensation?

Worker’s compensation is an insurance policy designed to protect your company, and your employees, in the event they are ever hurt on the job.

So if you run a restaurant, and an employee slips and falls in the kitchen, they could become seriously injured. They might sprain an ankle, which would require medical attention and would cost money.

On top of that, they might not be able to work for a period of weeks or months. But it wouldn’t be fair to that employee to have to pay for those medical expenses and to not receive any income while they are recovering, since it wasn’t their fault.

They were just doing their job and following instructions when an accident took place.

If a company didn’t have workers comp in place, this employee would be straight out of luck. They’d be responsible for paying those expenses and would be out of work for a period of time, which can destroy their personal financial situation.

But it also wouldn’t be fair for the company to have to pay for those medical expenses and to pay that employee their wages while they aren’t working. Most small businesses don’t have the budget to pay people not to work.

Thankfully, workers comp is available. This insurance policy protects both employees and businesses in these circumstances, which are more common than most people would like to admit. 

How Does Workman’s Compensation Work?

So how does workers’ compensation insurance work? It works much like any insurance policy. 

You need to sign up ahead of time with a company that understands your specific industry. Your policy specifics will be determined by your state laws, your industry, the number of employees you have, and a few other factors.

Once in place, it should be your goal to promote company safety in every area, to prevent the need to file a claim in the first place. However, it’s likely that you’ll need to file a claim at some point because life isn’t perfect.

If an employee is injured on the job, regardless of how severe, they should receive medical attention immediately. However, if the injury or sickness is minor, it might not be reported right away.

Either way, it’s your employee’s responsibility to report the injury or sickness to you within a certain timeframe, or they will be ineligible to file a claim. Once reported, you can then file a claim with your state’s worker’s compensation board or agency.

Once they have all of the information regarding this claim, they will instruct your insurance company to release funds for the claim. This includes funds to pay the medical expenses incurred by your employee, as well as any funds that are meant to replace lost wages while the employee is recovering. 

You may also need to report the incident to the Occupational Safety and Health Administration (OSHA) within 24 hours. 

Workers Compensation Laws

Workers’ compensation is required by law in most states. However, specific requirements may vary from state to state. 

If you don’t have workers’ compensation insurance in place, you can be fined and potentially face lawsuits in the event of an accident. Also, workers comp only covers valid, W-2 employees. It doesn’t extend to independent contractors, freelancers, volunteers, or the business owner themselves. 

Laws and regulations also change on a regular basis. As a business owner, you always need to stay on top of these, as doing so can make or break your business. Check out these updates to learn the latest workers comp news.

Most accidents caused by work-related tasks are covered under workers comp, including things like falling, carpal tunnel, or sickness due to unhealthy work conditions.

Certain things aren’t covered, such as when an employee is breaking the law, if an injury wasn’t related to work, if an employee hurts themself on purpose, or is injured while commuting to or from work. 

Filing a worker’s compensation claim is a duel effort between employee and employer. Since both parties are covered, it should be a collective effort, and both parties have tasks to complete.

However, if an employer suspects that an injury wasn’t work-related, they can dispute the claim, which may require appearing before the state’s board or agency to settle. 

Getting Workers Comp in Place

If you want to stay in the clear, you need to get worker’s compensation in place before you even open your doors for business. You don’t want to risk getting fined or having an accident take place right out of the gate, and not having the means of covering the cost.

Doing so can put your business in jeopardy right away. This is especially true for new businesses where employees aren’t in the habit of following best safety practices yet. During this time, accidents are even more likely to take place. 

Many insurance providers offer workers comp alongside other business products, such as a business owner’s policy. You can also find companies that specialize in workers comp specifically. 

Protect the Future of Your Business

So how does workman’s compensation work? It works by providing for both your employees and your business when an accident takes place. It provides valuable protection and can ensure your employees and your business have a safe and productive future.

Looking for more answers to your business questions? Find other helpful articles on our blog today.