Workers' compensation is designed to assist employees who sustain injuries or get ill while at work. When a claim is filed, the compensation covers the medical expenses and lost wages that directly result from a work-related accident. As a business owner, here are a few workers' comp basics you need to know to ensure that you comply with state laws.
In California, every employer must have a workers' compensation policy in place. So whether you have 100 employees or only one, you need to have workers' comp. This applies even if all your employees work out of state.
Workers' compensation insurance eliminates the need for a lawsuit. In most cases, all of the employees' needs will be met through insurance. However, a lawsuit can still be filed if it is determined that the employer was negligent in any way as regards protecting their employee or mitigating risks in the workplace.
According to California law, it is up to the employer to cover the cost of having workers' compensation. It is considered to be part of the cost of doing business. As overhead, the entire cost falls on the employer and cannot be charged to the employees. Businesses in California are obligated to carry this type of insurance for their employees without charge or any deduction from their pay.
If you are a sole proprietor and have no paid employees, you are exempted from carrying workers' comp insurance. However, if you change your status or hire someone to work for you in any capacity, you will be required to purchase the coverage. This is true even if you only hire an employee on a seasonal basis.
Self-insurance acts just like workers' compensation. The insurance is purchased through a third-party provider, and all claims are filed through the employer. As a self-insured employer, it is up to you to file the claims through your insurance company and cover the employee's expenses and lost wages on your own. Self-insurance is just as effective as a traditional workers' compensation policy and may save you money in the long run.
California-owned businesses can face criminal fines that may be quite substantial if it is determined that they don't have a workers' compensation policy in place or prove that they are self-insured. If an accident occurs without the proper insurance in place, it can be financially devastating for your business. Not only can it bankrupt your business, but the criminal penalties may also close your business permanently.
Owning a business in California means you will shoulder certain responsibilities. Protecting your employees with workers' compensation insurance is one of them. Having the right information will help you protect your employees and yourself from financial difficulties. Call our agents at Fuller Insurance Agency to get the information you need to make an informed decision about your workers' compensation obligations.
