One thing many people who start a business don’t realize: as an employer, you are required to have workers’ compensation insurance, even if you have only one employee. Should one of your employees get injured on the job, you must pay workers’ compensation benefits.
Imagine a world without workers’ compensation. If an employee were to fall off a ladder and need to be rushed to the emergency room for x-rays, you might not feel like you are responsible for paying for that hospital visit. The employee might not have money to pay for the visit. So what does he do? Sees the doctor, then sues you, claiming you had a wobbly ladder that made him fall. You are found at fault, and have to pay tens of thousands of dollars to the employee — far more than that hospital visit would have cost you.
As you can see in this scenario, not having workers’ compensation can cost you more than just money; it can cost you your company.
The History of Workers’ Compensation
Did you know that workers’ compensation is the U.S.’ oldest social insurance program? It was put into play during the early 1900s. Its purpose was to ensure that employees get medical attention without having to pay for it themselves should they be injured on the job, or experience illness due to their work. Workers’ compensation doesn’t point the finger at the cause of the illness or injury, and it reduces the number of lawsuits a company has from employees.
Understanding Workers’ Comp Insurance
The workers’ compensation insurance you purchase provides five benefits for your employees:
- Medical care
- Temporary disability benefits
- Permanent disability benefits
- Supplemental job displacement benefits or vocational rehab
- Death benefits
You won’t have to pay for these expenses out of pocket, as your insurance will cover them.
Start by talking to your state’s business licenses, permits & tax division to find out what the process is for registering for workers’ compensation. You may need other business licenses or proof of your insurance to start a business, so it’s important to get it taken care of early.