Almost every state mandates workers’ compensation as a part of their business. The insurance helps cover medical costs and lost wages while employees are out of work when an ailment afflicts them directly from the job.
Small companies starting up may glaze over this vital asset, especially if one has the mindset that they do not work in a dangerous industry — therefore, their workers will never get hurt or sick. Every business should have workers’ comp, no matter the size.
Workers’ Comp Details Small Businesses Must Know
Though most equate workers’ comp to injuries, it also covers illnesses, impairments, rehabilitation and more as a part of the bundle. For example, many coal miners obtained black lung and emphysema due to poor air quality. This ailment was not a one-time, immediate injury but a gradually worsening condition. These instances have just as many grounds for workers’ compensation as broken limbs. With this in mind, it should prompt small businesses to consider the overall health of their work environment and how it could affect employees long term, not just in the short term.
It broadens the covered services far beyond what most small business owners may perceive. Once this is acknowledged, it’s crucial to understand how the process unfolds if a worker submits a claim to a small business:
- Don’t automatically worry: Accidents happen. So long as the small business creates as safe of an environment as possible given the industry, it is not always someone’s fault — the company or the employee. It’s best to carry the process out with a level head instead of worrying about blame. Claims don’t take personal fault into determining approval.
- The employee receives attention: Human resources and superiors will ensure the employee is given proper medical attention, or in cases outside of immediate injury, analyze future medical needs. The claim is prepared at this point and explained to all parties.
- It is in the insurance company’s hands now: They receive the claim and approve or deny it. The worker and employer will receive notification from the insurance about the decision.
- Continued care is given upon approval: The insurance will then pay for needed medical attention for the employee. Based on medical advice, doctors will inform employers when the employee could return to work safely. If the insurance denies the claim, the case will be closed, or an employee can appeal for further investigation.
There are a few caveats to note about workers’ comp claims. First, there is the question if a worker can claim workers’ comp if they are not at their main workplace. If the small business has workers that travel for any reason or have multiple work sites, they can still claim workers’ comp as long as they are performing work-related duties on the clock.
There are also legal queries — what if a lawsuit occurs due to a workers’ comp claim? Workers’ comp does not inherently protect the business or employee for anything. Additional insurance, such as employer liability to pay for court costs, may need to be purchased if this is a concern.
Ultimately, every state is different, so small businesses should research these requirements accordingly and not assume there is a blanket option.
Considerations to Make to Avoid Excess Claims
As a small business, budgets are sometimes tight, so lowering premiums and reducing the financial burden of claims may be a priority. There are actionable steps to help lower premiums and the number of claims because the business created a safer work environment.
It’s essential to know the top causes of workers’ comp submissions. It helps grant perspective depending on the industry a small business is operating. Then, companies can implement plans to curb the highest risk causes based on the susceptibility of their work. Average claims cost around $42,000, however based on 2018-2019 analyses, these were some of the top reasons:
- Motor vehicle accidents cost over $80,000.
- Burns cost almost $60,000.
- Strain cost around $35,000.
- Cuts, punches and scrapes cost close to $24,000.
As for the nature of these claims, they vary from carpal tunnel to dislocations. A claim can take many forms, and knowing this will help a small business prevent as many incidents as possible.
Once the work environment is curated to cause as little disruption as possible, training is paramount in keeping employees safe. Depending on the industry, governments may require safety training, such as in the food or mechanical industry. Researching these as well as Occupational Safety and Health Administration (OSHA) standards will provide a great baseline for worker safety.
However, an employer can incorporate additional programs and training in areas deemed necessary. It’s important not to forget short-term changes to business operations, such as if a portion of the building is under construction. Training may not be required, but having a meeting to go over protocols with employees will potentially save on workers’ comp submissions.
It’s also likely an employee may refuse the insurance benefits. They could have any number of reasons for doing so, but it is allowed. There are still protocols to follow, such as an employer submitting a report to avoid penalties and having an employee sign forms to confirm refusal of benefits. But, it’s critical to know a refusal is a possibility.
Benefits of Workers’ Comp for Employees
The primary benefit of having workers’ comp in a small business is the peace of mind it provides everyone. Employees will feel safer by default, and it protects a small business’ finances because they took precautions.
It also could enhance the health of employees, especially if small businesses attempt to mitigate claims by encouraging employee wellness. Discuss how to incorporate physical activity throughout a work day, or initiate a more comprehensive plan, like asking the local gym to give discounted memberships to employees.
It will also help employees because if they know the business understands the ins and outs of workers’ comp, then they will appreciate that the small business cares about their transition back to work. It’s essential to have a strategy for reintroducing employees at a careful, meaningful pace.
Opening the doors back up for someone with compassion proves to a small workforce that every employee matters. It helps reduce the number of repeated claims for similar issues if recovering workers aren’t enduring unnecessary pressure. It may not be the most obvious cause for a claim, but neglecting re-acclimation could cost small businesses if not properly acknowledged.
Does Workers Comp Work for Small Businesses?
Workers’ compensation protects small businesses. Though it isn’t always required, facing the actual costs of medical expenses for accidents could sink a flourishing new company. Researching the process of what claims involve and informing employees it is a benefit they have will create a healthier and safer workforce.