Workers' compensation is one of those issues most business owners choose not to think about. No one likes thinking about the possibility of their employees getting hurt on the job, but unforeseeable accidents can happen even in the safest of work places. Workers' compensation insurance is not only a good product to have, in the majority of states, it is required by law.
What Is Covered Under Workers' Compensation
Only illnesses and injuries that are work-related fall under workers' comp. It's not the same as the health insurance benefits packages you might offer your employees in addition to their wage. Workers' comp actually has nothing to do with benefits administration whatsoever.
That being said, the injury doesn't have to happen in the workplace. As long as it happens in service of the company, you're required by law to offer workers' compensation. Examples of legitimate workers comp claims include…
- Employees injured while performing their job duties
- Injuries stemming from an accident on the work site
- Repetitive motion injuries (carpal tunnel)
- Gradual injuries developing over years of working (planter fasciitis)
If the cause of the injury or medical condition can be tied to the job, then Workers' Comp will cover it. That's good thing because, if a worker is injured on the job, and if the employer has the required workers' comp, the workers' comp policy coverage and benefits is the employee's exclusive remedy. In other words, because it is the exclusive remedy, the company is protected from a tort liability claim by the injured worker.This makes lawsuits filed by workers for injuries almost non-existent.
What workers' comp doesn't cover
That being said, workers' comp is not meant to be a health insurance comparison. There are plenty of injuries it won't cover, even if they do happen in the workplace.
- Accidents while commuting to or from work
- Injuries incurred during a lunch break
- Occurring after termination or layoff notice
- Acquired due to afterhours activities
- Common colds and flus
- Fraudulent claims
So, if workers' comp is an exclusive remedy for employees and stops them from suing the company, shouldn't we always direct our workers to try to claim workers' comp for all injuries?The short answer is no.Just like all insurance the more claims you have the more premium you have to pay.While a legitimate claim will protect the company, a fraudulent claim will cost the company.This is why claims management is so important because claims have to be filed. A good claims manager will be able to work with the insurance adjustors to ferret out fraudulent claims and close the legitimate claims faster.Thus lowering the overall claims impact on premium paid.
Luckily most outsourced human resources firms will take care of obtaining and setting up your workers' compensation insurance as part of their services, freeing up your focus more on your business than the possibility of your employees getting hurt and suing you.Workers' Compensation leaves many employers with questions and often blindsided by unexpected claims. The advisors at DHR are ready to help you mitigate those risks and associated costs. Learn more about DHR and our Risk Management programs.