Your business is likely required to obtain workers’ compensation insurance as soon as you hire one or more employees. With it, you’ll comply with legal requirements and gain access to the financial peace of mind that insurance offers.
However, the process of shopping for and obtaining coverage takes time that busy small business (SMB) owners may not have available.
Let’s explore what coverage you’re required to obtain, what workers’ compensation really does, and how a PEO can streamline your professional services, including workers’ compensation.
Workers’ compensation is a form of insurance that provides financial and medical benefits to employees who suffer job-related injuries or illnesses.
In general, the key requirement of workers’ compensation coverage is that the injury or illness is work-related. If a covered event occurs, depending on state law, compensation often covers:
Workers’ Compensation is a No-Fault System
One of the defining features of workers' compensation is that it works on a no-fault basis.
This means employees are generally eligible for benefits regardless of who was at fault for the injury. This benefits all parties involved, as it saves the time and effort necessary to determine fault. The main trade-off is that employees generally cannot sue their employers for covered injuries or illnesses.
Most states require workers’ compensation coverage when a company has at least one employee, with Texas being the only state where it is not required.
Idaho, for example, requires workers’ compensation as soon as there are one or more employees within an organization. This is true whether the employees are full-time, part-time, seasonal, or occasional.
Sticking with the Idaho example, a few exceptions to the rule above include:
Navigating workers' compensation requirements can be challenging so SMB owners are advised to invest time in thorough research or consider partnering with a PEO to help with the process.
Since most states require workers’ compensation coverage, forgoing it entirely can carry significant legal and compliance risks, as well as financial risks associated with medical fees and lost wages caused by employee injuries.
Even if you aren’t technically required to obtain workers’ compensation coverage, not having it means potential legal battles and business-interrupting challenges if an employee ever gets injured or sick on the job.
Though the risks of not having workers’ compensation are clear, there are also clear benefits to obtaining quality coverage early in your business journey.
Here are 3 key advantages:
SMB owners have a choice to make; spend time pricing options and ensuring their company obtains the right coverage, or save time by partnering with a PEO who can provide the necessary coverage for their business.
Professional Employer Organizations (PEOs) like BBSI can simplify the process of acquiring workers’ compensation through internal underwriting processes. Internal underwriting allows BBSI to expedite the acquisition of workers' compensation coverage for businesses and their employees.
Leaving coverage acquisition to a PEO allows business owners to focus on core operations and strategic aspects of their company, knowing they are properly covered through their PEO partnership.
PEOs like BBSI provide comprehensive workers’ compensation programs that are designed to provide required coverage with flexible pricing, predictable premiums, and efficient administration. They do this by:
Workers’ compensation coverage is a legal requirement in almost every state in the union. Even in rare instances where coverage is not required, choosing to forgo workers’ compensation is a high-risk strategy with few upsides.
However, knowing this doesn’t make the process of shopping for and choosing workers’ compensation coverage any easier. For SMB owners who also have to worry about HR, payroll, and managing talent, a PEO like BBSI can be a lifesaver.
BBSI specializes in unique, tailored solutions to our clients’ professional service needs, including workers' compensation.
If you need help finding a workers’ compensation plan that includes: