What Business Owners Need to Know About Workers’ Compensation

Find answers to questions like: what is workers’ compensation, how does it work, and who pays for it?

Let's talk about something that might not be the most exciting part of running your business, but it's absolutely crucial: workers' compensation insurance. If you're in construction, manufacturing, or any hands-on industry, this one's especially for you.

Why Workers' Compensation Matters (Even If You Think It Doesn't)

Here's the thing, accidents happen. Even with the best safety measures in place, someone can slip, trip, or have an unexpected incident. And when they do, workers’ compensation isn't just another business expense—it's your safety net. Think about it this way: if one of your employees falls from scaffolding or strains their back lifting materials, who's responsible for their medical bills? Their lost wages? That's where workers' compensation comes in, and that's why almost every state in the U.S. requires it. Yes, you read that right—it's not optional!

What Does Workers' Compensation Actually Cover?

Let's break down what you're actually getting with your workers' comp policy:

For Your Employees

• Medical Expenses: From emergency room visits to long-term physical therapy

• Lost Wages: Usually about two-thirds of their regular paycheck (and it's tax-free!)

• Rehabilitation: Getting them back to work safely

• Disability Benefits: If the injury leads to permanent limitations

• Death Benefits: Protection for families in worst-case scenarios

Let's Talk Money: What Does Workers’ Compensation Cost?

I know what you're thinking, "This sounds expensive." The reality is that for most businesses, it shouldn’t break the bank. Here's what affects your rates:

• Your Industry: Construction = high risk vs Professional services = low risk 

• Your Safety Record: Better safety = lower rates

• Your Payroll Size: More workers = more coverage needed

• Your Claims History: Previous accidents impact future premiums

Pro Tip: Want to keep costs down? Invest in safety training. It's way cheaper than dealing with claims!

Common Workers Compensation Questions

"Do I Need to Cover Everyone?"

• Full-time employees? Yes

• Part-time workers? Also yes

• Seasonal help? Still yes

• Subcontractors? Maybe—it depends on their insurance status

"What About 1099 Workers?"

Here's where it gets tricky. Many business owners think having a 1099 contractor means they're off the hook. But if that contractor doesn't have their own insurance, you might be responsible. Always, always get proof of insurance from your subcontractors.

“What Happens When Someone Gets Hurt?”

Let's walk through this because timing matters:

1. Immediate Response

• Get medical help first

• Document everything (and I mean everything)

• Report it to your insurance carrier within 24 hours

2. The First Week

• Keep in touch with your injured worker

• Complete all required paperwork

• Start planning for their return

3. Long-Term Management

• Stay involved in the recovery process

• Consider light-duty options

• Keep documentation updated

Quick Tip: Create an injury response kit for each job site. Include forms, a camera, and clear instructions. Trust me, you'll thank me if you’re in a situation where you need to document an incident.

Make Workers' Comp Work for You

Having a workers’ compensation policy is the first, very necessary, step. But you need to keep on top of your company SOPs so your bases are covered before you need to enact your policy. Here is a general checklist to review and limit your liabilities.

1. Review Your Coverage

• Are all your work types covered?

• Do you have the right classification codes?

• Are your subcontractors properly insured?

2. Create a Safety Program

• Regular training sessions

• Develop and share written procedures

• Post clear reporting guidelines

3. Plan for Claims

• Designate a point person

• Create response procedures

• Build relationships with occupational health clinics

The Bottom Line

Workers' compensation isn't just another business expense—it's protection for both you and your team. Yes, it costs money. Yes, it requires attention and management. But compared to the alternative? It's one of the smartest investments you can make in your business's future.

Need help figuring out the right coverage for your business? That's what I'm here for!

Let's talk about your specific needs and find a solution that works for you. Message me today, and let's make sure your business is properly protected!

Have additional questions? Call us at 503-912-8839 or email me at mspivey@orrandassociates.com