Do I Need Workers’ Compensation Insurance?
You probably already know that as an employer you are required to purchase workers’ compensation insurance, or work comp for short.
What is it?
- Mandatory insurance for employers.
- A type of property and casualty insurance.
- State regulated.
- It pays for all the medical treatment necessary to return your employee to their pre-injury condition.
- It pays your employee’s lost earnings due to time off work.
- It is an employee’s “exclusive remedy”.
All of this according to a schedule of benefits established by the State.
- North Dakota
- Puerto Rico
- U.S. Virgin Islands
States with alternative options
- Texas – An employer may elect to opt out of the system and either;
- purchase some other insurance policy
- or you may go without i.e. be a non-subscriber. Non-subscribers are exposed to civil judgments as a result of an employee lawsuit.
- Oklahoma – An employer may opt out and use alternative benefit plans.
- in late February 2016, the Oklahoma Workers’ Compensation Commission determined that the opt-out is unconstitutional.
- This decision will most likely be appealed to the Oklahoma Supreme Court.
- Tennessee and South Carolina – These states are considering similar employer opt-out options.
What if you decide not to buy work comp insurance? Well, you’re now illegally uninsured.
What is the consequence for being illegally uninsured?
In California, for example;
- it is a criminal offense.
- a fine of $10,000 or more.
- up to 1 year in county jail, plus;
- a penalty of up to $100,000.
- pay all the claims costs
- exposed to a civil action against you by your employee.