A Comprehensive Guide to Workers Comp
Are you looking for a way to motivate your employees and boost your business performance? Initiating workers’ compensation insurance is one of the best techniques to achieve this goal. With workers comp, you give employees benefits that help them recover from work-related illnesses and injuries. But why do you need this insurance in your business, and how does it work? If this is what you’re wondering, here we take you through crucial information you need to know about workers’ compensation business insurance.
Origin of Workers’ Compensation Schemes
Historically, workers’ compensation dates back to 2050 B.C. For example, ancient Sumeria, Greece, and China paid workers who sustained injuries at work. However, these past laws were not sufficient, and they oppressed laborers in several ways. For example, a worker couldn’t be compensated, if an employer could prove;
Source: Wikipedia.orgWorker’s or Contributory Negligence: If it was proven that the injury was an employee’s fault, the employer was not liable to make any compensations. This was the case regardless of how hazardous the workplace was.
Fellow Workers’ Blame. An employee was also not eligible for compensation if the injury they sustained was caused by a colleague employee.
1. The Assumption Risk on Ancient Workers’ Compensation
One obstacle to the efficiency of the ancient and industrial revolution workers’ compensation was the assumption of risk. The assumption of risk meant that by accepting to work in a particular environment, employees accepted the hazards existing within the workplace. In some companies, employees had to sign documents that deprived them of their right to sue employers for injuries. To end this oppression against employees, better laws had to be established.
2. Improved Compensation Laws
In the 19th century, Prussian Chancellor Otto von Bismarck brought the Sickness and Accident Law to action, including the Employers’ Liability Law of 1871. The law offered employees limited protection in selected factories, railroads, mines, and quarries. Other laws in the act included Workers’ Accident Insurance of 1884, Public Pension Insurance, and Public Aid. In the 19th century, European nations adopted similar systems. The most similar was England’s Workers’ Compensation Act initiated in 1897.
In the US, workers’ compensation policies came to being in the 20th century. In 1908, the Federal Employers Liability Act was adopted. It gave railroad employees compensation if the evidence presented proved that an injury was out of negligence. The first state to pass a comprehensive workers’ compensation law was Wisconsin in 1911. It took 37 years for all the 50 states to pass the law. The state of Mississippi was the last in 1948 to adopt a workers’ compensation act. Across states, these laws were similar and wanted employers to offer wage and medical coverage benefits for every injured employee. In 1990, Congress passed the Americans With Disabilities Act. The law required all workplaces to be accessible to the handicapped. Also, workplaces were required to possess disability reasonable accommodations. In the 21st century, compensation laws inthe US hold a crucial part of employee protection policies. The law requires coverage for both part-time and full-time employees.
Prussian Chancellor Otto Von Bismarck brought the Sickness and Accident Law to action, including the Employers’ Liability Law of 1871
Why Do You Need a Workers’ Compensation Policy?
Designing and implementing a workers’ compensation plan is not for your business to comply with legal requirements alone. The practice has numerous attached advantages for you, the business, and the employees.
1. Benefits to Employees
For the employees, workers’ compensation insurance covers:
- Medical expenses such as hospital visits, emergency surgeries, and medication.
- Disability benefits for injuries that cause any permanent or partial disabilities.
- Partial lost wage coverage. Particularly when a worker needs time away to heal from the injuries or diseases related to a workplace.
- Death survivor benefits for family members. Covers some costs such as funeral money.
- Ongoing care coverage to ensure the employee is fully catered to while in the recovery process.
- Access to training in work safety skills, reducing the risk of sustaining injury while at work.
- Paid benefits regardless of who is at fault for the accident.
2. Benefits for Employers and Business
To the employers and their businesses, taking a workers’ compensation scheme is like having a saving plan. It serves the business with several advantages:
- Protection against employees' attempts to sue the company for any work-related injuries and illnesses. Saves the business court fees and time wasted in attending the trials.
- Keeps the business financially protected. Without the cover, employers are held financially accountable for the injuries employees sustain from work.
- Motivation for the employees. The policy is an element of a healthy working environment, which makes employees feel worthy and cared for in the business.
- Increased motivation increases a business’s productivity, boosting its profits.
- Ensures compliance with the law.
What is Not Covered in This Type of Business Insurance
Not all injuries sustained at a workplace are compensated under the workers’ remuneration scheme. For example;
- Injuries and illnesses related to intoxication and substance abuse.
- fight injuries aren’t compensated unless the fight was work-related.
- Injuries sustained when commuting to and from work are not covered. However, an employee who works out of the office, e.g. a salesperson, or a worker using a company’s car can receive compensation for any injuries sustained outside the workplace.
- In some states, business owners and partners are not covered in the policy.
- Employees in particular businesses, such as real estate agents and insurance agents.
- Employees who sustain injuries or illnesses while engaging in a policy-violating event or any employee that engages in illegal business activities.
- Self-inflicted injuries.
- Any illness that is stress-related or caused by any psychiatric disorders.
How Workers’ Compensation Insurance Works
Workers’ Compensation Insurance is a form of an insurance policy. It covers the employees, the business, and the employers. For the employees, the policy gives medical care and wages in the event of a workplace injury. Payments are made when the business, employer, or insurance company proves that an injury was work-related. A judge can be involved only when the worker’s claim is disputed by both the employer and the insurance company. Workers’ compensation is paid for by the business or the employer. Employees aren’t required to contribute any funds.
How is Workers Comp processed?
Claiming for employees’ compensation involves several steps as follows;
- The employee reports the work-related injury or illness to the employer.
- The employer gives the employee paperwork to fill the claim details including the injury or illness sustained, the date and time of the injury, and the employee statement.
- If the employer approves the claim, he notifies the policy provider. If need be, the employer is required to report to the state workers’ compensation board. This requirement varies depending on the state the claim is being made.
- If the injury or illness is severe, the employer is required to report it to the Occupational Safety and Health Administration.
Note: It might be a requirement for the employee to appear before the workers’ compensation board to present their case. - If the insurer agrees to the claim, compensation for the injuries are made. The worker can accept the payment offer, which can cover disability payments, medical bills, and wages lost. However, employees have a chance to negotiate the payment to an amount they’re comfortable with for the injuries sustained. Once the employee recovers from the sickness, they can report back to work.
Tips for Making a Successful Workers’ Compensation Claim
The process of making a claim is often challenging for employees and employers. However, the following tips should help you as an employer to ease the process;
Do not wait. Instead, start the claim process immediately after the accident occurs
As an employer, ensure that the injured employee receives immediate medical attention.
For the employees, take a step to inform your employer about the injury immediately after it has occurred.
Depending on the state in which the claim is made, the allowed time limit to file for compensation will vary. Thus it is essential to consider these factors when you make a claim. The time limit applies for both an employee reporting to the employer and the employer reporting to the insurance company.
When Do You Make a Claim?
Three factors determine the eligibility of a claim:
- The injured must be an eligible employee in your business. The cover will not cater for injuries inflicted on individuals who don’t identify as an employee in the business of interest.
- The employer or the business must hold an active workers’ compensation scheme.
- The employee must be injured while at work. Any illness outside the workplace or not related to conditions in a workplace cannot be remunerated.
Determining the Cost of a Workers’ Compensation Plan
The costs of a workers’ compensation scheme will vary based on different factors:
- State: Each state has its unique statutes guiding the implementation of workers’ compensation policy. In some states, the cost of coverage will be low and high in others.
- Industry: The coverage cost will be high in high-risk fields such as mines, quarries, and construction companies. It will be low in low-risk work environments such as people working from an office.
- Number of Employees: The higher the number of employees in an organization, the higher the cost of implementing workers’ compensation insurance.
- The insurer will also use your organization’s safety records to determine the cost of the preferred workers’ compensation scheme adopted. If the records indicate high chances of work-related injuries taking place, the cost of the insurance policy will also be high.
- Consider the experience and status of the selected insurance company. Experienced companies help their clients select policies that are pocket-friendly and covers the best interest of the employees.
Final Thoughts
A workers comp is an essential aspect of your business. While it can be an added expense, it saves you from being held financially accountable and being sued if an employee sustains a workplace-related injury. For the employees, the scheme is a motivation that increases their productivity, thus making the business more profitable. It is an effective way of building an employee-friendly work environment that simultaneously cares in the best way for employees and business interests.
