Are you curious about workers’ compensation insurance as a small business owner? The National Federation of Independent Business (NFIB) has put together a list of common myths and misconceptions about workers’ compensation.
Myth: My business is small, so I don’t need workers’ compensation insurance.
Fact: Almost all states require employers with five or more employees to have a workers’ compensation policy.
Myth: Once an employee’s claim is paid, the issue is gone away forever.
Fact: The payment of an employee’s claim is just the beginning for an employer. Maintain frequent contact with the injured employee to assess when they will be ready to return to work. If you do not have a return-to-work program in place, consider setting one up. An employee receiving benefits is paid, on average, 50 to 70% of their normal wage. Back at work, an employer only pays 30 to 50% more for a full-time team member. A business will want to keep any paperwork associated with the claim for at least 10 years after the final workers’ compensation payment.
Myth: Workers’ compensation rules are the same from state to state.
Fact: While the general guidelines are similar across the board, there are some exceptions. Check out NFIB.com for different rules.
Myth: Business owners need to pay workers’ compensation for freelancers and contract workers.
Fact: Companies don’t have to pay workers’ compensation, unemployment or disability taxes for freelancers, contract workers or other “1099 workers.” To prevent freelancers from being misclassified as employees, be sure to pay them on a project-by-project basis rather than paying an hourly, daily, or weekly wage.
Myth: Lots of workers’ compensation claims are fraudulent – workers are just looking for a chance to make a false claim.
Fact: Studies show that only 1-2% of workers’ compensation claims made are fraudulent. If you do have suspicions about a claim’s validity, report it for investigation, but treat claims as valid until proven otherwise.