Common Worker’s Compensation Questions
What is worker’s compensation?
Wikipedia describes it as a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the tort of negligence.
Are you required to carry a worker’s compensation policy?
Requirements vary by state and industry, if you are unsure reach out to your agent for help. Keep in mind that without a workcomp policy you are basically self-insuring your employees and 1099 labor, in a court of law they will both be considered labor and in the event of an accident at work, if the employer does not have a workcomp policy, they are automatically guilty, you essentially give up your right to a trail.
How is workers compensation calculated?
Workers' compensation insurance premiums are calculated according to how employees are classified (with regards to the specific type of work they perform) and the rate assigned to each employee classification. The premium rate itself is expressed as dollars and cents per $100 dollars of payroll for each class code.
What is a workers compensation audit?
The policy term renewal audit determines your company’s’ actual payroll and verifies that payroll is correctly class coded, the audit is very routine and doesn’t mean you were singled out. The audit can create additional premium if you show more payroll than estimated and/or if you are incorrectly coded…most often it is the payroll that causes additional premium, payroll is defined as but not limited to...
- Wages
- Salaries
- Commissions
- Bonuses
- Extra pay/overtime
- Holiday/vacation/sick pay
- Piecework/profit sharing/incentive plans
- Value of housing accommodations provided to employees
- Value of meals
- Substitutes for money, like gifts
- 1099 contract labor
- Subcontractors
Am I covered out of state?
It depends on how the policy is written, what state your business is located in, where the employees live and how long the job last. Generally speaking it is best to have each state listed in the policy.
