A Startup’s Ultimate Guide to Workers’ Compensation  » Small Business Bonfire

If you’re a startup business founder, it’s likely that among your top priorities is fostering company growth. However, if you’re at the point of hiring staff, management concerns just get bigger. Now you have to take note of payroll taxes, insurance, and how to make your workplace safe, among other things.  

Likewise, in making your workplace safe, you should remind yourself that injuries are unavoidable no matter how you want to make your employees out of harm’s way.  

Per publicly available data, it’s said that there are countless occupational accidents and millions of victims of work-related injuries every year. Missed days from work and the chance of lawsuits from these injuries are possible outcomes that can gravely affect business productivity and profitability. This scenario can be bad for a startup that’s just finding some ground to expand and grow. 

Because work-related injuries can indeed be unhelpful, you should also take note of having worker’s compensation insurance in place to protect your startup and your employees in case of an accident.  

 What Is A Worker’s Compensation Insurance? 

Worker’s compensation insurance is a form of liability insurance that covers employees whenever an accident or illness occurs at work. This insurance pays for the employee’s medical expenses and lost wages while away from the job. Furthermore, it can also shoulder the funeral expenses and family benefits in case of accidental death.  

Similarly, worker’s compensation insurance can be beneficial for the employer, as it can hinder the staff from filing lawsuits because of work-related injuries or illnesses.  

What Does Worker’s Compensation Insurance Cover? 

As said, this type of insurance pays for the employee’s lost wages due to work-related injury or illness. Regardless of what happened, worker’s compensation insurance can pay for the medical expenses, lost wages, and even disability and funeral expenses. The only necessary condition is that the injury or illness must be related to the job. Otherwise, the insurance will not shoulder the costs because it was pre-existing.  

Also, there are other reasons this insurance will stop providing payments to the worker. You can read a full article here for more details. Here’s a more thorough breakdown of what worker’s compensation insurance can cover: 

  • Medical Costs: This insurance covers the expenses incurred due to injury or illnesses related to the job, including accidents and repetitive stress injuries. Overall, paying for medical costs will be helpful so that the worker can get back to work immediately. 
  • Ongoing Costs: Some injuries require more medical attention, especially if the worker needs rehabilitation or surgery. In this case, worker’s compensation will pay the costs. Yet as a startup owner, you’re deemed responsible for any work-related injuries or illnesses during their lifetime, even if they miss the job entirely. 
  • Death Benefits: It can be saddening that death sometimes happens on the job. When it happens, worker’s compensation will pay for the funeral expenses and even death benefits to the worker’s loved ones. 
  • Costs For Training And Education: If the injury requires the person to switch jobs, worker’s compensation will cover the expenses needed for training to have new work. 

Types Of Disability Benefits 

Disability benefits that a worker can gain from worker’s compensation insurance are meant to compensate for the part of the wages that such worker had lost due to work-related injury or illness. These benefits can fall into four categories, which are: 

  • Temporary Total Disability Benefits: This benefit applies to workers deemed unfit to return to work for a limited time by a medical professional. It gives wage reimbursement for a specific period until the worker can get back to the job or reaches the total number of weeks supported by the state. 
  • Temporary Partial Disability Benefits: This benefit compensates for the lost wages that the employee lost due to a temporary partial disability that hindered him from doing his job for a limited time, even when such an employee can still do some work. Here, various states also limit the time the payment will continue. 
  • Permanent Partial Disability Benefits: This benefit is issued when the work-related injury or illness is severe enough to allow for a life-long impairment but not enough to hinder an employee from working entirely. Likewise, to know the monetary value needed for the injury or illness, various states have their list of ‘scheduled’ losses that depend on the present type of issue. 
  • Permanent Total Disability Benefits: Reserved for the most severe cases, such as instances leading to the individual being completely blind, this benefit provides a safeguard for workers with injuries or illnesses that prevent them from working again. While the amount of money varies according to each state, most employees qualified for this benefit receive compensation throughout their lifetime. 

Are You Required To Have It? 

There are different kinds of insurance that your startup definitely needs. Nonetheless, not all startups or businesses require worker’s compensation insurance. Likewise, you may still want to check your state laws. There are things to consider whether you need it or not, these are: 

  • The type of your business; 
  • The number of employees; 
  • The kind of work you do; and 
  • The type of workers you have— usually farm workers, seasonal workers, domestic employees are excluded. 

If you’re a sole proprietor, worker’s compensation may be optional unless you have a staff who aren’t owners 

Some startups employ family members only—in this situation, you may not need a worker’s compensation insurance 

Reminders For Startup Founders 

Growing a startup is a priority for every founder. On the other hand, concerns will most likely get more significant if the business founder is hiring new employees. Likewise, one of the concerns that a founder or owner should address is how to make the work environment safer. 

Making the workplace safe is a process that should not be ignored, as millions of occupational injuries happen every year. Having injured employees can result in a loss of business productivity and even profits, which could be harmful, especially for a startup. 

To minimize the impact of job-related injuries that might happen, availing of a worker’s compensation insurance package or program can be helpful. This type of insurance will prevent legal actions from employees and reduce missed days from work. Overall, keep the things above to have an informed decision whenever you decide to have a worker’s compensation insurance for your business. 

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