THE LAW. Workers' compensation insurance provides compensation to employees for loss of income and for medical payments when they're injured on the job. A state workers' comp law covers most employers. There are very few exceptions, such as self-employed people, railroad employees and harbor workers. Also, the federal government's workers' comp programs protect federal employees.
Benefits are funded by state insurance pools, employers' own self-insurance or private insurance com-panies.
Workers' comp is a no-fault in-surance system. To collect benefits, workers don't have to prove that they're completely free from fault or that the employer is at fault.
Workers' comp also is an "exclusive remedy" system. That means, in ex-change for the expectation of benefits, workers can't bring a civil lawsuit against an employer to collect damages for worker-related injuries. The law typically makes exceptions in cases where the employer intentionally causes the injury or the injury is caused by a third party.
WHAT'S NEW. Workers' comp cost control is an increasingly front-burner issue for employers. Reason: In the past three years, the average workers' comp premium at U.S. businesses jumped 50 percent, thanks largely to rising medical and legal costs, according to the Insurance Information Institute. Employers in some states, including California, have seen costs double over that period.
Another reason for higher rates: more fraud. An Insurance Research Council survey last year said that 40 percent of insurance companies reported spending more to investigate questionable workers' comp claims and fight fraud during the past three years.
HOW TO COMPLY. Each state's workers' comp law has different rules regarding coverage, benefits, premium rates and insurers. Only Texas has an elective program (as opposed to a compulsory program). In most states, companies that have at least one employee are covered. While some states exempt small employers, they often have different definitions of a "small employer."
Your cost for workers' comp insurance depends on your business' industry classification (riskier business = higher rates) and loss experience (more injuries = higher rates), as well as on rates set by state law.
When a worker is injured, your coverage will pay for visits to an approved doctor, hospital stay, surgery, prescription drugs and medical devices.
Payments for lost wages usually begin after an employee has been off the job for more than seven days. In about 35 states, the payment amount is calculated based on the worker's average weekly wage for a period before the injury occurred, limited by the state's average weekly wage as set by law. The result? Payments typically equal about 66 percent of the worker's average weekly pay.
Hiring and retaliation. When interviewing an applicant, you can't ask whether he or she has ever filed for workers' comp; this could violate the Americans with Disabilities Act.
Once you've made a conditional job offer, you can investigate past workers' comp claims. But you can't withdraw a job offer based on the person's disability or the fact that he or she received workers' comp in the past. If the person can perform the job's essential function, you can't use his or her disability or use of workers' comp as a basis to pull the job away.
Also, courts have clearly stated that it's illegal to retaliate against workers who file workers' comp claims.
Interaction with. In many cases, workers' comp absences also qualify as (FMLA) leave. The absence won't qualify as unless the injury is a serious health condition, one that usually requires continued treatment by a health care provider.
If the injury does qualify as an FMLA-covered serious condition, you should promptly notify the worker that the time missed for a workers' comp injury will run concurrently with his or her remaining FMLA leave. Other-wise, a worker could take 12 weeks of FMLA leave in addition to any time off for a workers' comp claim.
Resources: Workers' comp
1. State laws. For a breakdown of each state's workers' comp law, go to www.dol.gov/esa/regs/statutes/owcp/ stwclaw/stwclaw.htm and click on Table 1.
2. Links to state offices. For contact data and a link to the Web site of your state workers' comp office, go to www.dol.gov/esa/regs/compliance/owcp/wc.htm.
3. Topic overview. For a detailed discussion of workers' comp issues, visit the Insurance Information Institute at www.iii.org/media/hottopics/insurance/workerscomp.
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