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What small businesses need to know about workers’ compensation

Generally speaking, companies in New York that have at least one employee will need to purchase workers’ compensation insurance. However, it isn’t uncommon for small business owners to either fail to purchase such a policy or have a limited understanding of how the workers’ compensation system works. Typically, a workers’ compensation insurance policy pays any medical bills an injured worker incurs in addition to a portion of that person’s lost wages.

However, it may also be possible to purchase policies that include long-term disability payments or survivor benefits. While a workers’ compensation insurance policy will likely eat into a company’s profit margin, there are ways to minimize yearly premium costs. For instance, it may be possible to apply for experience modification rates or conduct annual workers’ compensation audits to look for wasteful spending. Employers should know that they are not always liable for injuries that workers incur.

For instance, if an employee is drunk or otherwise impaired when an accident occurs, the workers is generally liable for treatment or other costs. Individuals may also be unable to claim benefits if an injury occurs away from a job site. Finally, workers’ compensation insurance does not cover subcontractors or others who are classified as independent contractors. It is important to note that employees may be entitled to workers’ compensation benefits even if they have medical insurance.

A company that doesn’t have a workers comp policy may face fines or other penalties for failing to comply with employment regulations. Companies that don’t carry adequate insurance may also have to pay thousands of dollars or more in medical and other costs if an employee is injured. Those who have questions about the workers’ compensation system or how to comply with applicable regulations may benefit from talking with a legal representative.