The rules and regulations in relation to worker’s compensation insurance coverage differ for every state. Most states in the country require business owners to procure this insurance policy for their employees as a form of legal compliance. Failure to do so, business owners may face legal consequences in the form of fines or even imprisonment depending on the specific state law that is applicable. Consequently, it is important to know more about this insurance policy in order to avoid any future legal suits against your business and at the same time ensure the well-being of your employees.
What is Workers Compensation Insurance Coverage?
Worker’s compensation insurance coverage is a form of an insurance policy that assures that your employees will be given monetary compensation if they suffer from any illness, injuries, disability, or lost wages as a result of their work. The compensation allows the employee to receive money from the insurance carrier which can be used by them or by their families as beneficiaries to pay for medical bills, rehabilitation expenses, funeral expenses, and lost wages.
It is important to know that any compensation from this insurance policy can only be given if the illness, injury, disability, or loss of income is based on a work-related accident or condition. Consequently, this kind of insurance does not cover instances wherein the injury or illness is contracted outside of the work or if it is a self-inflicted injury by the employee.
Moreover, a prior filing of an insurance claim within a prescribed period is mandatory in order that the insurance provider can have sufficient time to validate its authenticity and to assess the gravity of the work-related injury or illness. In this way, employers and employees alike can have peace of mind that they can seek compensation under their insurance policy in the event of an accident or illness as a result of their employment.
In the country, the rules on worker’s compensation insurance coverage differ per state. However, most states require employers to purchase this insurance policy for their employees as part of their business regulation laws. In states where worker’s compensation insurance coverage is mandated by law, business owners who do not provide their employees with the said insurance policy can face legal consequences through penalties ranging from fines even imprisonment based on the specific laws of a particular state.
What are the Legal Consequences if I get caught without workers’ compensation?
These are examples of penalties per state if a business is found to be operating without any worker’s compensation insurance coverage for their employees. Take note that the following list is simply an overview and does not constitute a legal discussion of the manner and extent of penalties in all states in the country.
- In Alabama, non-compliance with the workers’ compensation insurance requirement amounts to a misdemeanor which has a penalty of a fine of not less than $100.00 nor more than $1,000.00 upon conviction.
- In Arizona, non-compliance with the workers’ compensation insurance requirement has a penalty of a fine between $1,000 and $10,000 based on the number of offenses.
- In California, an employer that fails to procure a worker’s compensation insurance for its employees may be liable for a misdemeanor that carries a penalty of imprisonment, a massive fine, or both.
- In Colorado, non-compliance with the workers’ compensation insurance requirement can result in an issuance of a cease and desist order against the business which has the effect of suspending its business operations. In addition to this, the business may also be penalized with fines in the amount of at least $250 for each day that the employer fails to insure its employees. This fine may increase for subsequent violations.
- In Florida, non-compliance with the workers’ compensation insurance requirement may result in an issuance of a stop-work order which results in a halt of all business operations until the employer complies with the requirement. In addition to this, the business is also required to pay a fine twice the amount that the employer would have paid in insurance premiums for the period that their employees were not covered in the previous two years or $1,000, whichever is higher.
- In Georgia, non-compliance with the workers’ compensation insurance requirement may result in a civil penalty in the form of a fine against the business. One can also be held liable for criminal penalties as a refusal or wilful neglect by an employer to maintain insurance coverage for its employees is considered as a misdemeanor with a corresponding fine ranging from $1,000 to $10,000 or imprisonment up to one year, or both.
- In Idaho, an employer that fails to procure a worker’s compensation insurance for its employees may face an injunction resulting in the cessation of business operations. Businesses operating without the said insurance coverage for their employees may also be liable to pay a fine of $2.00 per day per employee or $25.00 per day, whichever amount is greater. In addition to this, said businesses may also face misdemeanor charges which have corresponding criminal penalties.
- In Illinois, an employer that fails to procure a worker’s compensation insurance may face serious penalties. Wherein, they could be fined $500 for each day that it did not carry workers’ compensation insurance, at a minimum of $10,000. In addition to this, said businesses may also face misdemeanor charges which have corresponding criminal penalties.
- In Kentucky, an employer that fails to procure a worker’s compensation insurance may face penalties such as the payment of a fine worth $1,000 for each employee not covered by said insurance. This fine will be charged for each day the employer was unable to procure the said policy for its worker.
- In Louisiana, non-compliance with the workers’ compensation insurance requirement may result in a civil penalty in the form of a fine equivalent to a maximum of $250 per employee for the first violation. For subsequent violations, the employer may be mandated to pay a fine worth $500 per employee for each subsequent violation, up to a maximum of $10,000.
- In Maryland, a business operating without the required workers’ compensation insurance coverage may be fined up to $10,000.
- In Massachusetts, an employer who fails to comply with the workers’ compensation insurance requirement may face a fine worth $100 per day, including weekends and holidays starting from the date of the issuance of the stop-work order, for each day the employer fails to provide coverage.
- In Michigan, a business operating without the required workers’ compensation insurance requirement may face a fine amounting to $1,000 or imprisonment ranging from 30 days and six months. In addition to this, the employer could also be prevented by the court from employing new employees until it complies with the said requirement.
- In Minnesota, an employer who fails to comply with the workers’ compensation insurance requirement may face a “fine of up to $1,000 for each employee per week during the time the employee was not insured.”
- In Missouri, an employer who knowingly fails to comply with the workers’ compensation insurance requirement may face misdemeanor charges. If found guilty, the employer shall be compelled to pay a fine of up to thrice the annual premium the employer would have paid had it been insured or up to $50,000 whichever is greater. Further, the subsequent violation shall be classified as a felony.
- In Montana, an employer who fails to comply with the workers’ compensation insurance requirement may face a fine equivalent to twice what you should have paid in worker’s compensation insurance premiums. The minimum penalty is $200, but the state may also charge other penalties, costs, and interests for your violation.
- In Nebraska, non-compliance with the workers’ compensation insurance requirement may result in a civil penalty of up to $1,000 per violation, in which each day of non-compliance amounts to a separate violation. In addition to this, the employer may also face imprisonment for not more than one year, or both fine and imprisonment.
- In Nevada, an employer who fails to comply with the workers’ compensation insurance requirement may face a fine of up to $15,000 in addition to other premium penalties. Moreover, business closure may also be mandated by the court.
- In New Jersey, an employer who fails to comply with the workers’ compensation insurance requirement may face a penalty of up to $5,000 for the first ten days. After the said period, an additional penalty of up to $5,000 for each ten-day period that the employer fails to comply with the requirement shall be given. If the entity is a corporation, corporate officers may be individually liable.
- In New York, non-compliance with the workers’ compensation insurance requirement, if there are five or fewer employees within a 12 month period, shall amount to a misdemeanor that may be penalized by a fine of not less than $1,000 nor more than $5,000. If there are more than five employees within a 12 month period. The violation shall be considered as a class E felony which has a penalty of a fine of not less than $5,000 nor more than $50,000. In addition to this, the employer may also be liable for other penalties as provided by law.
- In Oklahoma, non-compliance with the workers’ compensation insurance requirement may result in a penalty of $1,000 fine for each day the employer fails to provide said insurance to its employees.
- In Oregon, non-compliance with the workers’ compensation insurance required for the first offense constitutes a penalty of a fine worth twice the amount of premium the employer should have paid for insurance, with a minimum of $1,000. If the employer continues to employ without the said insurance policy for its employees, the fine shall be $250 per additional day of noncompliance after the first order. In the third or subsequent order, the Workers’ Compensation Division may request a permanent court injunction against the business.
- In Pennsylvania, non-compliance with the workers’ compensation requirement may result in a criminal offense of a misdemeanor of the third degree. The employer may face a fine of up to $2500 or imprisonment of one year. If non-compliance is proven to be intentional, then it shall constitute a felony of the third degree which has a penalty of $15,000 fine and up to seven years in jail. Each day of non-compliance constitutes an additional criminal count which may increase the fines and jail time.
- In Utah, non-compliance with the workers’ compensation insurance requirement may result in a fine of at least $1,000. In addition to this, the business may also face injunctions which results in the cessation of all business operations.
As can be gleaned from the list above, most states in the country have their own state laws penalizing employers who do not comply with the workers’ compensation insurance requirement.
While there are some exceptions to the requirement of a workers’ compensation insurance based on the specific rules of the state, the kind of business entity, the classification, and the number of employees of the business. It is better to secure yourself against any lawsuits that are not only expensive but time-consuming as well.
Bottomline
As the saying goes, “It is better to be safe than sorry.” One way of preventing any legal liability is by being knowledgeable about workers’ compensation insurance policy and the specific laws governing your state.
Knowledge is power!
Want to know more about Workers’ Compensation Insurance Coverage? Contact Advantage Insurance Solutions today. Our team of insurance experts will assist you in choosing the best coverage that will suit your specific needs and protect you and your employees from any risks.