Workers’ comp isn’t exactly the most uplifting thing to think about — but it sure is important to get right. Think of it as a virtual bubble wrap that protects you and your team if they ever get hurt at work. At times, it can be really difficult to figure out what you have to do with it as an employer. In fact, the National Federation of Independent Business found that workers’ comp is one of the top 10 most troublesome problems for small businesses. But not anymore. In this article, we’ll give you the download on how to get started with workers’ comp so you can feel good about offering it to your team.
Why is it important?
Because your team’s well-being is on the line. By providing coverage for paid medical care and lost wages, it helps employees breathe easy in case anything goes haywire at work. Plus, it also helps fence your company away from fines and lawsuits that can hit you if you don’t have insurance in place. All in all, getting workers’ comp is the right move to make if you want to keep your team safe.
Am I required to offer it?
Minus Texas, companies in every state need to have coverage for employees, which is determined by how many people are on your team. Note that this requirement doesn’t apply to independent contractors, but you can still provide it to them.
However, even if you live in a state that doesn’t mandate coverage, it’s wise to sock it away anyway. All companies are responsible for employee claims, regardless of whether or not they have a plan in place. See what your state’s requirements are here on this table.
How much does workers’ comp cost?
According to the Bureau of Labor Statistics, the average cost of workers’ comp insurance is around 1.4 percent of a person’s total compensation. So if one of your employees makes $75,000 a year, you can expect to pay in the ballpark of $1,050 a year on workers’ comp insurance (but remember, your exact total cost will vary).
Here are the main factors that roll into the price you’ll end up paying:
- Annual Payroll: The smaller your team, the smaller your premium.
- Claims History: If you have a low frequency of losses or accidents, your premium may also be lower.
- Business industry and role of employees: If your business industry and/or employees’ roles are deemed “high risk,” your premiums may be higher.
- Inclusion/exclusion of owners or officers: Some states allow corporations to exclude owners and/or officers from coverage, which can lower the price of premiums.
Okay, I’m ready to enroll in a plan. Now what?
You can get a workers’ comp quote through a pay-as-you-go service like Gusto, or directly through an insurance carrier. To get started, you simply call or sign up to get it all squared away.
Once you nail down a provider, keep the following information handy to speed up the enrollment process:
- Business name
- Physical and mailing addresses
- Telephone & fax numbers
- Number of locations
- Number of employees by location
- Annual payroll by location
- Type of business entity
- Federal Tax ID Number (FEIN) for your business, or a Social Security number if you’re a sole proprietor.
- Recent history of any workers’ comp claims
Life is full of surprises. Thankfully, insurance was invented to make sure those surprises don’t knock you down. Workers need workers’ comp insurance, plain and simple. Now that you know the requirements, you’re even closer to solving this important puzzle for your team.