A brief history of workers compensation insurance
Before workers compensation insurance statutes were adopted by most states, injured workers could sue their employers to recover medical expenses, lost wages and other damages resulting from work-related injuries. Employees first had to prove the negligence of their employer in a lengthy, costly and ambiguous process. The employer would sometimes then retaliate, making the process even more difficult. The employer could claim the employee contributed to the accident, was at fault or assumed the risk by simply accepting the job among other defenses. Statutes removed the right to sue, while obligating the employer to pay the damages without proof of negligence. Workers compensation is a “no fault” system, meaning fault is irrelevant to qualify for benefits.
What can workers compensation cover?
Workers compensation insurance offers benefits to employees for medical expenses, lost wages, funeral expenses, dependency benefits and rehabilitation services resulting from occupational injuries or diseases. It covers temporary and permanent disability benefits as well as temporary total disability benefits. These benefits are entitled to anyone who qualifies as an “employee” unless they have been specifically excluded.
Who is required to carry workers compensation insurance?
Nearly every employer is required to carry workers compensation insurance in Oklahoma. Employers may be subject to hefty penalties if they do not carry it. Keep in mind different states have different statutes, so if you have employees in multiple states, you will have to keep up with multiple requirements. In Oklahoma, certain employees may be exempt, but it is important to stay abreast of the law as it changes. Even though certain employees may be exempt, it is always better to have coverage in place.
Who doesn’t have to be covered by workers compensation insurance?
Although those listed below aren’t required to be covered, it’s important to remember that without insurance, the company or individual won’t have protection against expenses resulting from workplace accidents. Workers compensation policies will give you peace of mind as they will usually be tailored to the laws of your state. As previously stated, laws and definitions may change so it is always best for the business owner to stay abreast of the law.
- Sole proprietors
- Partners
- Members of an LLC
- Corporate officers
- Employees who have at least 10% of stock or more in the corporation are excluded from the definition of “employee”
What about independent contractors?
In Oklahoma, an independent contractor does not qualify as an employee. Bear in mind that the state definition and IRS definition may have different criteria as to what is considered an independent contractor. There are many factors to considered in determining if an employer-employee relationship exists, including:
- Is there a written contract agreeing that one party is an independent contractor?
- How much control does the contractor have over your work?
- Does the contractor do similar work for other businesses?
- What is the length and frequency of the job?
- What is the payment structure? Do you receive an invoice from the contractor? Do they provide a 1099?
If the contractor’s employees are injured on your job, your workers compensation insurance will not take effect since they are not considered as “employees” of your company. Therefore, it is important to ensure your contractor has their own workers compensation insurance and they are considered an independent contractor in the eyes of the state. This can be done by requesting certificates of insurance and requiring the contractor provide you with an affidavit of exempt status. Forms are available on the Oklahoma Workers Compensation Commission website.
Also remember that workers compensation insurance is an audited form of insurance. The insurer may require additional premium if there is no clear distinction between the firm’s employees and independent contractors’ employees.
Where can I get workers compensation insurance?
At OAMIC, we understand the challenges that law firms face. We can provide our members with the right coverage to meet their needs. The workers compensation policy provides assurance, compliance with workers compensation regulation as well as benefits to your employees resulting from work-related injuries. Visit our Workers Compensation Insurance page to apply for a quote.
Author
Zindaba has been at OAMIC since 2017. With an MBA from the University of Central Oklahoma, she is responsible for analyzing the financial costs of risk. She has her Associate in General Insurance and is working toward an Associate of the Casualty Actuarial Society. Before coming to OAMIC, she worked in research for a university, in addition to being an actuarial assistant at another insurance company.