What is Workers' Compensation Insurance?
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured or if they become ill in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence.
Workers' Compensation Insurance Is Required By Law
In the state of California even if you only have one employee, per California Labor Code Section 3700 you are REQUIRED to provide worker's compensation benefits.
If any one of your employees gets hurt or sick because of work they perform for your business, you are required by law to pay for workers' compensation benefits. Workers' compensation insurance provides basic benefits, such as medical care, temporary disability, permanent disability, supplemental job displacement, a return-to-work supplement, and death benefits.
If you fail to acquire worker's compensation insurance because you believe your hiring independent contractors and pay them cash or provide them 1099 forms, be very careful. If they do not meet "Independent Contractor" status and the Division of Labor Standards Enforcement (DLSE) determines you are operating without workers' compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty the greater of (1) twice the amount the employer would have paid in workers’ compensation premiums during the period the employer was uninsured, determined according to subdivision (c), or (2) the sum of one thousand five hundred dollars ($1,500) per employee employed during the period the employer was uninsured. Click the button below for the full article.
How Do You Determine If Your Business Is Exempt?
There is no set definition but here is a list that can help!
While plans differ among jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance), and benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance).
General damages for pain and suffering, and punitive damages for employer negligence, are generally not available in workers' compensation plans, and negligence is generally not an issue in the case.
If you have a small family owned business and a family member get injured you may feel tempted to pay the medical bills.
It is illegal for an employer to pay medical bills directly. You must file a claim form (DWC form 1) with your claims administrator for all injuries that require more than first aid.
A Common Question Is:
Q. My niece, brother, sister, cousin, aunt, uncle, brother/sister in law etc helps in my business for a few hours a day, but I don’t consider him/her an employee. Is that correct?
A. No, under the labor law he/she is considered an employee. An employee is defined as someone you engage or permit to work. Even though your niece, brother, sister, cousin, aunt, uncle, brother/sister in law etc are part of your family, he/she is considered an employee and you, as the employer, must provide Workers’ Compensation Insurance to cover him/her in case of a work-related injury. In addition, you are also required to pay the minimum wage unless the employee is your spouse, parent or child and you are a sole proprietor or partnership. Corporations do not have children and therefore, no family relationship to the officers of the corporation can be exempt from these requirements.
To learn more about workers compensation please call or send an email with your inquiries to firstname.lastname@example.org
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