**Please note, this article is informational and does not constitute legal advice**
Every prospective employer needs to know something about Worker’s Compensation and what it entails. While each state’s programs may differ, the broad outline is the same, and each state will have employer premiums that are not passed on to the employee, and will also have reporting and accounting requirements. You should check with whatever state you operate in for the exact details!
Essentially, Worker’s Compensation is a mandatory program that assures that employees injured on the job can receive necessary medical treatment, disability, therapies, and even partial compensation for their injuries. In return, the employee cannot sue the employer for injuries, unless there is a high degree of negligence or recklessness on the part of the employer that resulted in the injury.
Worker’s Compensation in Washington State, for instance, is very typical in how it is administered, what it does, and what it requires of the employer. In Washington State, Worker’s Compensation is administered by the Department of Labor and Industries, and each and every employer, except certain family farms or perhaps major railroads are charged a premium for each employee. Again, this might differ slightly outside of Washington State and you should check with a lawyer on what your exact requirements are. The premiums are determined by the Department and are keyed to the actuarial experience of the job classification. For example, a law office secretary’s premium will be less than that for a fisherman. The premiums are also tied to the actual wages being paid. In some classifications, the premiums can easily reach 10% or more of the hourly wage.
Each employer must report the hours worked by an employee, the wages paid, and his or her job classification. The employer must then pay the appropriate premiums. In addition, each employer must report any on the job injuries. If an employee does seek medical attention, the employer may object to the treatment and costs on the grounds of the injury not being job related. This is because an employer can face higher premiums depending on the department’s experience, and in some cases will have bear at least a part of the costs.
Failure on the part of any employer to pay the premiums, or violation of reporting requirements, negligence or recklessness on the part of the employer can also result in substantial corporate and even personal penalties.
It is thus essential that an employer be very aware of this cost of doing business in his or her state, and plan for it. It is equally critical that the reporting requirements are followed precisely by whoever is charge of payroll and compliance.