Unpredictability of Workers Compensation for Small Business Owners


workers compensation

Broadly speaking, companies are responsible for their employees’ wellbeing at the workplace and in any other locations where the employee carries out job-related tasks. Given this, many states have passed laws that make workers compensation mandatory. The purpose is to reduce litigation related to work accidents and protect employees by requiring companies take workers compensation.

While workers compensation is valuable in various ways, one must realize that it can put a strain on companies, especially those that operate in certain industries where work-related incidents are more frequent. Add on top of this the unpredictability of insurance costs in states like New York, and businesses can be burdened even further. This issue should not be overlooked as entrepreneurship is a major engine for the economy and it is therefore desirable to create the proper conditions for businesses to grow and prosper.

After 10 years of reform challenges, a new bipartisan bill has been pushed through the legislature to reform workers compensation in New York where the insurance rates have been among the highest in the whole country. Most issues center around how much businesses have to pay, how much it takes to review a claim and the level of care provided by a workers compensation insurance policy. A reform should benefit both employers as well as employees who get injured or sick on the job.

What does workers compensation insurance cover?

There are, of course, a wide range of claims that may be considered within workers compensation. For example, policies generally cover the medical expenses and a portion of the lost wages of an employee who’s injured doing his work. Particularly valuable in some industries where occupational illness is common, policies can cover the medical expenses and a percentage of the wages for the duration that the employee is out of work due to a job related illness (working with dangerous chemicals, frequent exposure to asbestos, etc.)

Another common type of claim covered is repetitive stress injury (for example, carpal tunnel syndrome or herniated disks in employees who repeatedly lift heavy boxes). Workers compensation can take care of rehabilitation and therapy costs as well as a part of the wages for the recovery period.

If an employee is left disabled after a work related injury, there are also disability insurance policies that can protect the employer from paying the medical bills and a part of the salary if the employee is unable to perform his job anymore as a result of that disability.

It’s important to also understand the situations that workers compensation insurance does not cover: self-inflicted injuries, injuries while not on the job, and injuries while violating company rules or while committing a crime.