Workplace injuries and illnesses are a potential risk in every industry, even in office-based professions like consulting, where physical danger is not readily apparent. In addition to common injuries that can occur when employees slip and fall, repetitive strain injuries are prevalent among modern office employees since workers often spend significant amounts of time at their desks and computers. Consultants may work long hours and develop injuries such as eye strain or carpal tunnel syndrome, which can result in medical fees and even prevent your employees from working while they recover. If your employees suffer injury or illness as a result of a work-related incident, Workers’ Compensation Insurance, or Workers’ Comp, will provide coverage for their medical expenses and lost wages.

What is Workers’ Compensation Insurance for consultants?

Workers’ Compensation Insurance is a type of no-fault insurance that provides monetary and medical benefits to employees or their survivors for work-related injuries or illnesses. Workers’ Comp can provide injured employees with funds for medical expenses, rehabilitation, and a portion of lost wages if they are medically authorized to take time off from work. If an employee dies from a work-related accident or injury, Workers’ Comp can pay for funeral costs and death benefits for the employee’s dependents. No matter who is at fault for the injury or death, Workers’ Comp will pay out benefits.

Example:

• An employee of your management consulting firm develops carpal tunnel syndrome after working long hours to complete an important project. The employee’s doctor advises her not to return to work for a month and to complete physical therapy. Workers’ Comp pays for the employee’s medical expenses and a portion of her lost wages while she is recovering and unable to work.

It’s important to bear in mind that Workers’ Compensation systems are different in every state, as local laws and legal decisions have shaped the way that states handle and investigate claims, enforce regulations, and dole out benefits. In most states, employees cannot opt out of Workers’ Comp if an employer purchases coverage. When they accept Workers’ Comp benefits, they agree not to sue the employer for the injury.

Is Workers’ Compensation Insurance required for consultants?

In most cases, Workers’ Compensation would be required for employers in the consulting industry. Workers’ Comp is not regulated at the federal level, and each state has its own Workers’ Compensation laws, meaning there may be differences in the types of businesses required to carry Workers’ Comp, the types of employees that are covered, the types of injuries or illnesses that are covered, and the penalties for violating Workers’ Comp laws. Texas is the only state where Workers’ Compensation is fully optional for employers.

Most states require you to purchase Workers’ Comp coverage as soon as you hire your first employee, but some states don’t require it until you hire a certain number of employees. If you are legally required to carry Workers’ Compensation Insurance and choose not to, you may be subject to fines and penalties, and in some states, criminal charges. Even businesses that aren’t legally required to carry Workers’ Compensation Insurance may choose to have this coverage in order to protect their employees and themselves in the event of a work-related injury. If you don’t have Workers’ Comp, you could be sued for the medical expenses and lost wages of injured employees.

What does Workers’ Compensation Insurance cover?

Workers’ Compensation Insurance covers work-related injuries and illnesses, whether they take place at your business location, at other work sites, or while an employee travels for work. States regulate what specific types of illnesses and injuries are covered, what benefits are available for employees, and what tests or medical examinations are required to verify claims. Claims and benefits for injuries or illnesses that result from repetitive motion or cumulative trauma, pre-existing conditions, or emotional or mental stress, may vary widely depending on the state in which your consulting business or employees are located. Because of this variation in regulations and requirements, it’s important for companies with employees in multiple states to work with insurers to make sure they have adequate coverage for all their employees.

Example:

• Your financial consulting company has offices in Virginia and Georgia. Employees in each office develop repetitive strain injuries over time, caused by computer use. They each file Workers’ Comp claims for their injuries. In Virginia, only injuries that are caused by a specific incident are covered; injuries caused over a long period of time through repetitive motions are not covered. However, in Georgia, repetitive injuries are covered as long as they are directly caused by your job activities, regardless of whether they are caused by a specific incident. This means that the Georgian employee’s claim would likely be covered, while the Virginian employee’s claim would not.

Who is covered by Workers’ Compensation Insurance?

Workers’ Compensation Insurance covers your company’s employees if they suffer a work-related illness or injury. An employee is defined as anyone who provides services at the direction of an employer. This coverage includes employees who are non-U.S. citizens.

Depending on your state’s regulations, certain types of workers may or may not be excluded from coverage. For consulting firms, it’s likely that the majority of your employees would be covered, as many of them will be full-time employees. If your firm hires or works with independent contractors, however, it’s possible they would not be covered in your state. It’s important to check your state laws to see what types of workers are covered under your Workers’ Comp policy.

What kind of claims does Workers’ Compensation Insurance pay for?

Injury and Illness

If an employee suffers a work-related injury or illness, Workers’ Comp will pay for:

• Medical expenses, including hospital visits, medical procedures, and prescriptions
• Ongoing care, including rehabilitation and physical therapy
• A portion of lost wages during the time the employee is unable to work

An employee’s lost wages are payable during the period of time in which the employee has been medically authorized to take time off from work. Payments are usually a specific percentage of the employee’s wages, and this percentage varies by state. There is also typically a waiting period before an employee can begin to receive benefits, and this waiting period also depends on state regulations.

Example:

• An employee of your cybersecurity consulting company is moving a large desktop computer into the storage closet. As the employee picks up the computer, his back gives out. He requires medical treatment and is unable to work for a month while he undergoes physical therapy. Workers’ Comp would pay his medical and rehabilitation expenses, as well as a portion of his wages while he is unable to work.

Death

In the tragic event that an employee dies from a work-related incident, Workers’ Compensation Insurance will pay for:

• Funeral costs
• Death benefits for the employee’s beneficiaries, such as a spouse or children

Death benefits are calculated based on the worker’s wages at the time of death (the insurer will usually pay about two-thirds of the workers’ income, but it varies by state). For a surviving spouse, the benefit may be paid until his or her own death or remarriage, depending on the state. For children, the benefits may be paid until the children reach age 18.

What are the key exclusions to Workers’ Compensation Insurance?

Workers’ Comp covers most injuries that occur during the course and scope of employment, and while covered injuries may vary by state, there are certain situations that are more commonly excluded. Workers’ Comp generally does not cover:

• Injuries that occur while the employee is commuting to and from work
• Injuries arising from recreational activities where the employee’s attendance is voluntary and for the benefit of the employee (and not the employer)
• Substance abuse or alcohol-related injuries
• Injuries sustained while not engaged in work-related activities
• Fights or violence initiated by the employee
• Injuries that are intentionally self-inflicted
• Horseplay or violations of company policy

Example:

• One of your HR consulting firm’s employees is involved in a car accident on the way to work. Her injuries would not be covered by Workers’ Comp because she was injured on her commute.

Workers’ Compensation Insurance vs. Employers Liability Insurance

It’s important to understand how Workers’ Comp coverage differs from employers liability insurance, which is often included as the second part of Workers’ Comp coverage. While Workers’ Compensation is meant to provide financial and medical benefits to employees, employers liability insurance is meant to protect the employer from liability.

In general, employees cannot sue their employer for injuries that are covered by Workers’ Compensation Insurance, and each state individually defines what injuries and illnesses are covered. If employees have suffered injuries that are not specifically covered under Workers’ Comp, they may sue their employer. Additionally, an employee may sue for additional damages beyond what is covered by Workers’ Comp. For example, an injured employee may sue for additional damages if he believes his injury was caused by the employer’s negligence.

Employers liability insurance can step in to address these risks, providing coverage for legal fees, court costs, and any settlements or judgments against your company.

How much does Workers’ Compensation Insurance cost?

Pricing for Workers’ Compensation Insurance is based on a number of factors, including:

• Business location
• Number of employees
• Dollar amount of payroll
• Claims history
• Nature of the business, which is based on the industry classification code

To get a quote on Workers’ Compensation Insurance, use our quoting tool here.

To determine pricing for premiums, insurers generally assess a company’s risk levels, and each industry has a classification code that indicates its type of activities. Since companies in the consulting industry typically do their work in an office environment, their risk may be lower. Businesses in physically hazardous industries pay higher premiums.

Insurers calculate what’s called an “experience rating” for your company, which takes the number of claims and losses your company has in its history and compares those against other similar companies in the same industry classification. The experience rating helps insurers understand how likely a claim will be filed by your company. The higher the likelihood of a claim, the higher your premium will be.

Final Word

As a consulting company, your work may not be highly physically hazardous, but there is still a chance that your employees could be injured while working. In particular, repetitive strain injuries and trip-and-fall injuries are common for office workers. If your employees injure themselves or become ill for reasons related to their work, Workers’ Compensation Insurance will cover their medical expenses and a portion of their lost wages. This coverage is a legal requirement in most states. Even if it is not legally required for your company, it’s a good idea to consider carrying Workers’ Comp policy to protect your employees if they are injured while performing their job duties.