Workers’ Compensation Insurance provides financial support for employees who fall sick or become injured on the job.
Get a quote on Workers' Compensation Insurance
What is Workers’ Compensation Insurance for IT professionals?
Workers’ Compensation Insurance is a type of liability insurance that provides financial benefits to your employees if they suffer a work-related injury or illness while working for your business. Most injuries that occur while an employee is working qualify for Workers’ Compensation coverage. The insurer will pay for medical expenses, rehabilitation, and a portion of lost wages for the injured person. 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 surviving family.
- A computer programmer at your software development company develops carpal tunnel syndrome after working long hours to complete an important project. Workers’ Comp pays for the employee’s medical expenses and lost wages while they are recovering and unable to work.
When employees accept Workers’ Comp benefits, they agree not to sue your company for the injury. In most states, employees cannot opt out of Workers’ Comp. Workers’ Compensation is a no-fault policy, which means that insurers will pay benefits regardless of who is at fault for the injury. Benefits would still be paid even in situations where the employer created an unsafe environment that caused an employee to be injured or where the employee acted unsafely.
Is Workers’ Compensation Insurance required for IT professionals?
Workers’ Compensation Insurance is regulated at the state level, and almost every state requires you to have it if your business has employees. In most cases, owners or partners in the business are not counted as employees. Most states require you to purchase Workers’ Comp coverage as soon as you hire your first employee, while others don’t require Workers’ Comp until you hire a certain number of employees, with coverage being required after you hire your third, fourth, or fifth employee. If you don’t carry this insurance when you are required to have it, you may be subject to fines and penalties, and even criminal charges in some states.
The only state where Workers’ Compensation Insurance is completely optional is Texas. However, businesses who aren’t required to have Workers’ Compensation Insurance may still choose to carry this coverage to protect their employees and themselves in the event of a work-related injury. Companies that don’t have Workers’ Compensation Insurance can be sued for the medical expenses and lost wages of injured employees.
What does Workers’ Compensation Insurance cover?
Workers’ Compensation Insurance covers any injury or illness that is related to work, including injuries that take place at your business location, at outside work sites, or while an employee travels for work. Injuries that occur while an employee is driving for work purposes (such as traveling from their office to a client’s office) are covered, even if the employee is using their personal car. However, injuries an employee suffers while commuting to and from work are not covered.
- A technician at your telecom installation company falls off a ladder and sustains a head injury while installing cabling at a client’s offices. Workers’ Comp would pay for her medical expenses and lost wages.
Most injuries that happen while working are covered, but each state has individual regulations and requirements for Workers’ Compensation Insurance. 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. Since coverage requirements vary by state, it’s important for companies with employees in multiple states to work with their insurers to make sure they have adequate coverage for all employees.
- Your IT consulting company has offices in Virginia and California. Employees in each office slowly develop repetitive strain injuries caused by long hours of typing. 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 California, 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 Californian 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 employees at your company who 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 minors or non-U.S. citizens, but excludes independent contractors.
Certain types of workers may or may not be excluded from coverage, depending on state regulations. It’s important to check with your state laws to see what types of workers are covered under Workers’ Comp.
The following are some of the types of workers whose coverage varies by state:
- Seasonal workers
- Agricultural and farm workers
- Domestic workers
- Undocumented workers
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
- Ongoing care, including rehabilitation and physical therapy
- A portion of lost wages during the time the employee is unable to work
Lost wages payments are typically a percentage of the worker’s wages before injury. Insurers usually pay about two-thirds of lost income, but the exact percentage depends on the state. The amount and length of coverage also depends on whether the employee’s disability is temporary or permanent and whether their impairment is partial or total.
- An employee at your digital marketing company trips over some loose carpet in your offices, severely spraining his ankle. As a result, your employee visits a doctor, and he is required to wear a foot brace and use crutches. Workers’ Compensation pays for his medical costs.
If 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 (usually benefits 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 work-related injuries, but some situations are excluded. Situations Workers’ Comp would not cover include:
- Injuries while commuting to and from work
- Drug or alcohol-related injuries
- Injuries sustained while not engaged in work-related activities
- Fights or violence initiated by the employee
- Injuries that are purposefully self-inflicted
- Horseplay or violations of company policy
- During a heated argument with a coworker, one of your firm’s web developers angrily punches a wall, injuring his hand. Because the injury was self-inflicted, Workers’ Comp would not cover it.
Workers’ Compensation Insurance vs. Employers’ Liability Insurance
In most states, employees cannot sue their employer for injuries that are covered by Workers’ Compensation Insurance. Each state defines what is covered under Workers’ Comp. For injuries that are not specified as covered under Workers’ Comp, employees may sue their employer for damages. Employers’ liability insurance, also known as “Part Two” or “Part B” of Workers’ Comp, covers these risks. It will defend any cases brought against your company for injuries not covered by Workers’ Comp, covering legal fees, court costs, and any settlements or judgments against your company. Workers’ Compensation policies usually include employer’s liability coverage, but in some cases you may need to buy it separately.
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
Most premiums are quoted as a rate per $100 of payroll. Businesses in riskier industries pay higher premiums. Each industry has a classification code which indicates its type of activities and level of risk. Since many IT industry companies do their work in an office environment, their risk may be lower.
The number of claims your company has in its history is known as your company’s “experience rating.” Companies with fewer claims than the average for their industry will have a lower experience rating, which will result in lower premiums. A history of many smaller claims will raise a company’s premium more than one large claim because insurance companies take many smaller claims as a sign that larger claims are likely to happen in the future.
Every company runs the risk that their employees may be injured on the job. While most IT companies may not have a high level of physical hazards compared to many other industries, trip and fall injuries and repetitive strain injuries are still common. Workers’ Compensation Insurance will cover medical expenses and lost wages for employees who are injured while working or have an illness related to their work. Workers’ Comp coverage is required by most states, and even where it is not required, IT companies should consider carrying this coverage to protect their employees who are injured in the course of their job duties.