Workers Compensation for Todays California Contractor

Insurance is one of the most important considerations for your business, and Workers Compensation coverage it is quickly becoming the area that most business owners need to pay special attention to, especially in California.

Workers Compensation insurance is not an option for business owners—large or small—in the state of California. Even home-based businesses with a single employee must hold Workers Compensation insurance. This insurance covers employees who are injured on the job while on company property as well as off company property as long as the injury occurred while in the line of duty including automobile accidents. It also covers any illnesses that are work-related. The insurance is used to pay the medical costs of the employee that are accrued from this injury or illness, as well as compensation for loss of pay due to the illness or injury. The medical costs can include the initial medical services as well as any recovery or rehabilitation costs that may be necessary. These policies should not be mistaken for medical coverage since they must be purchased as a separate policy from the medical insurance offered by the employer. The distinction is that Worker’s Compensation insurance only covers employees while they are on
the job.

Until recently, it was a relatively common practice for small businesses to operate without Workers Compensation insurance since law enforcement was ill equipped to detect those businesses breaking this law. However, California has recently put into action a bill that will not only serve as a watchdog for California businesses and their Workers Compensation insurance, but it also penalizes any business without coverage. Though businesses will be given a grace period during which they may purchase Workers Compensation coverage without penalization, any business that does not comply within the ten-day time frame will be fined $1,000 per
employee.

According to the Commission on Health and Safety and Workers’ Compensation the cost of cases dealing with non-compliant businesses to the Workers Compensation laws is well over $20 million per year, and the cases are so numerous that only 1 in 10 cases are actually cleared
through the clogged system.

Of course the cost to you, the business owner, is far higher than the state when it comes to dealing with the woes of not carrying Workers Compensation insurance. State investigators can actually legally completely shut down a business in response to a complaint filed against them concerning Workers Compensation. Not only this, but an uninsured employer can be directly sued by an injured employee, and all legal costs of the lawsuit must come out of the employer’s pocket whereas an insured employer would have these legal costs covered in their policy.

Penalties for not carrying Workers Compensation vary depending on the case and the size of the business. However, these penalties are always quite steep and never worth any money the company saves by not carrying insurance. Not only is it not worth the risk to skip being insured, new laws are being put into action to make sure all businesses comply with the Workers Compensation laws. To make sure you’re not one of the unfortunate companies that must weather the storm of penalties due to non-compliance with these laws, you’ll want to make sure you obtain some kind of Workers Compensation policy for your business. Not all insurance
agents are informed of the newest regulations, so be sure to check with the California Department of Insurance for a list of registered insurance firms before settling on a policy.