Running a business is expensive and stressful, but having a team of people (employees) to rely on can help tremendously. In order to protect your business, as well as your valued staff, it is necessary to carry Workers’ Compensation coverage. While it is a law in most states to carry this policy, some businesses feel it is unnecessary or too expensive. There are some misconceived theories about Workers Compensation and I am here to bust these myths!!
Myth #1: Only Large Business Need to Purchase Workers’ Compensation
Fact: While most states require ANY business having 5 or more employees carry Workers’ Compensation, the State of Maryland requires just ONE. This includes any full time, part-time, domestic and 1099 employees. Even when hiring an independent “1099 Subcontractor”, if they are working exclusively for you or the majority of the time, a court could deem them as an employee. If you do not carry Workers’ Compensation at the time of an injury not only will there be no coverage to help with medical bills and lost wages, but the state may fine you as well. In Maryland, employers failing to secure workers’ compensation insurance shall be guilty of a misdemeanor and shall be subject to a fine between $500-$5,000 or by imprisonment for not more than one year, OR both the fine AND imprisonment.
Myth #2: Medical Costs in the Workers’ Compensation System are higher
Fact: According to recent statistics from the National Council of Compensation Insurance, medical inflation for WC has been similar to medical inflation for group health over the past several years. Due to this, WC Laws and Regulations have place many containment programs in place to help this.
Myth #3: If an employee gets injured, I will just pay out-of-pocket as it will be cheaper than Workers’ Compensation
Fact: While you think it may just be a minor incident, medical bills can add up quickly as well as long term effects of the injury, let alone lost wages and fees if the employee retains an attorney. Severe injuries requiring surgery can mean months off the job or even permanent impairment, which WC would help cover these expenses.
Myth #4: My employees won’t sue me
Fact: NEVER SAY NEVER! When an employee is hurt, not only are they worried about their health and recovery, but also their financial stability during their healing. If their employer does not carry Workers’ Compensation coverage they may feel they MUST sue in order to pay the bills. A Workers’ Compensation policy can help limit liability, cover the costs associated with a lawsuit and prevent employees from filing suit.
Myth #5: I provide a safe workplace, so my employees will not get injured
Fact: Even in the safest workplace, where you are surrounded by cloud-like pillows and required to stay still at all times, accidents happen. There are also quite a few fraudulent claims made by employees who will always be able to find an attorney to file suit… check out some crazy claim stories at http://www.claimcrazy.com/?cat=9. While these examples are extremely farfetched, legal fees are not and a WC policy is there to help mitigate and protect you if a situation like one of these happens to you.