Why You Need Workers’ Compensation Insurance

Any business owner can tell you that there are many laws that need to be observed when setting up and running a business.  These laws range from federal tax laws all the way down to local ordinances about signage.  Mindful business owners will need to have a grasp on all the major laws and rules that could impact their business.  The laws surrounding workers’ compensation is no exception.  Although business owners work hard to reduce the likelihood that their employees will be injured on the job, it is likely that at some point, one of the employees will sustain some sort of injury in the course and scope of employment.  Once this occurs, the employee has the right to file for workers’ compensation benefits.  Once that occurs, it will quickly become obvious why you need to carry workers’ compensation insurance for your business.

The first and most prominent reason that your business needs workers’ compensation insurance is that California law requires almost all business owners to carry workers’ compensation insurance.  California labor code section 3700 provides that a business must carry workers’ compensation insurance as long as it employs one or more employees, with very few exceptions.  The penalties for failure to adhere to this law are severe.  A business owner can be charged with extensive civil fines for this.  In egregious cases, an employer could even be criminally charged for the failure to carry the proper insurance.

Another essential reason why you want to make sure to carry workers’ compensation insurance is that if you do not have insurance, your business will be directly liable for any costs for workers’ compensation benefits incurred by the employee.  Your employee will be entitled to the same type of benefits regardless of whether you carry insurance.  Especially where your worker is severely or permanently injured, he or she may require extensive medical treatment and lifetime benefits.  These types of costs can be enough to benefit a small company.  There are ways to obtain assistance in making those payments through the state.  However, this is not a gift; the employer will be responsible for repaying the benefits paid by the state on the employer’s behalf.

We have extensive experience with helping business owners understand their obligations with regard to workers’ compensation insurance.  Call us today to discuss your business and what we can do to help.

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