Comp laws exist in all 50 states, and provide a "no fault"
means of funding medical, disability & death benefits to injured
employees, usually replacing the tort process which required employees
to sue. While some very broad generalizations can be made, the types
of laws, benefit levels, insurance mechanisms & options, as
well as many other features of Workers' Comp vary greatly by state.
Remedy" states generally do not allow injured employees to
sue employers (except in rare cases of outrageous employer conduct),
and provide that all claims proceed through the workers' compensation
benefit schedules. In states where employees retain the option of
suing, the Employer's Liability portion of the Workers' Comp policy
would respond, providing defense and claims payments.
individually exercise great territoriality over this insurance line
due to its grossly political nature. An online
source for individual, state-specific details is available.
states now make insurance compulsory with heavy penalties for failure
to insure. Many provide a state insurance fund for coverage which
may, in a very few cases be the only source. ("Monopolistic"
states: No Dakota, Ohio, Washington, Wyoming)
insurance, employers can usually look forward to costly litigation
arising from employee injuries. Anyone providing services to your
business may assert an employment relationship. For information
see the grizzly details.
for comp are charged by business classification, as a percentage
of actual gross payroll. (Expressed as a rate per $100 of gross
payroll.) Rates vary from less than 1% for low-hazard jobs up to
well over 50% for hazardous occupations.
If your premium exceeds a certain qualifying amount (several thousand
dollars) for at least two or three consecutive years, most states
calculate an experience modification that must be applied to your
premium. A state bureau collects your premium & loss history,
compares it to a theoretical average for like businesses, then directs
a credit or surcharge be applied to your premium based on the result.
It is an arcane formula generally intended to punish those with
heavier losses & reward those with fewer.
you have employees injured outside your home state, they may well
choose to seek benefits under the other state's system, if its payments
are more generous. Employees might even seek benefits in both
states. This can lead to ugly gaps in your insurance, since
most policies cover only your home state unless scheduled for others.
If you have employees at risk in another state, you should have
any such state listed on your policy or consider purchasing coverage
from a source within that other state. Along with the plague of
other mandates, litigation & costs visited upon employers by
our geniuses in law & government, workers' comp costs have driven
the phenomenal growth of employee leasing & temp services, which
finesse the workers' comp issue by putting it into the contracted
service costs. Keep in mind, however that if you utilize these services
you should obtain proof of their insurance.