Employer obligations regarding workers compensation
When it comes to federally mandated responsibilities, companies have a lot to be mindful of. From Fair Medical Leave Act requirements to Affordable Care Act standards, employers and their human resources and payroll teams must be at the top of their game to ensure they’re maintaining compliance. Another important obligation that organizations have to continually maintain is the provision of workers compensation. SBS Payroll breaks down what businesses need to know about this important regulation:
Workers compensation is a government requirement first established under the Federal Employees’ Compensation Act of 1916. The law states that employers have to purchase insurance for workers who may potentially suffer job-related injuries or illness. Employees then get benefits no matter which party is at fault. With this agreement, companies are protected from lawsuits from past or current employees seeking reparations for damages that caused pain, suffering or mental anguish.
The important thing to note is that while the injury must be work-related, it doesn’t have to occur at the workplace. Whether the incident takes place while the employee is on a business trip or a networking event, it’s still covered. These kinds of situations can include repetitive stress injuries – like carpal tunnel – sudden accidents, like falls, and gradual diseases stemming from working conditions, including heart conditions and digestive problems, according to Nolo.
Variances according to state
Although workers compensation is federally mandated, it is governed on a state-by-state basis. Every system is virtually the same, but usually tends to differ in the rates paid to injured employees and the rules employers, workers and insurances companies have to follow.
It’s vital for businesses to understand the regulations tied to their specific state in order to protect themselves from legal action and other federal problems stemming from noncompliance. The National Federation for Independent Business detailed some examples of the state variances that organizations should be aware of:
- Alabama employers can decide the manner or method to insure workers compensation.
- California requires workers compensation in every work situation. The benefit is normally covered under owners insurance.
- Massachusetts businesses must carry workers compensation insurance regardless of the amount of hours worked.
- New Jersey requires that all employers have workers compensation coverage.
Next steps for employers
The job isn’t over for companies once they purchase and provide workers compensation. There are other obligations that come with the benefits system, including informing employees of their own legal rights.
To educate workers, human resources and payroll leaders should post written notices around the workplace in addition to sending out a digital version of the same documents. These notifications should include a breakdown of the specifics of the coverage, including the provision of replacement income for employees and payment of medical expenses. With multiple forms of documentation, people have records of the benefit they can refer back to in the future.
Furthermore, employers can choose to work with a third-party service provider to ensure compliance is fully maintained. Partners like SBS Payroll can offer assistive consulting services as well as insurance coverage that meets companies’ budgetary concerns and federal regulations. SBS software can be fully integrated into a business’s existing system and provides pay-as-you-go insurance. SBS Payroll also manages payroll reporting as an additional feature, so organizations can better monitor and manage their finances.
The number of rules companies have to follow can quickly become overwhelming if business leaders aren’t prepared. To stay on top of these obligations, many organizations designate a specific team of HR and payroll employees to tackle the ever-changing system of regulations. Workers compensation is a benefit that is just as important to be mindful of as the ACA or FMLA for employers. It’s critical for businesses to understand their legal responsibilities and ensure their insurance coverage is meeting state standards. Awareness of covered injuries, providing documentation of the benefit and utilizing a third-party service provider can ensure companies are following government regulations while providing the appropriate information to workers.