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WORKERS' COMPENSATION

Workers’ Compensation Insurance helps protect businesses and their employees from financial loss when an employee gets hurt from a work-related cause.  Workers’ Compensation is also known as Workman’s Comp, Workman’s Compensation, and Workers’ Comp.

 

Each state is in charge of their own workers’ compensation program.  This means state laws for workers’ comp can be different depending on the location of your business.  California (and the majority of states) requires you to have Workers' Comp Insurance if you have at least one employee.  If your business is only comprised of owners, you don’t need to get the insurance.

 

Worker’s Comp offers two main points of protection:

1) Pays benefits to employees injured on the job.

2) Provides employers liability coverage.  Mainly, an injured employee can’t sue you.

Depending on your state, you can get Workers' Comp Insurance through private insurance companies or through a state compensation fund.  A state fund is a non-profit insurance company created by your state.  Private insurance companies can deny you a policy, the state fund cannot.  Some states only have a state fund and no private insurers.

 

Most insurers use the standards set by the National Council on Compensation Insurance (NCCI).  The pricing of insurance is based off their classification system.  Workers are classified based off their occupation, more importantly the risk associated with that occupation.  A lumberjack is a much riskier job then a clerical worker.  Each occupation is assigned a class code and corresponding price rate, which all vary by state.

 

In California:

Clerical                        Code 8810                   $0.40 per $100 of wage

Electrical                     Code 5190                   $5.68 per $100 of wage

If a clerical worker makes $50000, that’s $200 to have Workers’ Comp.

If an electrical worker makes $50000, that’s $2840 to have Workers’ Comp.

With most insurance companies, your rate will also be adjusted based of your Experience Rating.  Your history of employee injuries will be judged (usually going back three years).  If the amount of injuries in your company are average compared to the amount of injuries that happen with other companies in your same industry, then your Experience Rating would equal 1.0 (you are exactly average).  If you have a safer workplace, the number goes down.  Dangerous, goes up.  Your total cost is multiplied by your Experience Rating.  So if you’re company is safe and has a rating of 0.9, then you only pay 90% of your rate.

 

Also , you will most likely have to post notices in the workplace and hand pamphlets to new employees. 

 

In California you need to post the Department of Industrial Relations Division of Workers’ Compensation: Notice to Employees - Injuries Caused by Work.

In California, you need to provide pamphlets to new employees.  There is no standard pamphlet but this one is recommended by the state: