Safety first. 

How many times have you heard that phrase? As often as it’s repeated, every time is equally important. During June, which in 1996 was designated National Safety Month by the National Safety Council, it’s a good time to reevaluate how you keep your business and its people out of harm’s way. The goal every day of the year is to send all employees home at the end of the work day the same way they came in: safe, healthy, and injury-free. 

The Importance of Workers’ Compensation Insurance 

So, despite your best efforts, what if someone does get hurt or sick at work? 

Every state except Texas requires the vast majority of employers within its boundaries to carry workers’ compensation insurance. In most states, companies with even just one person on payroll must do so. Specific details regarding the minimum number of employees vary from state to state. 

Federal law regulates certain components of workers’ comp coverage, including benefits, terms, and limits of liability. Beyond these areas, many other variables determine the total value of a policy. Premiums are the product of three variables: 

1. Your payroll: For every $100 of payroll, an employer pays a certain amount for workers’ comp, depending on each employee’s classification code. 
2. Your experience modification factor: This indicator compares a business with its competitors who have the same employee classifications. The insurer determines this figure based on such factors as the number, severity and frequency of previous claims.  
3. Your employee classification rate: This code is used by a provider to set the cost of insurance, depending on the type of work an individual does.  

The workers’ compensation system is designed to strike the right compromise in the event of a work-related injury or illness: The affected employee gets benefits regardless of who was at fault. And the employer gets protection from potentially crippling lawsuits by injured workers seeking monetary damages for pain and suffering. 

If you didn’t have workers’ comp coverage, an injured employee could sue you in civil court. You could also face criminal charges and steep fines for failure to have required coverage. 

You May Want to Outsource  

Workers’ comp is highly regulated and can cause complex issues for businesses. Especially for small to mid-sized companies, managing workers’ comp packages and claims can be costly. And, it can be very challenging to remain compliant with all the rules and regulations specific to your business. 

For a growing number of companies, the solution to this dilemma is outsourcing workers’ comp to a professional employer organization (PEO). The benefits include: 

• Reducing workplace injuries: PEO experts will guide your company through the best applicable safety practices and keep you updated on injured employees’ progress towards an effective, efficient return to work. 
• Solidifying compliance: Your outsource partner will help ensure your company stays compliant with all local, state and federal laws around workers’ compensation. 
• Resolving claims more efficiently: PEO experts understand the complexities of workers’ comp. They can take care of risk management, HR support, and payroll tax administration.  
• Being eligible for lower rates: Your PEO can negotiate lower rates, based on its ability to pool client employees together and buy benefits in bulk. 

Want to know more about keeping your business and staff safe?

To learn more about outsourcing workers’ compensation and other aspects of your HR functions, contact Key HR today.