Do All Businesses Have to Have Workers’ Compensation Insurance?
The workers’ compensation system is something of a compromise between a business and its employees. In exchange for providing insurance that covers you in the event of injury or work-related illness, you are prohibited from suing your employer (in most cases).
But do all businesses have workers’ compensation insurance? What happens if your employer doesn’t have it?
Let’s look at what workers’ compensation law says about required coverage and what you can do if your employer doesn’t have workers’ compensation insurance.
Ohio Workers’ Compensation Law
Which businesses have to have coverage, and which don’t?
Most states require nearly all businesses to carry some form of workers’ compensation insurance, whether through a state-administered fund or private insurance. And in most states the vast majority of workers are covered. However, there are some exceptions.
In Ohio, most businesses are required to purchase insurance through the state-administered fund. A business must purchase workers’ compensation insurance if it employs one or more people. Here are some examples of businesses that are required to provide workers’ compensation:
- State employers, including state-run hospitals
- County employers
- Municipal employers
- Township employers
- School districts
- Public service organizations (like emergency management companies and firefighting organizations)
- Private corporations
- Professional employer organizations (like temp agencies)
- Non-profits and charities
There are a few businesses exempt from this rule:
- Family farm corporations
- Individuals doing business as a corporation
- Limited Liability Companies (LLCs) operating as a partnership
- Self-employed individuals operating a sole proprietorship
Who is covered?
A business is required to provide workers’ compensation to all of its employees. The term “employees” is key here. Certain workers qualify as employees, and others don’t. Those who are not employees—like independent contractors (also known as freelance workers) and volunteers—are not eligible to receive workers’ compensation.
A person may be considered an employee of a business when one or more of the following applies:
- The employer exercises a large amount of control over how and when work is done.
- The worker is economically dependent on the business (and not in business for him or herself).
- The work done by the worker is integral to the business.
- The worker’s managerial skill doesn’t affect his or her ability to profit or lose money. (In other words, a worker in business for him or herself is able to hire others, rent space, advertise, and perform other managerial tasks that influence whether or not he/she makes a profit. An employee of a business, on the other hand, may only make more money if he/she takes on more work—which depends on the business offering it. In addition, employees are not generally exposed to actual losses.)
- The worker’s investment is minor compared to the business’ investment. (For example, a worker may purchase some tools in order to do his or her job; however, if the business provides far more equipment and clients, that would make it likely that the worker is an employee, not an independent contractor.)
- The relationship between the worker and the business is permanent or indefinite.
Whether or not you are considered an employer or an independent contractor is very important: it determines whether or not you have access to workers’ compensation and other benefits given to employees. (Read our previous blog post, “Will Worker Misclassification Prevent You from Getting Workers’ Comp?”, to learn more about this topic.)
What Happens If Your Employer Doesn’t Have Coverage?
What are the penalties for businesses?
Ohio takes workers’ compensation very seriously. Businesses who fail to report their employees, pay required premiums, or carry insurance face significant fines and even, in some cases, jail time.
When businesses are not in compliance with Ohio workers’ compensation law, they are notified in writing by the Ohio Bureau of Workers’ Compensation (BWC). The BWC may then impose penalties and bring a civil suit against the business to collect those penalties. In some cases, the BWC may recommend that the state attorney general bring criminal charges against the employer. (For example, the state may charge the business owner with workers’ compensation fraud.)
What are your options as an injured worker?
If you learn that your employer does not have workers’ compensation insurance (or has lapsed coverage due to late payment), you may be worried that you won’t be able to pay your medical bills.
The good news is that you have options.
You can make a workers’ compensation claim directly to the Bureau of Workers’ Compensation. If your claim is accepted, the BWC will cover your medical bills, lost wages, and other injury-related expenses (like rehab). The BWC then pursues your employer for reimbursement.
You can also sue your employer for the expenses caused by your injuries or illness, including your medical bills, lost wages, and other costs.
Whatever you decide, know that the attorneys at Casper & Casper are here to help. Our firm’s workers’ compensation attorneys can discuss your situation and help you determine the best option for your case. If you have been injured, call us today to set up a free consultation.
OhioBWC: Employer Q&A
Ohio Revised Code
OhioBWC: Lapsed Coverage
Ohio Revised Code
U.S. Department of Labor: Employment Relationship under the FLSA
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