Columbus, OH (WorkersCompensation.com) – According to a new poll by Insureon, 26 percent of small businesses don’t have workers’ compensation insurance, and 30 percent are not sure of whether or not they actually need workers’ compensation insurance.
The poll of more than 900 business owners with employees who responded to the joint poll by Insureon and online small business directory Manta, showed that another 19 percent of employers who had remote employees in another state were not sure whether or not they needed workers’ compensation for those employees as well.
“Each small business needs to be up-to-date on what its state, and the states it has employees in, requires for workers’ compensation insurance,” said Jeff Somers, president of Insureon. “The onus and responsibility starts with the small business owner who needs to know what required of them, not just to meet the requirements of the law, but to protect their business that they’ve worked so hard to build.”
Somers said small business owners risk fines and punishments (and jail time) for not carrying the required coverage. But owners also put their business at risk for bankruptcy.
In Illinois, for example, business owners without workers’ compensation can be fined $500 per employee per day they are without coverage. In New York, the punishment could be as high as $5,000 per day for every employer with more than five workers. In California, employers face jail time for not carrying workers’ compensation insurance.
“One accident without workers’ compensation can wipe a business out,” he said. “If a workers’ compensation claim comes up, the business owner would be forced to pay it out of pocket — and that could be catastrophic for a business.”
But finding those businesses and educating them can be difficult, said Anthony Gottschlich, spokesperson for the Ohio Bureau of Workers’ Compensation (BWC).
“Ohio law requires all businesses with one or more employees (excluding the owner) to carry workers’ compensation coverage,” Gottschlich said. “We don’t have any way of knowing just how many small businesses don’t carry workers’ compensation, but it’s possible the 26 percent figure applies here, as well.”
While the BWC performs outreach with programs for small business groups and new startups, there’s no simple way to determine whether or not all small businesses are getting the insurance. Time and again, he said, BWC representatives find that many business owners aren’t aware of their legal obligations.
“We also know some businesses willfully ignore their obligation. We work with them to bring them into compliance, and if we’re not successful we involve our special investigations department,” he said.
Through an online database search, the organization is able to cross reference the business name and whether or not they have purchased the required insurance and is in good standing, he said.
Finding the businesses whose insurance has lapsed, or who may not have insurance is assisted by several different means.
“As for employers who don’t carry work comp or their coverage is lapsed, we get reports from the public, BWC staff and through various investigative and data analysis techniques,” he said. “A business competitor or former employee might report a business that lacks coverage, for instance. Our internal staff will discover lapsed and nonexistent policies while researching injury claims or conducting audits. We also have an employer fraud team in special investigations that will run queries through state databases (liquor license permit holders, for example) and find businesses that are not in compliance.”
Somers also said just making sure you’re covered in one state isn’t enough when remote workers are a part of your staff.
“The gig economy has really changed the way we think about insurance,” he said. “Many large companies are now buying policies for their gig workers, their customers, or both. Small businesses really need to make those decisions for themselves before they hire remote workers, and do what is best for their businesses.”