Small Californian businesses look for ways to earn maximum profit, and one of the ways they try to do it is by cutting costs wherever possible. They believe workers’ compensation insurance is one of these possibilities. But is it alright to avoid including it in their employment scheme? The answer is NO.
To some, workers’ compensation may seem like an unnecessary expense, especially employers whose workplace did not experience a work-related injury among the employees.
If a mishap occurs, an employee is injured, and they hire an expert workers’ compensation lawyer in Los Angeles, not having this insurance policy will have the employer fined and, worse, send them to jail.
The Importance Of Workers’ Compensation Coverage For Businesses
Different states have different thresholds for this coverage. However, every state, excluding Texas, requires businesses to implement this compensation insurance after hiring a specific number of employees. Operating without it will bring forth severe penalties.
- In Pennsylvania, this non-compliance is a third-degree felony that may result in a $15,000 fine and seven years of imprisonment.
- In New Jersey, the state law imposes a $10,000 fine or 18-month jail sentence on employers without this compensation insurance.
- The law is similar in California. However, the imposed fine can reach up to $100,000.
Local law enforcement, business regulatory bodies, and insurance-fraud-focused government departments enforce workers’ compensation laws.
We recommend contacting the information & assistance officer at the local DWC district office or a reputable workers’ comp attorney in Woodland Hills to know more about the penalties. These lawyers not only help employees but can also guide employers in the right direction.
Not Every Business Needs Workers’ Compensation Coverage
You may wonder if every business must have workers’ comp coverage, and the answer is no. Some companies may not carry this insurance and sustain themselves legally. They are:
- South Dakota and Texas-based businesses
- Sole proprietorships
- Business owners employing only their immediate family members
- Companies that did not reach the specific number of employees their state laws require for them to have workers’ compensation insurance
Workers’ compensation laws also have exceptions. For instance, most sole proprietors do not require buying this coverage but may need a policy if they are part of a high-risk industry like construction.
Also, since compensation laws vary from one state to another, any business operating legally without coverage in this state may be illegal in another. For example, if a company has branches in other states, each must comply with its respective state laws.
So, if one is in South Dakota, one does not need workers’ compensation, whereas another branch in California must have this insurance coverage.