A Quick Overview of Workers Compensation – A Look at the Basics

Workers compensation is one issue that any business will have to consider during their operation.  While most companies understand that they are legally obligated to pay into workers compensation accounts, many don't realize that it actually helps protect their company as well as their employees.  Prior to mandatory workers compensation coverage a business could be sued by employees who were injured on the job and could face serious fines and harsh penalties.  The rise of mandatory workers compensation required by law has helped employers avoid this costly litigation, which was becoming very commonplace in the days before workers compensation laws.  By 1949, all states had some form of workers compensation regulations in place to protect employers and employees alike.

The basics of workers compensation are simple.  It is a type of disability insurance that all employers are required to take out for their employees.  Your company pays into the account for each worker on your payroll.  In the event that a worker is injured on the job, workers compensation will pay for their health related expenses and even pay out a percentage of their regular income to make up for lost wages, although the specifics of this varies depending upon where in the country your business is located.  At any rate, workers compensation will help employees manage injuries until they recover from them.

It's important that employees and employers alike realize that workers compensation only provides assistance if the injury occurs on the job.  Illness or injury suffered elsewhere won't be covered by workers compensation, which is why other short term disability insurance coverage is often desirable.  Employers can also dispute workers compensation claims and frequently do so due to a rising incidence in fraudulent claims.  Nevertheless, you are required to carry workers compensation on all of your employees at all times or risk serious fines and penalties.

Finding and opening workers compensation policies can be expensive.  The process usually involves a large upfront payment and often includes regular workers compensation payments that are based on estimated salaries and insurance rates.  At the end of each year a review will take place that often includes a workers' compensation audit.  This audit could result in your company owing more money to the workers compensation company or perhaps receiving a refund check.  No matter what the outcome of the audit, this aspect of workers compensation is often a costly hassle that most would rather avoid.

Pay as you go workers compensation like that available from Unicorn HRO is a great alternative that still allows your company to remain within workers compensation law and avoid large upfront payments or annual audits that can be serious hassles.  Pay as you go workers compensation is growing in popularity due to its lower costs and easier manageability, and if you're tired of dealing with estimated payments and audits you may want to consider using this form of workers compensation for your company.  It can simplify the entire process and make it much easier to protect yourself and your employees.


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