Update: Sources report that Jim Carey actually did have Workers' Compensation. The story we reported turned out to be the result of clerical error. Read details in this Insurance Journal article.
Pop quiz: if you're a famous comedian and actor and you open a small business in New York, do you need to carry Workers' Compensation Insurance to protect your employees?
If you answered “yes,” you may have done better than Jim Carrey, who's facing a lawsuit from the Workers' Compensation Board of the State of New York.
According to celebrity news site TMZ, he's being charged with not carrying Workers' Compensation Insurance for the entire year of 2012 for Church of FFC, the art studio he founded in 2011. According to New York state law, Workers' Comp violations will rack up fines of $2,000 per 10 days of noncompliance, in addition to any other fines or awards that accrue during the period.
Carrey, it seems, is currently looking at a fine of $72,000 – a sum that could bankrupt more than a few of the small enterprises currently operating in the Empire State.
Avoiding Workers' Compensation Insurance Fines in Your Business
Luckily, avoiding hefty fines for failing to carry Workers' Compensation Insurance is as easy as securing an adequate Workers' Comp policy. The rules of what that policy has to include vary by state, but often include the following requirements…
- You must carry coverage if your business has full-time or part-time employees. Some states also require business owners to carry insurance for contract workers (those who are paid under a 1099 tax agreement).
- You must keep your Workers' Compensation Insurance active for as long as your employees are actively working for you. Letting your insurance coverage lapse could result in fines of the magnitude of those mentioned above. (And if one of your team has a workplace injury when you're not covered, you could face even bigger expenses in the form of medical bills.)
- You may exclude yourself from Workers' Comp coverage. In some states, business owners can exclude themselves from Workers' Compensation coverage to save money on premiums. While this can be a great way to cut costs in the short term, it means that you as the business owner cannot collect Workers' Comp benefits if you're hurt on the job.
- You may skip coverage if you're a sole proprietor. In most (but not all!) states, sole proprietors who have no employees can skip Workers' Compensation Insurance altogether. Again, this can save a business money but lead to high costs in the event of a workplace accident that leads to an injury.
What Happens if You're Charged with a Workers' Compensation Violation?
So what happens if your business, like Jim Carrey's, is slapped with charges of violating the Workers' Compensation laws where you live? Chances are, you'll first have a chance to defend yourself against the claims. To do that, of course, you'll need to have a lawyer or legal team to help you navigate the legal issues surrounding the charges of violations. (For more about avoiding lawsuits in your business, check out the article "6 Customer Service Strategies to Prevent Liability Lawsuits.")
In Carrey's case, his team has apparently said that the claim of noncompliance resulted from a “clerical error” on the part of the Board. Whether or not that's the case will likely be determined in the court system or during negotiations between Carrey's legal team and the state's.