If you need any more proof that small businesses make up the backbone of America, take a look at the numbers from last month’s ADP National Employment Report: Small businesses (those with 50 employers or fewer) singlehandedly added 108,000 of the 238,000 new jobs in December.
Large businesses (those with 500 or more employees) only added 71,000 new jobs.
These numbers look good for small businesses, but they look even better for the overall economy. According to “Small Businesses Take the Lead in December Hiring” on the FoxBusiness website, experts predict that unemployment could drop to 6.5% by the end of this year – if the numbers stay comparable to December’s.
Is your business thinking about expanding its workforce in 2014? Even a single additional employee can necessitate changes to your small business insurance protection plan. Read on to learn how to grow your insurance coverage so it covers your workforce.
Workers’ Compensation Insurance and EPLI Considerations for Growing Small Businesses
Whenever you hire a new employee – whether it’s your first or your twentieth worker – your liability risk tends to increase. Why? Because more people means more potential for injuries – both physical and personal. Check out the following tips to help mitigate your business’s new-employee risk:
- Understand Employers’ Practices Liability. Employer’s Practices Liability is a type of Professional Liability associated with violating your employees’ – or potential employees’ – civil rights. When you decide to start interviewing for an open position, your biggest risk is that you may (unwittingly or not) discriminate against someone based on their gender, age, race, ethnicity, religion, or disability. If this happens to you, the prospective employee can sue or you may find yourself in the middle of an Equal Employment Opportunity (EEOC) lawsuit. (For more information about EEOC lawsuits, read our “Employment Practices Liability Issues for Employment Agencies” blog.) However, Employers’ Practices Liability encompasses more than just hiring discrimination. Read our Employers’ Practices Liability Insurance (EPLI) page to learn more.
- Review your local Workers’ Compensation laws. Most states require that employers carry Workers’ Compensation Insurance, a type of coverage that helps you cover medical costs when your employees suffer a work-related injury or illness. It’s very important that you understand your local laws (check out our state-by-state guide to WC to get started) because they significantly around the country. For example, some states require business owners to carry insurance as soon as they hire a single employee, while others don’t require it until a business has three or more. Noncompliance can mean big fees and fines. You can read the blog post “Jim Carrey Charged with Violating New York’s Workers’ Compensation Laws” for more information on the financial consequences.
- Evaluate your current employee pool and your insurance. Once you’ve brushed up on your state’s Workers’ Comp laws, it’s time to make an assessment of your employees (new and old) and your insurance policy. You may find that you’ve been carrying coverage for independent contractors when you didn’t have to (or vice versa). Or you may find that your new part-time receptionist will need WC coverage. If your coverage doesn’t match your current workforce, it’s important to update your policy as soon as possible.
- Manage Workers’ Comp costs with wellness programs. Sometimes, the cost of Workers’ Compensation Insurance can feel unnecessary – especially when you take pride in managing a safe work environment. But often, this insurance is unavoidable, which is why it makes sense to establish some kind of safety and wellness plan for your office. This may be as simple as offering ergonomic furniture and equipment to ward off common office ailments like carpal tunnel syndrome. Or it may mean work-zone safety training courses for your construction crew. Find out more about preventing WC claims by reading the blog post “Managing Workers’ Comp Costs by Offering Fitness Opportunities.”
The end of 2013 marked the greatest increase in new jobs for small businesses since the beginning of 2012. Keep up the good work!