The Small-Business Owner's Guide to Workers' Compensation Insurance

Chapter 2: How Workers' Comp Insurance Works
Part 4: What Are Your Workers' Compensation Insurance Rights & Responsibilities?

As we've mentioned, employers must follow state laws when they insure employees with Workers' Compensation coverage. But Workers' Comp laws entitle employers to certain rights, too.

Because of state Workers' Comp laws, your responsibilities and rights may vary depending on where you live. For the sake of brevity, we'll outline the most common particulars below, starting with your Workman's Comp responsibilities:

  • Provide coverage for eligible employees. Most states require that you carry Workers' Compensation coverage as soon as you hire eligible employees. A state's definition of "eligible employee" may vary, so be sure you understand your local regulations.
  • Post notice. Your state laws may demand that you "post notice" of your insurance coverage where employees are likely to see it, such as a break room. You must also provide this information to new hires. Additionally, most states require that notices display specific information (e.g., your policy number and your insurer's contact information).
  • Keep accurate records. Employers must keep accurate payroll and employee classification records. You must also document all workplace injuries and illnesses — even if the claims were dropped. Your local laws outline the kinds of records you need to keep and for how long.
  • Be transparent. Your state regulations may permit your local Workers' Compensation Board to access all your records upon request.
  • Comply with claim filing procedures. Each state has a slightly different filing procedure that employers must follow. In general, you must be sure to use the proper claims forms, provide necessary and accurate claims information, and file the paperwork according to your state's deadlines. Your insurance provider usually supplies you with these forms.

Your state realizes that unfounded Workers' Compensation claims would have a negative effect on your business. That's why your local regulations detail your rights, too. Generally, you have the right to…

  • Contest a claim. If you feel that an employee has filed an unfounded claim, you can ask your insurance company to contest it. However, your insurance provider does not have to contest the claim just because you requested it.
  • Access to claims information. State law usually allows employers to attend claims hearings and access a claim's case file.
  • Report fraud. If an employer suspects fraud, they can report it to the proper authorities.
  • Appeal a claims decision. After you receive a notice of decision, you can file to have that decision reviewed and appealed. However, if you do not have reasonable foundations for doing so, you could be penalized.
  • Secure a reliable workforce. Your state laws usually protect you when you decide to terminate an employee for filing a fraudulent Workers' Compensation Insurance claim — so as long as the termination is not "retaliatory."

To get an idea of a state's specific regulations, check out New York's Employer's Handbook [PDF] New browser window icon.. And now that you have an understanding of your responsibilities and rights, let's take a look at how the claims process works.

Next: Part 5: How Does Workers' Comp Protect a Business?

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