Massachusetts law requires every business with employees to provide workers’ compensation insurance coverage. Even a company with just one part-time employee must still offer workers’ comp.
Workers in the state of Massachusetts are considered employees for tax purposes. This means you will be required to provide them with workers’ comp coverage.
However, if you hire independent contractors, you won’t have to provide them with workers’ comp coverage if you can meet three tests:
For more information on working with independent contractors in Massachusetts, refer to the state attorney general’s advisory [PDF].
In general, you must include yourself in your company’s workers’ comp insurance. However, there are three exceptions:
The above individuals can still choose to buy workers’ comp. Health insurance providers can deny claims for work-related injuries, which makes buying workers' comp a smart business decision – especially if you work in a risky industry.
Even though certain business owners aren’t required to have their own workers’ compensation coverage, their employees still need coverage.
Corporate officers are considered employees and must have workers’ comp coverage.
One exception applies: corporate officers who own at least a 25% interest in their corporation can file for an exemption with the Massachusetts Department of Industrial Accidents (DIA).
To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.
In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.
Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.
When an employee suffers a workplace injury or develops an occupational disease, workers' compensation covers the cost of their medical care. It also provides disability benefits while the employee is recovering and unable to work, both for partial disability and total disability.
Policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. However, the exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer if they accept workers' comp benefits.
Workers' compensation benefits for injured workers include:
For details, visit the Mass.gov page on workers' comp benefits.
Massachusetts business owners can compare quotes and purchase a policy from private insurance companies. Insureon offers this service with its online insurance marketplace.
If a business owner is unable to qualify for a workers’ comp policy, they can buy it from the state’s assigned risk residual market, the Workers’ Compensation Rating and Inspection Bureau of Massachusetts. This is the insurance plan of last resort for state employers that can’t find standard coverage due to their extensive number of past workers’ comp claims.
Massachusetts employers also can self-insure their workers' compensation claims. This means they’ll pay for their own workers’ comp medical and rehabilitation costs rather than submit them to their workers’ compensation insurer. It also means they will be directly liable for any lawsuits injured or sick employees file against them.
To become self-insured, a Massachusetts business must have at least 300 employees and $750,000 in standard workers’ compensation insurance premiums and must prove to the state that it has enough capital to cover the costs of self-insurance.
If you operate your business without workers’ compensation coverage, you may face stiff penalties in Massachusetts.
The state may issue a stop-work order (SWO) if you fail to provide workers’ comp insurance as mandated by state law. This means you will no longer be able to do business in the state.
In addition, you may face minimum fines of $100 per day, including weekends and holidays, for each day you fail to provide coverage. Your penalty bill will accrue daily until you provide insurance and pay your total fine.
If you don’t appeal the SWO, you must shut down immediately and stay closed until you provide workers’ comp coverage and pay your fine. If you decide to appeal the SWO, then you can remain open, but now your fine will increase to $250 per day.
Finally, any uninsured Massachusetts employer loses the ability to compete for public contracts.
If an employee dies as a result of a work-related injury or illness, some family members may receive death benefits. These include weekly payments to cover a portion of the deceased employee’s income, along with funeral and burial costs.
Eligible family members include:
The deceased worker’s dependent family members will receive death benefits calculated on the basis of the person’s pre-injury weekly pay.
Surviving spouses are eligible to receive weekly payments equaling 66% of the deceased worker’s average weekly wage, but not to exceed the state average weekly wage (SAWW) at the time the worker died.
Spouses are eligible for yearly cost-of-living adjustments (COLAs) once two years pass after the worker’s death.
If a spouse remarries, the deceased worker’s offspring will receive $60 a week, but not to exceed the spousal benefit.
A workers’ compensation settlement is an agreement between the injured employee, employer, and insurer that will resolve a workers’ compensation claim. This benefits both the employee and the employer.
A settlement in a Massachusetts workers’ compensation claim involves an injured or sick employee giving up the right to receive any future workers’ comp benefits in exchange for receiving a lump-sum payment. Since this involves a worker forfeiting the right to future benefits, the state advises employees to make this decision carefully. It provides a lump-sum brochure to help them make a wise decision.
All settlements are subject to the approval of an administrative law judge or other conciliator at the Massachusetts Department of Industrial Accidents.
The Massachusetts statute of limitations for workers’ comp claims is within four years of the time employees become aware their employment caused their injury or illness.
If you are ready to explore workers’ comp options for your Massachusetts business, start a free online application today to compare quotes from top-rated insurance carriers.