California Workers’ Compensation Coverage for Small Businesses
Workers’ Compensation coverage is mandatory for the majority of small businesses. While it might seem like an unnecessary expense, Workers’ Compensation can provide a crucial safety net for your company if a workplace accident occurs.
While having Workers’ Compensation is imperative for all businesses, it is especially so for small businesses. In California, most small businesses will need Workers’ Compensation since the payroll threshold for insurance requirements is so low. Small businesses can get traditional Workers’ Compensation from carriers or opt for pay-as-you-go coverage. This type of insurance might benefit your business if it has a fluctuating payroll. When small businesses do not have Workers’ Compensation, they can be held liable for an injured worker’s damages. This could lead to significant financial issues for small businesses in California
To learn more about how our California Workers’ Compensation insurance brokers can help your small business, call NPN Brokers now at (866) 340-9120.
Workers’ Compensation Rules for Small Businesses in California
California is clear that all businesses with employees, including small businesses, must have Workers’ Compensation coverage. This coverage will compensate employees who become injured or ill because of their jobs.
Workers’ Compensation is mandatory for all businesses that employ workers in California. This applies to small businesses in California’s construction and non-construction industries. If your small business is largely comprised of family members, you will still need Workers’ Compensation for those employees. Furthermore, if you are a contractor with no employees, you must purchase a Workers’ Compensation policy or get approved to self-insure. Contractors can file for an exemption if eligible. Workers’ Compensation is mandatory, and failure to get it could result in penalties that leave a small business bankrupt.
Reporting and Posting Requirements
Missing even just one day of work can have serious ramifications for injured workers of small businesses in California. Because of this, employers must act quickly following a report of a workplace accident. As a small business owner, you must inform your Workers’ Compensation carrier of the accident and provide the injured employee with the necessary information about filing a claim. This must be done immediately. If you do not report the injury as soon as it occurs because you do not have Workers’ Compensation, the employee will be unable to recover benefits as easily. Your small business might get sued by the employee or penalized by the Division of Workers’ Compensation. Because small businesses and companies of any size are required to post information about their Workers’ Compensation policies and inform employees of their coverage, it will be obvious to employees if you do not have Workers’ Compensation.
Types of Workers’ Compensation Policies for Small Businesses in California
As a small business owner, you may be constantly looking for ways to cut costs. While Workers’ Compensation is an expense you are required to absorb, there are ways to reduce the cost of coverage while still adhering to state mandates for workplace liability insurance.
Often, small business owners are drawn to pay-as-you-go Workers’ Compensation. When you get this type of policy from our Workers’ Compensation insurance brokers, your premiums will change on a monthly basis. Your carrier will require monthly updates about your company’s payroll and alter your premiums accordingly. This results in more accurate Workers’ Compensation premiums. Traditional policies price premiums on annual payroll estimates and do not consider fluctuating payrolls.
Pay-as-you-go insurance might be more appealing to some small businesses than others. For example, coffee shops and retail stores typically have high turnovers of employees. Getting pay-as-you-go coverage makes lots of sense for these small businesses.
If pay-as-you-go insurance is not for you, a traditional policy will most likely suit your needs. Self-insuring may not be wise for small businesses in California, as taking this route requires your company to handle any costs related to an employee’s injuries. This can become exceedingly expensive, especially if your small business is in a high-risk industry for workplace accidents. Furthermore, many small companies are not eligible to self-insure in California, as companies must prove financial security to do so. In comparison, a Workers’ Compensation policy can provide you with coverage and leave the stresses of handling claims to your carrier.
Importance of Workers’ Compensation for Small Businesses in California
Following California’s rules for Workers’ Compensation coverage is crucial for all companies, especially small businesses. The financial implications of non-compliance might be too much for small businesses to bear.
California has some of the biggest fines for non-compliance with Workers’ Compensation mandates. Regardless of its size, any company that is illegally uninsured can be fined up to $100,0000. Furthermore, failing to have workplace liability insurance is a misdemeanor offense. Such offenses are punishable by fines of up to $10,000, one year in jail, or both.
When small businesses are illegally uninsured in California, they become responsible for covering an injured employee’s damages. The employee can still file a Workers’ Compensation claim but will do so through the Uninsured Employers’ Benefit Trust Fund. The employer must then repay the agency for any benefits paid to the injured employee. The injured employee can also file a civil lawsuit against the small business that was illegally uninsured in California.
Employers of small businesses can be penalized for non-compliance at any time, even if a workplace accident has not occurred. Employees can also report employers for non-compliance.
The consequences of not purchasing a Workers’ Compensation policy are severe for all companies but might be especially detrimental to small businesses. Your business will not be permitted to operate until it secures a Workers’ Compensation plan. In order to avoid these issues altogether, ensure you have a valid policy for your small business at all times.
Call Our California Brokers to Get Workers’ Comp Coverage Today
For help finding coverage, call the Workers’ Compensation insurance brokers at NPN Brokers at (866) 340-9120.
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