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Workers Compensation Insurance

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Workers Compensation Insurance

 

Blue Collar works with PEO's that offer you a cost saving program featuring large group rate savings and providing with the coverage you need with no hassles. By utilizing the PEO's workers compensation physicians and managed care networks, your employees are provided with expedient and expert care, enabling them to return to work as soon as possible.

The PEO's take responsibility for implementing the workers compensation programs; saving you time and providing efficient claim resolution by performing the following:

  • Handling all of the workers compensation audits
  • File statutory Workers Compensation Notice of Injury reports
  • Implement Return To Work and Transitional Duty Programs
  • Conduct post-accident drug testing
  • Coordinate medical care for your injured worker

Blue Collar's Professional Employer Organizations can help you establish a safety program to assist in preventing accidents. We offer you access to loss control personnel who can provide the following services:

  • Inspections and consultations
  • Safety manuals
  • Safety programs and training
  • Assistance in complying with OSHA regulations
  • Post-accident investigations
  • Establishment of drug-free workplace
  • Access to the assigned workers comp claims processors

 

About Workers Comp

Workers compensation is a state-mandated, "no-fault" insurance system that pays benefits to workers injured on the job. Workers comp needs to be obtained by any employer who has an employee and this coverage needs to be obtained before the employee's first day of work. There are a few circumstances where employers can be exempt. In return for carrying a workers comp policy, employers receive immunity from civil lawsuits filed by employees over workplace injuries.

Most states have workers comp laws that allow certain types of businesses to choose to be exempt from providing workers comp insurance. If an employer chooses to be exempt from providing the insurance they are still responsible to provide benefits to an injured worker. These employers also remain exposed to civil lawsuits brought by employees who are injured during work. Each state will have specific workers comp rules detailing the various classes of workers exempt from workers compensation insurance.

If you are required to carry workers compensation and fail to do so, you are exposed to severe civil penalties and fines. The employer can also be liable for the costs of any injuries suffered by employees.

Workers compensation insurance can be purchased through the private market where companies bid on your policy or through some type of state fund. Getting insurance through the state is usually the option of last resort because it can be much more expensive than through the private market. Getting your workers comp insurance through a PEO is getting it through the private market at large volume discount rates.

 

Five types of workers comp benefits are provided to injured employees. These benefits include:

Workers Comp Medical Benefits: When an employee is injured on the job, all medical benefits afforded to heal the condition. These services are paid for by the workers compensation insurance policy unless the employer chooses a deductible which would need to be paid first and the insurance policy pays the rest. In some circumstances there are limits on treatment but generally workers comp medical benefits are unlimited.

Workers Comp Rehabilitation Benefits: When an injured worker requires any kind of therapy to return to the workplace or resume a more normal life, workers comp rehabilitation benefits pay for these services. This includes the actual cost of the therapy along with any assistive or medical devices if necessary.

Workers Comp Income Benefits: If an employee cannot return to work because on an work related injury, workers comp income benefits are available. Each states rule as to when these benefits kick in are different. If the injury proves to be permanent the employee may receive income benefits for the rest of their life. If the disability partially reduces the employee's ability to work then the employee might receive a workers comp income benefit to make up the difference of what they are receiving in income now as compared to before the injury.

Workers Comp Death Benefits: The two types of death benefits provided by workers compensation are burial expenses and survivors payments. The burial expenses covered are typically only the cost of the basic services. The survivor payments are for the spouse and children and can be for the spouse's lifetime and typically up to ages 18 or 21 for the remaining children.

Workers Comp Loss of Use Benefits: When an injured employee losses the use of a body appendage such as a finger, eye or arm, the individual State's insurance laws have specific payment schedules depending on the injury.

 

Tips to help reduce the cost of workers compensation insurance?

  • Make sure your employees are correctly classified under the right workers comp code. There can be huge differences in cost between different codes.
  • Reduce claims by stressing safety on the job. The number of claims you report and the dollar amount per claims can determine whether your cost increase or decrease.
  • Return your employees back to productive work after an injury through a modified work program if they are unable to come back in their full capacity. By doing so you can reduce the losses which impact your workmans comp insurance costs
  • Pay for the small "medical only" claims out of your pocket so the injury does not go against your rating.
  • Track your open claims diligently and make sure everyone is acting in your companies interests.
  • Monitor your claims history by asking for your "loss runs" to see where each claim stands and how much they are costing.

 

How to determine if someone is an Independent Contractor or an Employee

There is no definitive answer to this question, only guidelines to follow and each case is looked at on an individual basis. To follow, are the guidelines the IRS uses in determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered. Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no "magic" or set number of factors that "makes" the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

 

Behavioral Control

Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work. A worker is an employee when the business has the right to direct and control the worker. The business does not have to actually direct or control the way the work is done – as long as the employer has the right to direct and control the work.

The behavioral control factors fall into the categories of:

  • Type of instructions given
  • Degree of instruction
  • Evaluation systems
  • Training

Types of Instructions Given

An employee is generally subject to the business's instructions about when, where, and how to work. All of the following are examples of types of instructions about how to do work.

  • When and where to do the work.
  • What tools or equipment to use.
  • What workers to hire or to assist with the work.
  • Where to purchase supplies and services.
  • What work must be performed by a specified individual.
  • What order or sequence to follow when performing the work.

Degree of Instruction

Degree of Instruction means that the more detailed the instructions, the more control the business exercises over the worker. More detailed instructions indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.

Note: The amount of instruction needed varies among different jobs. Even if no instructions are given, sufficient behavioral control may exist if the employer has the right to control how the work results are achieved. A business may lack the knowledge to instruct some highly specialized professionals; in other cases, the task may require little or no instruction. The key consideration is whether the business has retained the right to control the details of a worker's performance or instead has given up that right.

Evaluation System

If an evaluation system measures the details of how the work is performed, then these factors would point to an employee.

If the evaluation system measures just the end result, then this can point to either an independent contractor or an employee.

Training

If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods is even stronger evidence of an employer-employee relationship. However, independent contractors ordinarily use their own methods.

 

Financial Control

Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker's job.

The financial control factors fall into the categories of:

  • Significant investment
  • Unreimbursed expenses
  • Opportunity for profit or loss
  • Services available to the market
  • Method of payment
  • Significant investment

An independent contractor often has a significant investment in the equipment he or she uses in working for someone else. However, in many occupations, such as construction, workers spend thousands of dollars on the tools and equipment they use and are still considered to be employees. There are no precise dollar limits that must be met in order to have a significant investment. Furthermore, a significant investment is not necessary for independent contractor status as some types of work simply do not require large expenditures.

Unreimbursed expenses

Independent contractors are more likely to have unreimbursed expenses than are employees. Fixed ongoing costs that are incurred regardless of whether work is currently being performed are especially important. However, employees may also incur unreimbursed expenses in connection with the services that they perform for their business.

Opportunity for profit or loss

The opportunity to make a profit or loss is another important factor. If a worker has a significant investment in the tools and equipment used and if the worker has unreimbursed expenses, the worker has a greater opportunity to lose money (i.e., their expenses will exceed their income from the work). Having the possibility of incurring a loss indicates that the worker is an independent contractor.

Services available to the market

An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.

Method of payment

An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job. However, it is common in some professions, such as law, to pay independent contractors hourly.

 

Type of Relationship

Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.

The factors, for the type of relationship between two parties, generally fall into the categories of:

  • Written contracts
  • Employee benefits
  • Permanency of the relationship
  • Services provided as key activity of the business
  • Written Contracts

Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker's status. The IRS is not required to follow a contract stating that the worker is an independent contractor, responsible for paying his or her own self employment tax. How the parties work together determines whether the worker is an employee or an independent contractor.

Employee Benefits

disability insurance. Businesses generally do not grant these benefits to independent contractors. However, the lack of these types of benefits does not necessarily mean the worker is an independent contractor.

Permanency of the Relationship

If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.

Services Provided as Key Activity of the Business

If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities. For example, if a law firm hires an attorney, it is likely that it will present the attorney's work as its own and would have the right to control or direct that work. This would indicate an employer-employee relationship.