Why does your small business need workers’ compensation insurance?
Do you need to have workers’ compensation insurance if you own a small business? For almost all businesses in the U.S., yes. While the requirements for workers’ comp insurance vary from state to state, having a policy in place as soon as you hire the first employee is crucial. Even when not required by law, workers’ comp insurance provides important protection.
A workplace injury could have devastating impacts on your small business. Many small businesses can’t afford to pay medical expenses out-of-pocket. Whether it’s treatment for a broken leg, respiratory illness, or carpal tunnel syndrome. What’s more, failure to comply with workers’ comp laws could result in costly penalties. Fortunately, a Professional Employer Organization (PEO) can help you find the best workers’ compensation insurance for your small business. A PEO can handle the administration process, giving you and your team more time to focus on your core business needs and reduce operating costs.
Workers’ Compensation Insurance for Small Business in Florida
Under Florida workers’ compensation law, most businesses with four or more employees are required to provide workers’ comp insurance for their employees. Specific requirements are based on the number of employees, type of industry, and entity organization. Some of the industries that are mandated to have workers’ comp coverage include:
- Construction companies with at least 1 worker
- Non-construction companies with at least 4 employees
- Agricultural business with at least 6 regular employees and/or 12 seasonal employees
- Contractors need to make sure that independent contractors have workers’ comp at the start of a project
But even if you have 1 or 3 employees who primarily work desk jobs, you shouldn’t skip coverage because you assume that accidents are unlikely. No matter how much effort you put into preventing job-related injuries, accidents can happen.
How Workers’ Compensation for Small Business Work
Workers’ compensation insurance protects employers from liability if their employees sustain a work-related injury or illness. It covers:
- Medical expenses
- Lost wages
- Rehabilitation and ongoing care costs
- Funeral expenses
Workers’ comp insurance also protects your small business if an injured employee files a lawsuit against you for negligence. If an employee sues you for not preventing a workplace accident, your policy will pay for:
- Defense costs
- Settlement or judgments
- Court costs
How A PEO Can Assist with Finding the Best Workers Comp Insurance for Small Businesses
Workers’ compensation is one of the largest and most expensive pain points for small businesses. The rates of these insurance policies are often too steep for small business owners. Even companies classified as low-risk may find it challenging to get affordable workers’ comp insurance coverage. However, with a PEO, you can find affordable workers’ comp insurance with better rates and terms.
When you partner with a PEO, you enter into a co-employment agreement, which allows the PEO to become the employer of record and handle certain HR functions. Because your employees are also considered employees of the PEO, you can gain access to workers’ compensation insurance plans that are offered to employers with many employees.
Economies of Scale for Workers’ Comp Savings
PEOs leverage their size and the collective number of employees they work with across different companies to shop for and purchase worker’s comp insurance. They’re able to find insurance at a much lower price, passing those savings onto their clients.
Most PEOs will enable their clients to have coverage with the large workers’ comp insurance companies. When you partner with a PEO, you get competitive rates and a flexible payment schedule. A PEO will assist you with finding worker’s comp insurance that you would not be able to afford on your own.
Optimized Worker Classification
There are various categories under which your employees may fall. Your PEO will review your employee and their class code. The HR experts understand the duties of your employees and how to legitimately classify them under a different category. With new class codes, your company can see cost savings in workers’ comp premiums.
Pay-As-You-Go Workers’ Compensation for Small Business
A PEO helps reduce or eliminate the need for substantial down payments associated with the purchase of workers’ compensation insurance. Partnering with a PEO allows you to access their existing workers’ comp plan. Your premiums are set up as pay as you go, which spreads your workers’ compensation liability throughout the year.
The amount you pay is based on each payroll that you run, making it easy to calculate and forecast expenses. If you hire more talent or lose employees, you’ll only be paying for who you have hired. With pay-as-you-go workers’ compensation insurance for small businesses, there’s less of a chance to pay too much throughout the year.
Lower Experience Modifier Rate
If you have a high experience modifier (E-mod), you’ll benefit the most from working with a PEO. The E-mod is determined by the number of claims you have and the amount you’ve paid out to injured employees.
Having a higher e-mod means you’ll have higher workers’ comp premiums. When you join a PEO, you take on their E-mod, which is usually significantly lower. A PEO will provide risk management guidance to ensure low E-mod and premiums.
Partnering with Vested HR for the Best Workers Comp Insurance for Small Business
At Vested HR, we will work to understand your business and assist in the workers’ comp insurance selection process. We’ll give you access to the coverage you need at competitive rates. As your co-employer, we provide employee safety training, workplace safety audits, claims administration, OSHA compliance reporting, and employee drug testing to reduce the opportunities for workers to get injured or sick. Contact us today to schedule a consultation with one of our workers’ comp. experts.