Workers compensation insurance is a must for employees in any organization. It is your duty as an employer to protect your employees against work related injuries at all times but what about you as the employer and other executive officers in your company? Are they also covered under your workers compensation policy?We will discuss two types of business owners and what workers compensation laws say about getting coverage for work related injuries.
In Massachusetts, executive officers and other principals are considered employees of the company so they are automatically covered by workers compensation. Workers compensation laws, however, allow some executive officers from opting out of insurance coverage.
Sole Proprietors, Members and Partners
Workers compensation laws exclude sole proprietors, members, partners and other limited liability members from workers compensation benefits. You can however, benefit from workers compensation by filling out a state-designated form. Once you’ve sent the form to the insurer, they will forward it to the relevant state workers compensation authority.
If you are a chief executive, you will be covered under employer’s workers compensation by statute or by choice and then you will be assigned a classification that describes your role in the company. For example, if you are four executives who own a construction company and all four of you work in the company, you will be covered under workers compensation because you will be classified as construction employees.
However, if one of the executives performs administrative duties, they will be classified differently. When members, sole proprietors, and partners are covered under workers compensation, they should be classified according to the roles they perform in the company.
Maximum and Minimum Payrolls
Payrolls and rates are typically used to calculate premiums for workers compensation. The payrolls assigned to members, sole proprietors and executive officers are determined by state law if they are covered by workers policy. The maximum and minimum payrolls for company principals are defined by state law. Workers compensation law will use the minimum payroll for rating purposes even if the principals decide to take a payroll that’s less than the specified minimum.
If for example the minimum payroll for company principals is $100, 000 per year, and the principals decide to take $50, 000 the insurer will calculate the premium based on a payroll of $50, 000. Same case applies when the principals decide to take more than the specified maximum. So for example, if the maximum is $200, 000 and the principals decide to take $500, 000, the insurer will calculate the premium based on $200, 000.
Cost of Missing Forms
An annual audit is conducted on workers compensation policies. As part of the audit, the insurer will ensure that all principals who’ve opted in or out of the policy have signed all the relevant forms. If any of the forms are missing, they will deduct or add payroll accordingly.
For instance, if you and five other principals opted out of coverage but did not sign the forms, the auditor will include your payrolls when calculating how much you will pay in workers insurance premium.
Opt in or Opt out of Coverage with Care
Injured workers get compensation for disability and medical costs among other benefits under workers compensation. If you and other principals decide to opt out of insurance coverage, you should do so after carefully analysing other sources of benefits. Some of the benefits to consider include accident, disability and health insurance.
For instance, you may decide to opt out of workers compensation because you assume your current health insurer will cover all your medical costs. However, your assumption may be incorrect because some health policies do not cover work related injuries.
Consult a Workers Compensation Lawyer in Hyannis
It is very important to have informed,clear legal advice before signing a workers compensation policy. Same case applies when you are filing for workers compensation and talking to an insurer. You may need to hire a workers compensation lawyer if your claim is denied or delayed. Always protect your rights and that of your employees especially if you are unsure about how to go about making a claim.
At Kevin P Landry, we are committed to helping you get compensation so that you can focus on recovering from your injuries. Contact any one of our workers compensation lawyers in Hyannis at 508-775-1660 for a free initial consultation.