Workers' Compensation 101: Everything You Need to Know as an Employer

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Since workers’ compensation requirements apply to most all California businesses, employers should be familiar with their legal obligations. So long as a California company has any employees, it is under a legal obligation to provide workers’ compensation insurance. It does not matter whether the employee works full-time or part-time - they must be covered by the insurance. If the employer does not comply with the workers’ compensation mandate, there are two potential consequences:

  • The employer can face criminal penalties
  • The employee would be able to file a personal injury lawsuit against the employer for negligence. If the employee wins the lawsuit, the employer would need to pay more in damages, and it could come from their own pocket.

The obligation to provide workers’ compensation only applies to employees. Businesses do not have to offer coverage for independent contractors. However, California has tightened the definition of who may be considered an independent contractor with recent legislation.

Workers’ Compensation Benefits for Employees

Workers’ compensation insurance provides a number of benefits to employees who suffer a work-related illness or injury, including:

  • Full coverage of reasonable medical care related to the injury
  • A portion of the employee’s wages
  • A death benefit for the family

How Employers Obtain Workers’ Compensation Coverage

The employer has two primary options when obtaining workers’ compensation insurance. They can obtain a policy from one of the many insurance companies that do business in California.

Insurance companies price their policies based on a number of factors, including the type of work that the employees perform. Companies that do work that is more likely to cause serious physical injury should count on paying more. Large companies may not purchase a policy, but they would self-insure claims.

On average, workers’ compensation insurance would cost roughly $3 for every $100 in payroll. However, there is a wide disparity in premiums based on what the company does. Higher risk companies can count on paying several multiples of the average cost. Rates may rise if the employer has a large number of injuries on the job. California does not regulate workers’ compensation insurance rates. How much the employer pays is based on an agreement between them and the insurance company.

Alternatively, the employer could obtain coverage from the State Compensation Insurance Fund. California has its own state insurance provider that competes in the market with the many insurance companies licensed to do business in the state. The SCIF is a not-for-profit entity. If a business is not able to obtain a policy on its own (for example, the business can be extremely high risk), the SCIF is obligated to provide coverage as the insurer of last resort.

Employers Have Obligations in Administering the Workers’ Compensation Program

Employers must place notices in the workplace advising workers of their rights to file a claim if they have been injured. Failure to post notices can lead to a fine. Employees must also be informed of their rights at the time that they are hired.

Once the employee has been injured on the job, they must provide the employer with notice of the injury within 30 days. If the employee fails to provide this notice, they will lose the right to seek workers’ compensation benefits. The employer must provide the employee with a claim form within one day after they receive notice of the injury. Once the employee provides this notice or they file a claim, the employee cannot do anything that would be considered retaliatory against the employee. They cannot be fired for filing a workers’ compensation claim.

Employers May Terminate an Employee for Other Reasons

However, employees who are receiving workers’ compensation benefits do not have ironclad assurances of a job. They could be terminated for other reasons while they are receiving benefits. For example, if the company had financial problems and it decided to conduct layoffs, there would be nothing that prevents the company from laying off the employee who was receiving benefits. Companies who terminate workers who are drawing benefits must be very careful when giving the reason for termination and documenting the layoff.

Nonetheless, termination from a job does not result in the termination of workers’ compensation benefits. The company would have a legal obligation to pay benefits until the former worker completely recovered from their injuries.

A Doctor Decides When the Employee Can Come Back to Work and How

The treating physician determines whether and when the employee is able to return to work. They may clear the employee to go back to work with no restrictions. Alternatively, the doctor could place work restrictions on the employee while they are fully recovering from their injury. Employers must meet these restrictions if the employee is to return to work. Otherwise, they could keep receiving benefits until they fully recover. The employee may ask for another opinion if they disagree with the doctor’s conclusion that they are able to go back to work.

The employer’s legal obligations do not end when the employee is able to return to work.

For example, the employee may still not be able to perform certain types of vigorous labor. In that case, the employer is obligated to make reasonable accommodations for the employee. There are other federal laws that require accommodations in the employee’s current position or that the employer offers a lighter-duty position. However, the term “reasonable accommodations” implies that the employer does not have to make unlimited efforts to accommodate the employee.

Contact a Los Angeles Workers’ Compensation Employee Today

Employees may need the help of an experienced workers’ compensation lawyer if their claim has been denied or if they are having trouble when they are receiving benefits. They may have disputes over medical care or whether they can really return to work. Employees have legal rights under California law. If you need to speak with a lawyer, you can schedule a free initial consultation. You can call us today at (888) 851-5005, or you can reach out to us online.