How Does Workers’ Compensation Work: A Guide For Business Owners

When you are a business owner, you worry about your bottom line costs and profits.

But you also think about what would happen if one of your employees was injured on the job? Do you have enough business insurance to handle an injury like that? How does workers’ compensation work for your company?

There is a myriad of different questions and worries running through your head on any day. Employee injuries, insurance, and how much it would end up costing you are right up there at the top of your concerns.

The informational guide below will go over how to understand best what workers’ compensation is. The guide will also give information about what workers’ compensation provides for your business peace of mind.

What is Worker’s Compensation?

The history of workers’ compensation in the U.S. spans over 100 years. When workers’ compensation began back then, occupational injuries and fatalities were at epidemic levels. The 1970 passage of the OSH Act set out various recommendations for a system of compensation that would be fair to the business owner and employee.

New Jersey has one of the better state systems for worker compensation insurance and a fair rating system for their disability and compensation schedule for injured or sick employees. The state also mandates that every employer not covered by federal programs must have workers’ compensation coverage or approved for self-insurance.

How Does Workers Compensation Work?

Worker’s compensation insurance provides business owners some peace of mind from being sued by employees hurt on the job. Employees can still sue, but the worker’s compensation insurance helps prevent that from happening most of the time.

The insurance is paid for by companies and is used to provide benefits to employees who become ill or injured on the job. A worker’s compensation insurance program provides this care through two types of benefits.

The First Benefit is Medical

Workers’ comp insurance provides medical benefits to employees who become injured or ill on the job.

The Second Benefit Is Lost Wages

Workers’ compensation insurance also covers wages lost by employees unable to work due to their workplace injury. Most of the time, it is an accident the employee had on the job where they can’t work for some time. The insurance provides benefits to help cover the wages the employee will lose while they recover.

Workers Compensation and Financial Protection

Worker’s compensation gives businesses financial protection. Worker’s compensation gives employees who are injured or get sick on the job medical care and lost wages.

If the employee’s recovery takes a while, the workers’ compensation helps them have a livable income wage while they get better.

What do Businesses Like about Workers Compensation and Financial Protection?

Almost every state requires worker’s compensation insurance, and in some states, employers can go to jail or face fines if they don’t have it.

Businesses especially like to have worker compensation insurance because the insurance reduces their financial loss in case of lawsuits. Without insurance, if an employee gets sick or hurts on the job, the business may look at a lawsuit for lost wages and damages.

What do Employees Like about Workers’ Compensation and Financial Protection?

Employees like the worker’s compensation insurance because it helps them get their medical and financial needs met while they recover.

Stellar employees sometimes won’t work for companies without workers’ compensation insurance. If you are a small start-up business, those are the employees you want and need.

Company Programs That Help Reduce Injury Claims

When you are a business owner, you want your financial statements to look healthy. It’s in your best interest to keep your businesses exposure to big-money items to a minimum.

To keep your exposure down and your big-ticket costs to a minimum, there are steps you can take. These steps can help your company keep the risk of injury to your employees at a minimum.

They include:

  1. Keep workspaces clean and free from clutter.
  2. Post signage up in proper places for employees.
  3. Provide a safety program and proper training.
  4. Provide proper equipment that’s received maintenance and safety checks.
  5. Provide injured workers with access to the best medical treatment without delay when injuries occur.

But even when you take these steps, your company’s safety record begins and ends with prevention. Prevention of accidents, injuries, and illnesses is the only way to go.

Employee Workplace Injury Statistics

Workplace deaths and occupational injuries have dropped over 60% since the inception of workman’s compensation. Most injuries and illnesses that have occurred since then were preventable.

In the U.S., there are over 12 workers who die on the job every day. That equals over 4,500 every year. Every year, there are over 4 million employees who suffer a serious, life-altering job-related injury or illness.

These numbers prove that there need to be more pro-active prevention programs offered by companies.

Where Can Your Company Go to Find Out More About Workmans’ Compensation?

We hope you’ve learned more about the importance of workers’ compensation, both for you as the business owner and your employees.

There should never be a question about getting workers’ compensation insurance; it is the law. That said, if you get coverage without implementing an injury and illness prevention program, it may seem like a futile effort.

Injury and illness prevention programs need not be resource-intensive for small businesses. Most programs can be modified to meet the needs of any size organization.

Your business will not be alone in the quest to provide New Jersey with the safest work record. You will join companies in most of the US states, 27 European Union member countries, Canada and Australia.

If you want to get the right workers’ comp coverage for your business, give us a call to find out more: 609-587-8030.