Written and submitted by Rob Griffin, Owner of Swift Creek Insurance; www.swiftcreekinsurance.com.
From time to time, I get a call from a customer saying he was told by one of his subcontractors that since they do not have employees, or only one employee, that they do not need Workers’ Comp. That statement is generally followed up by, “Is this true?” By law, if you have fewer than three employees, it is true; you are not required to have Workers’ Comp Whether or not you need it is a different question.
Prior to Workers’ Comp insurance, if an employee was injured on the job, his only recourse was to sue his employer for his medical bills and lost wages. Now, if you have a Workers’ Comp policy in place, the employee is “made whole” in accordance with state law, and the ability to sue the employer for an on-the-job injury is greatly reduced. It is limited to the most extreme cases.
What happens if an employer has only one employee and chooses, in accordance to state law, not to carry worker’s Comp, and the employee is injured on the job? This is not a simple question. Usually, there is an attempt to find some other means to get the claim paid. Was the company subbing from another company that does have a policy? If the work was being done on a home, can a claim be filed against the homeowner’s policy? Is it possible that the individual’s health insurance policy would cover it? (Traditionally not.) If all other means are exhausted, it is still the employer’s responsibility.
So, to answer the question, “Who need Workers’ Comp?” — Anyone who has employees.