Workers’ compensation laws were adopted for two primary reasons. First, they are designed to protect workers from a significant loss in payment when work is missed stemming from a workplace injury. Second, they assist the worker with the recovery process through payment of medical bills, rehabilitation programs, and other recovery services.
Employers need to not only be mindful of implementing the best safety practices, they also need to make certain that they avoid many common mistakes that can lead to higher workers’ compensation premiums. In parts one and two of this two-part article, a Florida workers’ compensation lawyer will discuss some ways that employers impact their bottom line when they fail to control claim costs.
How are Workers’ Compensation Costs Calculated?
Every employer should know how their workers’ compensation premium is calculated. The three factors that determine the price of your premium are:
- Payroll size
- Job classification of employee
- Company claims experience
Regardless of the size of your business, in the State of Florida, if you have one or more employees, you are required to have workers’ compensation. Understanding how your policy is calculated can assist you with discovering ways to lower the cost of premiums.
No Accurate Payroll Estimate
It’s critical that the employer has an accurate estimation of their annual workforce payroll as overestimating or underestimating the price will directly impact the premium. When you overpay, you will eventually recoup those additional funds; however, there will be no return on investment as the insurance company holds your capital. If you underpay, this will increase the cost of your premium after you receive an audit. It’s critical that every employer do their due diligence at the beginning of a policy period and determine an accurate payroll evaluation for that policy period.
Independent Contractors in the Workplace
Employers, especially contractors, should always ask themselves, “are all workers at the workplace covered?” For industries like construction, employers may rely on numerous subcontractors to perform much of the needed work of the business. To add to the confusion, many of these subcontractors will employ sub-subcontractors. As these “freelancers” are often coming and going, it can be easy to lose track of whether or not every worker is covered.
When an uncovered worker is injured, the burden of paying for their recovery may be the responsibility of the primary contractor. Moreover, without a record of a certificate of insurance, the contractor’s business could be impacted during an audit. Before a subcontractor should be allowed to begin work on a project, it’s critical that the contractor obtains proof of coverage from the subcontractor and their crew.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.