Wednesday, March 5, 2008

The Impact of Worker’s Compensation Claims on Small Businesses

Workers are the most important member of the labor force. Without them, capital would be futile. Thus, it is but proper to give them the proper and maximum benefits for their sustenance and well being.
Workers' compensation is a compulsory type of business insurance that gives employees who become injured or ill while on the job with medical coverage and income replacement. It also protects companies from suits filed by employees for the workplace conditions which results to such injury or illness.
Given the compulsory nature of workers' compensation coverage and the potential cost involved, workers' compensation insurance policies have become a huge concern for small business owners. In fact, premiums paid on workers' compensation stand as second largest operating expense for most companies.
Unlike in health insurance costs, small business owners have minimal control over the cost of workers' compensation coverage. Moreover, in this kind of coverage, co-payments do not apply as the state legislatures set the level of benefits and employers pay the full cost.
Does it mean then that small businesses shall have a different method of paying worker’s compensation claims?
Of course not!
I believe that the legislators, in enacting workers compensation laws, do not distinguish between small and big businesses. These laws must be implemented in order to give workers the protection in case of injury or illness which may leave them unable to render service.
I have some suggestions on how small business may lessen their workers' compensation premiums. These may include:
  • Selecting the right insurer
  • Monitoring all aspects of work safety record and insurance coverage and ensuring that all subcontractors carry workers' comp coverage
  • Adopting policies and programs to reduce exposure to workers' comp claims such as ergonomic training
Following the above, owners of small business can still keep up with their responsibility of providing compensation claims without compromising the well-being of their workers.