If you have one or more employees and you operate a business in Arizona, you are required by law to provide them with workers’ compensation insurance coverage.
All employees, including full time and part time workers, family members, and minors, must be covered. The structure of your business doesn’t matter – whether you are a sole proprietorship, a partnership, an LLC, or a corporation, you must provide workers’ compensation to all employees.
Some exceptions exist, but there are very few.
What is Workers’ Compensation?
Workers’ compensation is insurance you provide to your employees that covers work related injury, illness, or disability.
Injuries that are not work related are not covered.
For example, an employee slips on a wet floor at home, resulting in a minor injury. The employee reports to work as usual, then during the course of the work day experiences some pain as a result of the incident at home. The employee then leaves work to go to the doctor for diagnosis and treatment. Although the pain surfaced at work, the original injury happened at home. It would not be considered a workers’ compensation claim under most circumstances, unless there were other reasons that could prove that the work was the cause of, or contributed to, the injury.
If the employee had slipped on a wet floor while on the job, it would be considered work related and would most likely fall under the protection of workers’ compensation, unless it was the result of reckless or willful behavior of either the employee or employer.
Having a workers’ compensation policy in place will usually not protect you if your employee has opted out of coverage, or you have failed to give you employee proper legal notice of the right to opt out.
Keep the Job Open
If your employee is absent from work due to a work related injury, illness, or disability, the employee’s job is protected.
Your employee cannot be fired for anything that does not involve intentional behavior. Coverage is generally no fault. The employee may receive a partial salary as well as payment of medical expenses while off work during convalescence.
After recovery, the old job or an equivalent job must be available. If your employee is unable to perform previous job duties due to the incident, training costs for suitable, equivalent job duties may be covered. In the event that the employee does not recover, there may be the possibility of permanent disability benefits.
Options for Coverage
Here are some options to find workers’ compensation coverage in Arizona:
- Self-funding. Go to the Industrial Commission of Arizona and fill out the application. There are general qualifying guidelines, including an annual payroll of at least 2 million dollars per year, 50 million dollars in assets, and a minimum of 5 years in business.
- Go to the list of approved workers’ compensation carriers and get several quotes.
- Go to the Arizona State Compensation Fund to get a quote.
- Assigned Risk Pool. If you are unable to find coverage or are rejected for some reason, contact the Industrial Commission of Arizona for information on the Assigned Risk Pool.
Workers’ compensation coverage is serious. If you do not provide coverage, your business could be shut down. You open yourself up to lawsuits with no damage ceilings. The Industrial Commission of Arizona’s Special Fund Division will cover valid employee claims, then will seek full reimbursement, plus 10%…from YOU. There are additional potential fines.
And you may be charged with a Class 6 felony.
So….unless you want to meet some new friends in Tent City (I hear it’s nice & warm this time of year), make obtaining and maintaining a workers’ compensation policy a priority!
Questions regarding workers’ comp? Call managestaff. We’ll help.
It’s what we do.