Too Many Risks to Saying 'No' to Workers' Comp

Posted By Katz Leidman Grossman Wolfe & Freund || 6-Oct-2015

Employers are aware that workers’ compensation premiums rise fast as their organizations grow – the more employees a company has, the higher the premiums. With a company that is scaling quickly, the result can be a significant and unexpected expense by years end.

In the face of rising workers’ compensation costs, some employers are choosing to limit benefits, or they’re choosing to forego workers’ compensation insurance altogether. But, this decision does not come without risk. In many cases, choosing to go without is more costly than provider workers’ comp in the first place.

Risk of Costly Lawsuits

Workers’ compensation laws require that employers provide financial assistance to most workers injured in a work-related accident. If they fail to do this, they run the risk of lawsuits.

All we have to do is take a look at Uber, who in August was sued in a class action lawsuit brought on by one of its drivers in California. The Uber driver was allegedly attacked by a customer while on the job.

That lawsuit was a result of the company’s decision to classify their drivers as independent contractors as opposed to employees.

Uber’s controversial decision helped the ride-sharing company avoid insurance costs, but it removed valuable protections for the drivers and Uber itself, namely insulation from lawsuits filed by its drivers.

Paying Out of Pocket

Though premiums are on the rise, rising costs shouldn’t stop employers from considering the big-picture costs that come from having an unprotected business.

Waiting for an employee to get hurt, then paying them out-of-pocket may seem like a better option, but in reality paying regular fees for workers’ comp premiums is almost always cheaper than paying out of pocket.

For employers, the costs of not providing workers’ comp run much deeper than any financial inconveniences. The benefits of providing workers’ comp are numerous, for example, it shows employees that their safety is important, and that the company will take care of them if they’re injured.

Depending on the state, federal regulations may impose sanctions on employers who violate the law and fail to maintain workers’ comp. In New York, employers who fail to comply face a $2,000 penalty for every 10 days of noncompliance, according to the New York State Workers’ Compensation Board.

In New York, sole proprietors, partners, or the president, secretary or treasurer of a corporation can be held personally liable if they fail to secure workers’ compensation for the employees.

Injured on the job by an uncovered employer? Contactour New York workers’ compensation lawyers to discuss your rights and your legal options!