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How Do Workers’ Comp Claims Affect Employers?

The Growing Challenge of Multi-State Payroll

Business owners, CFOs, and HR professionals know how complex the payroll process can be. When your company hires employees that live across multiple states, however, it becomes even more challenging.

 

Varying tax regulations and location-specific wage laws make it difficult to remain compliant. The rise of remote work means these complexities are becoming even more prevalent, ultimately costing companies time and money.

 

The administrative burden of multi-state payroll can lead to costly errors—particularly for small businesses. Professional employer organizations (PEOs) step in to alleviate some of that pressure by handling administrative tasks like payroll management. This means growing companies can stay focused solely on running their business.

 

Let’s take a closer look at multi-state payroll compliance, why traditional payroll may not be the right choice for your company, and how PEOs help simplify the payroll process.

 

Understanding Payroll Compliance Across State Borders

If you’re a small business owner, hiring remote workers means having the ability to access a larger pool of talent beyond your specific area. This can be incredibly beneficial for your business, but it also comes with challenges.

 

One of the biggest challenges companies should consider when hiring talent across state borders is remaining compliant with rules and regulations regarding payroll. Not only do these laws evolve constantly, but they also tend to vary from state-to-state. If your company falls out of compliance, you could be faced with hefty fines and penalties.

 

When hiring workers across multiple states, it’s important to keep in mind that state income tax rates, unemployment insurance requirements, wage and hour laws, and benefits mandates will vary depending on where your new employees are located. Keeping up with those regulations can be especially difficult for smaller businesses or companies without a human resources team.

 

Why Traditional Payroll Systems Fall Short

Traditional payroll systems typically handle one-size-fits-all scenarios. While they may process paychecks efficiently, they may not take multi-state payroll compliance into account.

 

In many cases, generalized payroll processing can lead to miscalculated tax withholdings, late or inaccurate state filings, or noncompliance with state wage laws.

 

How PEOPayGo Makes Multi-State Payroll Easy and Accurate

From streamlining payroll and ensuring compliance to flexible pay-as-you-go programs and expert support at your fingertips, PEOPayGo makes multi-state payroll easy and accurate.

 

1. Payroll Compliance

PEOPayGo specializes in understanding and keeping up with state and federal rules and regulations when it comes to payroll. No matter where in the United States your workers are located, PEOPayGo ensures that your business will remain in compliance with those laws.

 

2. Streamlined Payroll Processes

Beyond remaining compliant with state and federal regulations, a streamlined payroll process is essential to keep employees happy and your company thriving. PEOPayGo’s platform simplifies the entire process, from onboarding new employees and time tracking to tax filings and benefits management. Automating your payroll processes with the help of PEOPayGo also ensures that it’s done accurately and on time.

 

3. Expert Support

The team of experts at PEOPayGo is always available to help with what you need—whether you’re unsure of how to handle an employee moving to another state or you’re trying to understand varying wage laws. When you partner with PEOPayGo, you’ll receive the support you need as a small or medium-sized business.

 

Simplify Payroll with PEOPayGo’s Multi-State Expertise

Managing payroll across multiple states can be complicated, and as a small business owner, you likely have a lot on your plate already. It can be difficult to keep track of varying wage laws by state, especially when rules and regulations are constantly changing.

 

When you work with PEOPayGo, you can rest assured that your business will remain compliant with state and federal regulations when it comes to payroll. Not only will you receive compliance support, but you’ll have streamlined payroll processes to help your organization simplify and thrive.

 

If you’re a business owner or HR manager with multi-state or remote employees, reach out to PEOPayGo today to get the payroll support you need.

 

Contact us today to get the coverage and support you need!

The worker’s compensation program protects employers by covering the medical costs and lost wages of injured employees. When an employee is receiving workers’ compensation benefits, you do not need to pay them. You should pay them their regular pay rate if they are still working for you. Accordingly, workers’ compensation would likely cover only medical benefits, not lost wages.

In the event of an injury, your insurer-not you-will covers the cost of an injured employee’s medical treatment, disability, and other benefits as long as the policy is active. So why do some companies fight workers’ compensation claims? For one thing, they fear premium increases. When determining premiums, providers consider your loss history, but fighting a workers’ comp claim will only encourage your injured worker to hire a lawyer. Once a lawyer is involved, your costs will skyrocket. Studies suggest attorneys can make workers’ compensation claims 388 percent more expensive than those without. The reality is that fighting workers’ compensation claims is a losing battle. 

So now let’s look at how much these claims cost you.

The Direct And Indirect Costs Of Claims

There are two kinds of workers’ compensation costs: direct and indirect. Direct costs are easy to track and analyze. The direct cost for most businesses is workers’ compensation premiums. A business pays a premium for workers’ compensation insurance, and the insurer pays for the benefits injured workers are entitled to under state law. Benefits include medical care, disability payments, rehabilitation, and death benefits. Additionally, legal fees can be covered by the insurer. Injured workers receive disability benefits for a portion (usually about two-thirds) of their lost wages while they’re unable to work. Workers receiving disability payments are not supposed to be paid wages by their employers. 

Compared to direct costs, indirect costs are typically more difficult to determine and quantify. However, indirect costs can still be significant even when they are not easy to spot. Indirect costs can exceed direct costs in many workplace injuries. The following are seven types of indirect costs that a single workers’ compensation can produce.

The Administrative Costs

A workers’ compensation claim has the most immediate impact on your business by adding workload to your supervisory and administrative staff. Injuries at work require immediate attention. The employee has to be transported to a clinic or hospital for urgent care, provided with a claim form, and have the form completed and submitted by your insurance company. To ensure that the worker’s recovery proceeds smoothly, your staff will need to communicate with colleagues at your company as well as the worker’s health care provider. Employees who are cleared to return to work with restrictions, such as lifting no more than five pounds, may need to look for alternative jobs. As all business owners know, time is money. As a result, these tasks can take a lot of time and effort.

Increased Payroll Costs

Nearly a third of American workers who sustained non-fatal workplace injuries missed at least one day of work last year, according to the Bureau of Labor Statistics. Someone else must perform the duties of the injured employee. Depending on the situation, either a temporary worker can be hired or existing workers can be asked to perform the worker’s job, possibly with overtime pay. A long-term absence from work may require you to hire and train a new employee. Each of these options is costly.

Insurance Costs are Higher

Workers’ compensation insurance claims increase your insurance costs because they change your experience. The experience modifier is a mathematical factor that affects your insurance premium. 

In addition to your current policy term, your rating modifier reflects how you perform against the loss experience of other businesses in your industry over the past three years. Numbers may be greater than, less than, or equal to one. You can receive a credit on your workers’  compensation premium if your loss experience is better than average for your industry. This also applies the other way around. An increase in losses will result in a debit from your premium.

Morale and Productivity at Work

Accidents at work have the potential to lower employee morale and increase absenteeism. Minor incidents can disrupt your business and negatively impact your productivity. After an accident, it may be necessary to stop work or delay it until damaged equipment is repaired or replaced. Worker injuries may cause fear and anger, particularly if they believe you are not concerned about their well-being or the accident. Injured employees who are out on disability may also be resentful of having to pick up the slack.

The Extra Scrutiny of Your Insurer

Your insurance company may also try to scrutinize your business because of workers’ comp claims. Insurance companies monitor their customers’ claims experience and pay attention to claim patterns that occur frequently. To determine whether there was a safety lapse on the part of the employer, they will analyze the circumstances of the accidents that triggered the claims. Your insurer may conduct an on-site workers’ comp inspection if it suspects safety is an issue at your workplace. During an inspection, your insurer is likely to list corrective measures you need to take to maintain your coverage. You might be required by your insurer to install guards on equipment, improve housekeeping, or educate your workers about the dangers of handling hazardous materials.

OSHA Inspection and Fines

An OSHA investigation may be initiated after a serious workplace injury. OSHA is more likely to investigate your workplace if employees complain about hazards. OSHA may inspect your business on-site or over the phone depending on the circumstances. OSHA may fine your business $13,653 per day if an on-site inspection reveals serious violations of its standards.

Reputational Damage

Damage to your business’ reputation is another effect of workers’ compensation claims. Social media has made it possible to share information about workplace incidents quickly. Suddenly, your business might be viewed as a risky business. Injury stories can discourage prospective employees from working for your company. Your company can lose customers, clients, investors, suppliers, etc. Because of these problems.

Prevention Is The Key To Avoiding Accidents

Workplace safety programs can help you rein in the direct and indirect costs of workers’ comp claims. You can save money by preventing accidents before they happen, improving employee morale, and lowering costs of insurance by preventing injuries before they happen. Be proactive if you don’t yet have a plan.                                                                                                                       

Businesses and self-employed contractors might want to consider getting a policy that protects their business if they get hurt at work instead of skipping workers’ compensation protection. Get in touch with an insurer today, PEOPayGo is a great option.

As a Professional Employee Organization (PEO), P.E.O.PayGo can help you get workers comp, bundle payroll, and HR, and perform all the headache functions of a small business, all while saving your time and money. Let our Instaquote do all the work, we don’t need much information and it takes 2 minutes. Our software does all the work for you. 

Get Ready, Set, and Covered Now!

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