No matter how safe of a work environment you create for your employees, mistakes can happen at any time. As a business owner or HR manager, having the right workers’ compensation insurance in place for your workers is crucial. Not only does workers’ comp protect your employees financially in the event they get injured on the job, but it also helps protect you as a business owner.
Workers’ compensation is required in most states, and without it, if one of your employees gets injured at work or becomes sick as a direct result of their job, you as the business owner could be expected to pay those expenses out-of-pocket. Workers’ comp ensures that if an accident does happen at work, your employee’s medical treatment, rehabilitation costs, and any lost wages during recovery will be covered.
Workers’ comp, however, doesn’t come without its challenges. There are certain complexities of state-specific workers’ comp regulations that can be confusing to navigate. Let’s take a look at some state-specific regulations, challenges that might arise, and how to navigate them effectively.
State-Specific Workers’ Comp Regulations
Most states require you to obtain workers’ compensation insurance as soon as you hire your first employee, though there may be exceptions to that requirement. In Alabama and West Virginia, for instance, you may not need workers’ compensation if you have fewer than five employees.
In some states, if the employee doesn’t have set hours, works less than 40 hours a week, or is a family member—referred to as a casual employee—they may not need workers’ comp. Typically, a casual employee is a contracted worker who isn’t technically a full-time employee.
The industry you work in may be a contributing factor too. While some industries like construction or factory work are considered high-risk or hazardous, other industries may not require workers’ comp at all.
Additionally, there are four monopolistic states that require workers’ compensation to be purchased from a state fund: North Dakota, Ohio, Washington, and Wyoming. This means there’s no competition between private insurers in those states in terms of coverage and cost.
Common Challenges in Workers’ Comp Compliance
Staying compliant with workers’ compensation can be challenging in that rules and regulations regarding coverage are constantly changing. When you have so much on your plate as a business owner, it can be difficult to keep up with current laws and adapt accordingly. Beyond the ever-changing regulations, each state has different requirements, making it challenging to navigate what’s required in your state and industry.
Workers’ compensation rates and coverage also depend on the specific work your employees do. The National Council on Compensation (NCCI) classifies workers according to their industry and job title. If you fail to classify your employees correctly, you may pay too much or too little for their coverage. Underpaying could mean being charged with penalties for non-compliance.
Another challenge in workers’ comp compliance is maintaining a safe work environment. Unlike large corporations, small businesses may not have safety programs in place to help educate their workers and keep them safe on the job.
Role of PEOs in Navigating Regulations
Professional employer organizations (PEOs) are well-versed in every aspect of human resource management, including workers’ compensation rules and regulations for any specific state. A great PEO will be up-to-date on any changes happening in the law, and will be able to confidently navigate your business toward the coverage it needs.
Creating a safe work environment is crucial as a business owner. PEOs are experienced in implementing safety training programs to help prevent workplace injuries or illnesses.
Strategies for Ensuring Compliance
No matter where you’re located or the industry you’re in, maintaining active workers’ compensation insurance for your employees is essential. Even if it isn’t legally necessary, when it comes to workplace safety, it’s a good idea to cover all your bases.
Partnering with a PEO is a great strategy to help ensure compliance. An experienced PEO will help you find the best coverage for your business, keep you up-to-date with rules and regulations, and aid in risk management to help keep your workers safe on the job.
Staying Compliant with State Regulations
When you work with us at PEOPayGo, we’ll help keep your company compliant with state regulations so that you can focus on building your business. Reach out to us today to learn more about how we can help!
Small and medium-sized business owners tend to wear many different hats within their organization. Not only are they the creative behind their offerings, but they’re also in charge of business strategy, growth, and all of the little details in between.
Whether your organization has one or one-hundred employees, small and medium businesses play a pivotal role in a successful economy by helping their local communities thrive. In order for your company to succeed, however, optimizing your business is crucial. Outsourcing administrative tasks like payroll, workers’ compensation, and other human resource services is a great way to optimize your business so that you can focus on what matters most.
Professional employer organizations work with small and medium businesses to help manage their administrative tasks. Simplifying payroll and workers’ comp is a huge benefit of using a PEO as a small or medium business. Let’s dive into a cost-benefit analysis of PEO services and when it’s worth it for your company to partner with a PEO.
Costs Involved in PEO Services
PEO services can vary in cost depending on the services you use, the number of employees you have, the industry you’re in, and where you’re located. Typically, that number will be a flat-rate for each employee or a percentage of your company’s total payroll. Things like state and federal taxes, workers’ compensation, insurance, and Medicare will likely also be included in your PEO fees.
Key Benefits of PEO Services
For small and medium businesses, working with a PEO can offer many benefits. When you partner with a PEO, you can:
1. Focus on business growth
As a business owner, you’re the brains behind the operation. The success of your company relies on your ability to focus on your strengths. Administrative tasks require daily attention that can ultimately take away from strategy and growth. Working with a PEO gives you the space to focus your time and energy where it’s most needed.
2. Find the best insurance coverage for your needs
A major benefit of working with a PEO is the ability to tailor your workers’ compensation coverage to meet the needs of your employees. Small and medium businesses often have contracted workers with hours that vary, which means standard coverage may not be the best fit. PEOs offer pay-as-you-go plans that allow you to adjust the plan depending on the duration of the project and the amount of coverage needed.
3. Stay compliant with workplace regulations
Rules and regulations within the workplace are constantly changing. From state and federal regulations to healthcare and minimum wage, PEOs stay up-to-date with regulations so that your small or medium business can remain compliant.
4. Keep your employees up-to-date with safety trainings
Unlike larger corporations, small and medium businesses may not have safety trainings in place for their employees. When you work with a PEO, however, they’ll do it for you. Many PEOs implement safety training programs to help prevent future accidents from happening on the job. These programs help protect employees from being injured at work, ultimately helping companies save money in the long run.
5. Increase your employee retention rate
When you’ve got a great team full of talented individuals, you likely want to keep it that way. When employees feel valued and taken care of at work, they’re more likely to stay where they are. As a small or medium business, offering competitive benefits packages and streamlined, timely payroll is crucial for worker retention.
PEO Services vs. In-House HR
While an in-house human resources department will have an understanding of your company’s culture, the benefits of using a PEO may outweigh the cost. PEOs have the ability to offer competitive benefits with more flexibility than standard options. While they won’t be located down the hall from your office, a good PEO will have readily available representatives to help whenever you need it.
Calculating ROI from PEO Services
A study from the National Association of Professional Employer Organizations (NAPEO) looks at five separate areas to determine cost savings for PEO clients: HR personnel costs, health benefits, workers’ compensation, unemployment insurance, and other costs related to HR services. NAPEO estimated the ROI for PEO clients each year is 27.2%, meaning for every $1,000 spent on PEO services, the average client would save $1,272.
Is a PEO Worth It?
As a small or medium business, working with an experienced PEO like our team at PEOPayGo, the benefits will outweigh the costs when it comes to streamlining and simplifying your HR services. Reach out to us today to see how we can help.