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Navigating the Complexities of State-Specific Workers’ Comp Regulations

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!

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