In 2016, workers’ compensation claims cost employers a total of $96.5 billion. This could make it tempting for a business owner to choose to go without the insurance. But, what happens if you don’t have workers’ compensation insurance?
In Arizona, most business owners are mandated by law to have worker’s compensation insurance. This is regardless of whether their employees work part-time or are aliens, minor workers, or family members. Not having the coverage could lead to unwanted consequences such as fines and lawsuits.
If you more have questions about workers’ compensation in Phoenix, contact Snow, Carpio, Weekley to speak to experienced Phoenix Worker’s Compensation Attorneys.
Why Should You Have Workers’ Compensation Insurance?
As mentioned, workers’ compensation is a legal requirement in Arizona. Any employer with at least one employee, whether full or part-time, is required to carry the insurance. Non-compliance could lead to severe unwanted consequences, such as:
- A Civil Lawsuit
If you don’t have workers’ compensation insurance, an injured employee could sue you in a state court for damages. You could be liable for medical expenses, lost wages, rehabilitation costs, and pain and suffering. Depending on the severity of the employee’s injuries, this could ultimately be costlier than getting the cover.
- Fines from the ICA
Alternatively, the employee could file a claim with the Industrial Commission of Arizona (ICA). The ICA would then pay the compensation benefits to ensure the employee is well cared for. Next, they would seek reimbursement from you for all costs met. You could be liable to pay all the benefits plus:
- A 10 percent fine or $1,000penalty, whichever is greater
- A separate penalty of $1,000 for not having workers’ compensation insurance
- Additional penalties of $5,000 and $10,000 for subsequent failure to get the insurance
- Additional Fines
In Arizona, employers are subject to a flat $1,000 penalty for not carrying workers’ compensation insurance. The amount rises to $5,000 if they still don’t get the cover within five years. If you are caught with yet another subsequent case of non-compliance, you could pay up to $10,000 in penalties.
- Higher Worker’s Compensation Bill
Workers’ compensation insurers have access to your policy records. When you finally decide to purchase a cover, they could discover the gap in your coverage records and quote you higher rates. They could also refuse to insure your business.
If the worst comes to worst, the ICA could file an injunction against your business. This would force you to shut down until you got workers’ compensation insurance for your employees. You would lose both your clients and your employees.
- Bad Reputation
Employees help build your business’s reputation. If you fail to protect them by getting the coverage, you could create a bad name for yourself as an employer. This would ultimately be bad for business.
Talk to a Phoenix Workers’ Compensation Attorney
It could be tempting to choose to go without workers’ compensation, especially if your business is not doing well financially. However, it is not worth the risk. Going without workers’ compensation could expose you to legal risk. It could even cost you more money in the long run.
If you have more questions about what happens if you don’t have workers’ compensation insurance, contact us to talk to the best Phoenix workers’ compensation attorneys.