If you employ workers in Phoenix, you need worker’s compensation insurance. It is a type of business liability insurance that provides coverage for costs that come with injuries suffered while at work.
However, many states also have different worker’s compensation exemptions which allow employers not to provide coverage for specific people working within their organization. Being eligible for a worker’s compensation exemption can help cut costs associated with worker’s compensation insurance for a few of your employees.
What is a workers’ compensation exemption?
A worker’s compensation exemption allows businesses to skip providing worker’s compensation insurance for specific partners or employees. The employer saves the money they would otherwise spend on providing coverage since part of the worker’s compensation insurance is based on its payroll. By excluding part of the total payroll, you get to save on the total cost of insurance.
However, it does come with some risks. If you qualify for a worker’s compensation exemption, some of your employees do not have any form of protection if they get injured while at work. While you do not break any laws by not providing a policy for the employees, the injured workers could file a lawsuit if they feel you have a part to play in their injuries.
For a sole proprietor, the chances of injury could translate to high medical costs and a loss of income. In this case, you will have to take care of all the costs if you do not have worker’s compensation insurance.
Who is Eligible for a Worker’s Compensation Exemption?
Every state has different ways of deciding who qualifies for a worker’s compensation exemption. Make sure you verify with the Arizona state department of workers’ compensation to find out who qualifies and who does not.
Most states exempt independent contractors and self-employed professionals. The logic behind this is that any self-employed party can handle the risk that comes with the job and will not take themselves to court if they get injured at work. Here are some common types of employees eligible for workers’ compensation exemption in most states:
- Government employees
- Business partners and owners
- Household and domestic workers
- Railroad workers
Some types of claims also have exemptions. In this case, not all injuries or illnesses suffered while on the job are covered if they fall under an exempted category. Here are some of the widespread claim exemptions:
- Horseplay injuries
- Mental issues unrelated to work
- Self-inflicted injuries
- Injuries suffered while in violation of safety rules and company policies
- Injuries sustained while under the influence of drugs
Make sure you check with the Arizona workers’ compensation board to fully understand how you can make the most of the workers’ compensation exemption. Phoenix Workers’ Compensation Attorneys can also guide you on how to handle the process without leaving yourself or your business open to lawsuits.
Although you may qualify for a workers’ compensation exemption, you could benefit from having workers’ compensation insurance. It can save you lots of money you or one of your employees gets injured and cannot work.