When an employee is injured on the job, Workers’ Compensation Insurance provides coverage for medical costs, lost wages, and disability expenses—no matter who’s at fault.

Virtually every state requires employers to buy Workers’ Compensation Insurance coverage for its employees. Fail to buy it, and you’ll face heavy state fines if an employee is injured.

Your organization most likely has secured a national Workers’ Compensation policy. However, if you operate in North Dakota, Ohio, Washington, or Wyoming, you purchase Workers’ Compensation Insurance coverage through a state agency.

Refer to the Insurance Overview for your chapter or house corporation to determine if your location is covered by the national insurance policy. Contact your MJ Account Executive with questions.

Misclassifying Employees

The government is aggressively pursuing employers who misclassify employees as independent contractors to avoid payroll withholding taxes, unemployment insurance, and Workers’ Compensation payments.

The IRS and other agencies typically use a 20-factor test to determine whether a worker qualifies as an employee. The more control an employer exercises over a worker, the more likely that worker will be deemed an employee. Factors that may signal that a worker is an employee include requiring an employment application; dictating how, where, and when a worker performs; and whether you provide the tools for the job.

Coverage for Independent Contractors

Insurance is one of the bigger expenses for any business. Especially when the economy is down, businesses may choose to eliminate that expense. If you hire such a business, you may have to rely on your own coverage for a loss if they cause bodily injury or property damage.

Make sure that you secure Certificates of Insurance from all of the contractors who work on your property.

Refer to the Insurance Summary Table of Contents for additional information on Certificates of Insurance.