I Own A business In Louisiana……Do I Need Workers’ Compensation Insurance?

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Aaron Etzkin 

PROPERTY & CASUALTY INSURANCE AGENT

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Although workers’ compensation is often thought of in the context of protection for a worker injured on the job, its provisions also limit legal and financial exposure to the business as a result of the injured worker. Without workers’ compensation insurance protection, an employer can be sued by an injured employee for damages which can significantly exceed the amounts the worker would be entitled to in worker’s compensation benefits.

With few exceptions, any business in Louisiana employing one or more worker, full or part-time, is required by statute to have workers’ compensation protection. Subcontractors and certain independent contractors may be considered employees if their work contribution to the company is directly and substantially related to enhancing the success of the business. One class of workers often overlooked by businesses is contract workers who may be hired to perform maintenance and/or cosmetic work related to the physical appearance of the business premises. If injured during the course of their work for the business, and not covered under their own workers’ compensation insurance policy, these workers could very well file a workers’ compensation claim against the company that hires them. Some examples would be landscapers, electricians, plumbers and building contractors to name a few.

Louisiana workers’ compensation law does contain some limited exemptions. For example, domestic employees, most real estate salespersons, uncompensated officers and directors of certain non-profit organizations, and public health officials are specifically exempted. Most volunteer workers would not be entitled to benefits as well. Also, the owner or owners of a business are allowed to opt out of covering themselves under the company's workers' compensation plan. The rules about owner coverage can vary depending on whether the business is a sole proprietor, partnership, limited liability company or corporation. For a business owner, workers' compensation coverage is often optional; as the owner you can choose to cover yourself along with your employees or just cover the employees and save the cost of coverage on yourself.

In Louisiana, an employer may purchase workers compensation insurance directly from an insurance company that offers this coverage, or if able to meet strict guidelines set up by the state, may be self-insured. The guidelines for self-insuring require the company to provide proof of financial ability to pay benefits and completion of other state certification requirements.

The punishment imposed on an employer who fails to provide workers’ compensation insurance may include fines and/or imprisonment up to one year under civil and/or criminal penalties. Penalties are normally imposed by the Louisiana Office of Workers’ Compensation on employers and on other individuals who aid and abet employers who willfully misrepresent that they are in compliance with statutes governing workers’ compensation. By Louisiana statute, an employer who fails to secure workers’ compensation insurance, regardless of the reason, shall be liable for civil penalty up to $250 per employee for the first offense and up to $500 per worker for a subsequent offense [LA. R.S. 23:1170(A)]. The employer is also subject to investigation by the Office of Workers’ Compensation, which could result in the discovery of additional violations. The Office of Workers’ Compensation may also seek injunctive relief against an employer with prior offenses to prohibit it from continuing to operate until proof of insurance is provided and all fines are paid in full. An employer who intentionally or through gross negligence fails to provide insurance is subject to criminal penalties, including a fine of $250 per day and/or imprisonment for up to one year, or both.

As you can see, there is potentially much to lose if an employee is injured on the job and the employer is not protected by workers’ compensation insurance or authorized to be self-insured. No matter how minimal you feel your business exposure to accidents may be, it’s not a matter of if an employee will be injured; it’s a matter of when. A minor needle stick at a medical office can quickly evolve into full-blown treatment for HIV or Hepatitis. An office worker exposed to mold or other contaminants in the building’s heating and air conditioning system may result in the employee becoming extremely ill. In all cases of accident or injury in the workplace, by strictly following reporting, treatment and follow up procedures outlined in the workers’ compensation policy, financial exposure to the business can be minimized.

 This article was written for informational purposes only. Each workers’ compensation policy is unique to the insured that is named on the policy and based on the information provided to the insurance company at the time of application. Please refer to your own policy for specific guidance on coverages. If you would like a free consultation to go over your workers’ compensation policy, please
contact me, Aaron Etzkin, right away at aetzkin@powellins.net or call me at 985-351-1287.  You may also contact me via my website at www.etzkininsurance.com. Please check back periodically for additional informative articles on property & casualty insurance.

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