There are plenty of legalities to deal with when you are thinking about starting a business. One of them is workers’ compensation in Los Angeles. It is an insurance type system that enables workers to have easy and quick access to medical bills, loss of wages, compensation for any permanent disability caused during work regardless of who is at fault. Therefore, it ideally ensures welfare to all employees while protecting business owners from most lawsuits as well.
Who Has to Pay for the Compensation?
Any Los Angeles employer has to pay the insurance premium and not deduct it from the worker’s salary. The employer cannot ask any of their employees to purchase their own worker’s compensation insurance or ask them to help pay that sum. Under California law, this premium is considered overhead. That means it is just the cost of doing business in the state.
Is It Required to Carry Workers’ Compensation in California?
All employees are required to carry worker’s compensation insurance under California law. And even if you have just one employee, you need to purchase this insurance for that employee without fail. In fact, even if you’re not a California businessman and your business is not based out of California, you will still be liable for worker’s compensation as long as your employee is working in California or if you two made and signed your contract in the state.
Can Employers Still Be Sued After Purchasing Workers’ Compensation?
This insurance system was designed to ensure that the need for most types of lawsuits would not arise. That is achieved by duly compensating the employees for all work-related injuries regardless of who is at fault in the situation. However, this is not an absolute immunity from being sued. If an employee feels that their injury was rather severe and/or caused due to willful and negligent misconduct of the employer, they are free to file a lawsuit in court.
Also, if an employee has faced any discrimination from their employer because they took the worker’s compensation insurance or have had made known that they will likely file a claim for the same, then such employee would violate Labour code section 132a under California law and thus, can be sued against.
If filed against an employer, such claims would not be covered under the existing worker’s compensation system. Hence, the employer can be taken to court and affect the business drastically.
Where Do Sole Proprietors Stand With Workers’ Compensation?
Running a business doesn’t always require you to hire employees all the time. However, if you hire even one employee under California jurisdiction, you will have to give them worker’s compensation without fail, even if it is just for a short while, such as hiring salesmen for holiday shopping. As long as you’re a small business with no employees, you would not need to purchase this compensation.
What Is Self Insurance?
This is a risky mode of insurance. Instead of hiring a third party to become the insurer for your employees, some business owners opt to fulfill the workers’ compensation requirements themselves. They direct all claims to themselves and hence eliminate the third-party insurer from the middle.
Remember that all self-insured employers have to comply with every compensation rule in the worker’s compensation system and are themselves liable for all such claims as under. While California has the largest self-insurance program for employers, it is still a risky move to make, especially if you’re a small and new business. Therefore it is always advisable to talk to a lawyer before you choose to make any such decisions.
What If I Opt Out of Paying Workers’ Compensation?
Opting out of paying workers’ compensation in Los Angeles and/or not taking it altogether can become a huge issue of trouble with law enforcement in the state. If caught, the criminal fines alone range from $10,000 to $50,000 and have civil penalties ranging from $1,500 per employee! If your offense is serious enough, the court could rule your business closure as well.
If these are not enough, several other penalties can be levied on you. And as such, if a claim is made against you that you do not have worker’s compensation, do not take it lightly and reach out to legal help as soon as possible.