Workers’ Compensation: What is it and why your business needs it

During the time of the industrial revolution and early 20th century, it was difficult for injured workers to obtain compensation and medical treatment for workplace-related injuries. The most likely way for employees to get compensation was to sue their employers, which was costly, time-consuming and uncertain for all parties involved.

The modern workers’ compensation insurance system dates back to the late 1870s and early 1880s when Prussian Chancellor Otto von Bismarck enacted a system of social insurance that gave limited protections to workers in factories, quarries, railroads and mines. The concept gradually spread across Europe and by the early 1900s individual states within the U.S. began to implement similar reforms.

Today, workers’ compensation is a no-fault insurance program that provides medical treatment, rehabilitation and wage replacement benefits to employees who are injured at work. In what is often referred to as “the compensation bargain,” injured employees receive these benefits in exchange for giving up the ability to sue their employer for negligence.

While workers’ compensation insurance requirements vary from state to state, most businesses with more than one employee are required by law to provide workers’ compensation benefits to their employees.

A workers’ compensation policy, paired with a comprehensive workplace safety program, is a strategic investment in the success of a business, as well as in its most valuable asset – its employees.

Below are the top three reasons why it is important for Nevada businesses to obtain and maintain workers’ compensation insurance coverage.

1. It is required in Nevada

In Nevada, unless excluded by statute, all employers that have one or more employees must have a workers’ compensation insurance policy. The Nevada Division of Industrial Relations, Workers’ Compensation Section (WCS) is responsible for ensuring employers are compliant with this law. Employers who do not have workers’ compensation insurance are subject to an administrative fine of up to $15,000 and are financially responsible for all costs arising from a work-related injury. Businesses can be ordered to shut down until they obtain workers’ compensation insurance coverage. They may also be subject to civil litigation brought on by an injured employee, or criminal penalties for accidents involving substantial bodily harm or death.

For more information on the workers’ compensation requirements for Nevada, visit the State of Nevada Department of Business & Industry’s website.

2. It protects your employees

Accidents can happen even in low-risk workplaces. The Bureau of Labor Statistics reported that there were 2.8 million nonfatal occupational injuries in the United States in 2014, the most recent year for which statistics are available.

In addition to medical treatment and wage replacement, workers’ compensation insurance protects injured workers by providing these additional benefits:

Lost time compensation (Temporary Total Disability / Temporary Permanent Disability)

Permanent Partial Disability (PPD)

Permanent Total Disability (PTD)

Vocational Rehabilitation

Dependent’s benefits in the event of death

Other claims-related benefits (e.g., mileage expense reimbursement)

Return-to-work programs

3. It protects your business

Workers’ compensation doesn’t just protect injured workers. Because Nevada has “exclusive remedy,” injured workers generally cannot sue their employer for work related injuries if the employer has secured workers’ compensation insurance. This helps protect employers from additional damages claimed by their employees as a result of an injury on the job. Workers’ compensation coverage also helps employers avoid paying the full out-of-pocket costs of an injured employee’s medical expenses and lost wages. In cases of severe injuries or deaths, these costs could cause significant financial harm to a small business. Additionally, workers’ compensation carriers can provide employers with access to useful services and materials to help create a culture of workplace safety that can reduce the risks of employee injuries.

Finding the Right Fit for Your Business

Local insurance agents or carriers can help business owners find the appropriate workers’ compensation insurance policies for their particular needs.

When evaluating policies, it is important to solicit multiple quotes and look at more than just the price tag. Business owners should consider the whole package a carrier offers — including its network of care facilities, return to work guidance, loss control support, anti-fraud programs, claim handling efficiency, financial stability, workplace safety education and flexible payment plans.

Having workers’ compensation insurance coverage for your organization is a smart and strategic investment that not only protects your employees, but your business as well. Employers are advised to contact their local agent or carrier for more information and guidance on ways to effectively protect their business.

Stephen Festa is executive vice president and chief claims officer for EMPLOYERS®, which offers workers’ compensation insurance and services through Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Preferred Insurance Company and Employers Assurance Company. For more information, visit www.employers.com.