A real life story of a small business owner:
Can you believe it? You just opened your doors only 6 months ago and already business is booming. You are feeling great and, at this rate, you will need to hire your first employee within the next month or so. Maybe the employee would be part-time to start just to help out with your busy days – you are still thinking about that.
You go to your accountant to let him know that you just finished your interviewing process and found the perfect employee to help grow your business. They will be starting part time on Monday for about 20 hours a week. Your accountant says great and puts you in contact with a payroll company who will help run your payroll weekly, making his and your life easier to manage the expenses.
Your employee starts and things are going great for a couple of months. That is, until she slips on the coffee spill in the break room and hurts her back. She tries to brush it off because she is a good employee and doesn't want to make a big deal about it but, the pain gets worse and she eventually goes to her doctor. Your employee is diagnosed with a slipped disc and it looks like she will need surgery, which will take her out of work for 6 weeks. 6 weeks is a long time for your employee to be out - how will you find a replacement?
But, there is another factor in this story- who is going to pay for the doctor's visits, surgery, etc. On top of that, who is going to pay for her extended time out of work? Since she has only been working for 2 months, and is covered under her husband’s insurance, you think you have dodged the bullet. Think again.
The above scenario is very real. Every day, we see simple things like this turn into major headaches that can spin out of control. Yes, your accountant was in the right mind set in getting you set up on payroll but, what he failed to tell you is that with your new employee comes state required workers compensation insurance and disability insurance. These employee insurance policies are required to be in place regardless of whether that employee is part time, full time, or even a day laborer. This scenario would fall under your responsibility for Workers Compensation and disability insurance.
Workers Compensation will cover employees who are injured on the job including medical expenses. Disability Insurance will cover short term disability for employees who are out of work or hurt off the job and need to collect lost wages. Your new employee’s slip and fall is covered under these policies because it happened while she was at work, whether she was actually in the act of working or not. The claim includes her doctor's visits, surgery, physical therapy, etc. If she is out for 6 weeks, she would collect disability for her lost wages.
Now, your first thought might be about the expenses. Before you panic about being required to provide and expensive insurance, keep in mind that workers compensation is rated based on the job classification. For example, a roofer will pay a different premium than someone working in an office, simply because the risk of getting hurt is very different. Regardless of the expense, think of it this way - it is much cheaper to pay for insurance than medical expenses and potential lawsuits on a work injury.
On top of that, state regulations say that when you have employees on payroll you are required to have both workers compensation and disability. If you fail to do so, your business is likely to face hefty fines, (in New York, its $200/ day for every 10 days that you are without insurance) or worse they can shut your business down.
So what can you do if you have employees and no insurance to cover them? Get the coverage ASAP. While you may not be able to avoid the state penalty for operating your business with no insurance, you can show them you now have the coverage in place and your employees will now be covered in the event of an accident. Long Island Workers Compensation Insurance is the best way to protect your employees and your hard earned business from a small slip and fall that could be a huge financial strain later on.
Looking for a checklist of what to do before hiring your first employee? Email us or text us at NEWEMPLOYEE and we will respond back with a downloadable pdf.