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Most Illinois employers are required by law to carry workers’ compensation insurance. To help businesses better understand what this type of insurance covers and how to maintain compliance, use the guide below.
What is the purpose of workers’ compensation?
Sometimes at work, there can be unexpected (or unintentional) incidents that lead to an employee getting injured, sick, or hurt while on the job. And when an employee is unable to work, it usually means the loss of a paycheck for a period of time. That’s where workers’ compensation can make a difference.
- For employees: It ensures that employees are covered in these unfortunate incidents and that all reasonable and necessary medical treatment is taken care of. Workers’ comp also typically covers lost wages. Many employers are required by law to provide this type of policy.
- For employers: Workers’ compensation insurance can also have benefits for the employer. In most jurisdictions, employees generally cannot sue their employers for damages related to injuries or illnesses that happen while on the job when they are already covered by workers’ compensation. Some policies may also provide fraud support.
Now that we’ve covered the basics of workers’ compensation, let’s get into the specifics that Illinois employers should be aware of.
Which employers in Illinois have to provide workers’ compensation?
In a nutshell, Illinois law requires every business with full-time or part-time employees to carry workers’ compensation insurance. In most cases, this also includes family members, unless they are corporate officers. Sole proprietors, business partners, corporate officers, and members of limited liability companies may exempt themselves. Workers must be covered from the moment they are hired, according to the Illinois Workers’ Compensation Commission
Next, let’s talk about what coverage usually covers if a claim needs to be filed.
What does workers’ compensation generally cover?
An employee may be eligible for partial income replacement, rehabilitation costs, and permanent disability benefits in Illinois if they sustain an occupational illness or injury at work and need time off to recover. Most employees should notify their employer as soon as possible, and Illinois law requires workers to report workplace incidents within 45 days.
Purchasing workers comp in Illinois
When it comes to coverage, Illinois law requires employers to either
- Purchase a policy through a private insurance company. According to the Illinois Workers’ Compensation Commission, 90% of employers choose this method.
- Apply for permission to self-insure.
Next, let’s talk about the potential repercussions of not having a policy.
What are the possible penalties if an Illinois employer goes without a workers’ comp policy?
According to the Illinois Workers’ Compensation Commission’s employer handbook on workers’ compensation and occupational diseases, fines can add up.
- Employers have the potential to incur fines of $500 per day for every day of noncompliance (with a minimum $10,000 fine).
- If failure to provide workers’ compensation insurance coverage is due to neglect, it is punishable by a Class A misdemeanor for each day without coverage (the maximum is 12 months imprisonment and a $2,500 fine).
- If failure to carry insurance is found to be knowing and willful, it is considered a Class 4 felony in Illinois. A felony conviction can lead to up to three years of jail time and fines of up to $25,000.
- In addition, the Illinois Workers’ Compensation Commission may issue a work stop-order against an employer that’s been found to have knowingly failed to provide insurance.
The handbook also points out that employers are responsible for purchasing a workers’ compensation policy by law and may not charge their employees for any insurance premium costs of the plan or for the benefits they receive.
Furthermore, employers must complete and post a notice in a prominent location at each location of employment informing employees that they have workers’ compensation coverage. Here is the poster the state provides: ICPN Workplace Notice (rev. 10/11)
More resources for Illinois employers
Workers’ compensation provides peace of mind for employees and employers
In Illinois, having a workers’ compensation policy is more than a legal requirement. In many cases, it can provide you and your employees with peace of mind. With a plan in place, workers can rest easy knowing that they will be taken care of if they get hurt or sick on the job. And in the vast majority of cases, business owners can feel confident that they’ll be protected from litigation due to work-related injuries or illnesses that their employees experience. If you have any questions or need assistance setting up a workers’ compensation policy for your company, we’re here to help.
Please note all material in this article is for educational purposes only and does not constitute tax, benefits or legal advice. You should always contact a qualified tax, legal or financial professional, in your area for comprehensive tax or legal advice.