For the majority of Louisiana employers, having workers’ compensation insurance is a must. But how do you know what it covers and how to go about obtaining a policy? In this employer’s guide, we go into all the details to help businesses better understand what these policies cover and how to stay compliant.
Why is workers’ compensation important?
Workers’ compensation requirements are put into place to protect both employees and employers. For employees, workers’ compensation coverage provides medical and wage loss benefits to employees injured on the job. But for employers, workers’ compensation protects employers from costly lawsuits that can result from an employee being injured on the job.
Next, let’s go over which employers need to purchase workers’ compensation insurance, what it covers, and how employers can purchase workers’ compensation insurance for their business.
What Louisiana employers are required to have workers’ compensation coverage?
In a nutshell, employers in Louisiana are required to maintain workers’ compensation insurance even if they only have one (1) employee. This includes part-time, full-time, temporary, or seasonal employees. Generally, independent contractors are not required to have workers’ compensation coverage, but if an employer hires an independent contractor to perform work which is part of the business, such as the construction industry, you may be required to provide workers’ compensation coverage.
Are there any exceptions?
There are exceptions to Louisiana’s workers’ compensation requirements, including:
- Sole proprietors that do not have employees
- Corporate officers that own a percentage of the business
- Employees working at a residential home
- Real estate brokers and salespeople
- Employees of an incorporated farm
- Musicians and other performers who have a performance contract
- Federal employees covered the Federal Employer’s Liability Act, Longshoremen’s and Harbor Workers’ Compensation Act and Jones Act
- Airplane crews involved in crop dusting or spraying operations
- Uncompensated officers and members of a board of directors for nonprofit organizations
Louisiana state workers’ compensation requirements do vary from business to business, so there may be additional exceptions that will need to be considered.
What does workers’ compensation insurance cover?
Louisiana workers’ compensation covers both mental and physical injuries that can occur either from accidents or from occupational diseases. Benefits are offered in the following areas:
Louisiana workers’ compensation insurance pays for all medical care for eligible employees injured on the job. Medical care includes emergency treatment, follow-up care, surgery, along with reasonable and necessary travel expenses incurred by the employee to obtain medical services. An employee is required to keep all medically related travel receipts to obtain reimbursement for those expenses.
An employee that is unable to return to work within seven days after injury or illness began may be eligible for indemnity benefits. Indemnity benefits are available for both Temporary Total Disability (TTD) and Permanent Total Disability (PTD). In addition, employees suffering an injury covered by Louisiana workers’ compensation insurance may also be eligible for Supplemental Earnings Benefit (SEB) if the employee is able to return to work but is not able to earn their previous wage. Employees receiving a catastrophic injury may also be eligible for a one-time payment of $50,000.
Vocational rehabilitation services
Injured employees that are unable to return to their previous job are eligible to receive vocational rehabilitation services which include retraining, occupational therapy, and job placement assistance.
The surviving spouse and/or dependent children of an employee that dies as the result of a workplace related injury or illness is entitled to receive death benefits including funeral expenses up to $8,500, along with a weekly indemnity benefit. If there are no surviving dependents, the employee’s surviving parent(s) will receive a one-time benefit of $75,000.
How can Louisiana employers purchase workers’ compensation insurance?
There are numerous options available for Louisiana employers to purchase workers’ compensation insurance. In many cases, an employer may opt to purchase the required coverage from an authorized private insurer licensed to sell workers’ compensation policies in Louisiana.
Employers also have the option to obtain membership in a state approved Group Self-Insurance Fund. Select Louisiana employers may also elect to apply to be self-insured by completing the self-insurance application and including financial statements for the last three years along with three years or audited financial statements. If approved to be self-insured, employers must deposit the required security or indemnity bond as required.
What are the penalties for not having the proper workers’ compensation insurance?
There can be some unfavorable outcomes if an employer decides to go without workers’ comp coverage.
- Louisiana employers who fail to offer proof of workers’ compensation coverage may be fined up to $250 per employee for the first violation.
- A subsequent violation will cost a non-compliant employer $500 per employee, up to $10,000 in total.
- Employers not in compliance may also be charged with a criminal violation or forced to halt operations until the business is in complete compliance.
Another item to note is that whether the violation is determined to be willful or an oversight, the penalties for noncompliance remain the same.
What happens when an employee is injured?
Any injury, even a minor one, should be reported to the employer as soon as possible, though employees have up to 30 days to report an injury and still be eligible for workers’ compensation benefits. Once notified of the injury, employers must complete and submit Form LWC-WC 1A-A, the First Report of Injury or Illness.
Employees have up to one year to file a claim for medical or indemnity benefits from the date of the accident or injury. Claims for Supplemental Earnings Benefits (SEB) can be filed for up to three years after the initial injury while claims for occupational diseases including repetitive injuries such as carpal tunnel can be filed for up to a year after knowledge of the disease.
Can employees choose their own physician for treatment?
Under Louisiana law, an injured employee has the option to choose their own physician for treatment and has the freedom to switch treating physicians without prior approval needed. Any employee injured on the job will have to complete LWC-WC-1121 indicating their choice of physician. If switching physicians within the same field of treatment, permission must be granted by the Louisiana Workforce Commision. However, any physician chosen by the employee must receive approval to continue treatment beyond the $750 threshold established by the state.
Employers also reserve the right to request that an employee be examined by the physician of the employer’s choice.
Stay compliant with the proper workers’ compensation coverage
Having the proper workers’ compensation coverage in place makes good business sense for a couple of reasons. A workers’ comp policy provides your employees with both medical and wage replacement benefits should they be injured on the job, while it also protects your business from costly penalties and skyrocketing litigation costs. If you have any questions about obtaining workers’ compensation coverage for your business, our team is 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.