For the majority of Utah employers, having workers’ compensation insurance is a must. But do you know which businesses need to purchase coverage or the times when this coverage is optional? In this employer’s guide, we’ll cover workers’ comp basics, including how it protects employers and employees, which businesses are exempt, and how to buy a policy.
Why is workers’ compensation insurance important for your business and employees?
For employees, workers’ compensation can provide peace of mind should they experience a work-related injury or illness while on the job. That’s because this type of insurance typically offers benefits such as partial wage replacement and medical coverage should an employee experience an occupational illness or injury while on the job. On the other hand, having a policy generally protects employers from litigation that might stem from a work-related illness or injury that happens in the workplace.
With this explanation of how workers’ compensation can make a difference for both employers and employees, it is time to learn which businesses must have coverage.
Which employers in Utah are required to carry workers’ compensation insurance?
To start with, regulations require nearly every employer in Utah to have workers’ compensation coverage, including any business that employs one or more workers under any contract of hire, including aliens, whether working legally or illegally, and minors.
Additionally, all Utah employers are required to post a notice in a conspicuous location that they are currently in compliance with all workers’ compensation laws.
What employers are exempt from purchasing coverage?
According to Utah’s Labor Code, there are some exemptions for purchasing workers’ compensation coverage in Utah. These exemptions include:
- Sole proprietors without an employee
- Corporation officers or directors
- Partners in a partnership
- Real estate sales agents and associate brokers
- Insurance salespeople
- Non-paid interns and volunteers
- Casual and domestic employees
- Some agricultural employees
In most cases, optional coverage is available for each of the categories listed above. It’s important to note that individuals with no employees who hire out their services to an employer may be classified as a statutory employee and can request a waiver to waive their right to workers’ compensation insurance.
Moving on, let’s find out more about how a business typically goes about buying a policy.
How can Utah employers purchase workers’ compensation insurance?
Utah employers can purchase workers’ compensation insurance from an insurance carrier licensed in the state of Utah to sell workers’ compensation insurance policies. If a company is unable to purchase insurance because they have a poor safety record or are considered a high risk, they can purchase coverage through Utah’s Workers Compensation Fund or WCF, which is considered a last resort option.
Certain employers may choose to self-insure. Advance authorization is required before a company can become self-insured. Any business applying to become self insured must have been in business at least five years, have a net worth of at least $10 million, and demonstrate the ability to pay claims. Those interested in self-insuring can visit the Utah Labor Commission’s self-insurance information page for additional requirements and how to apply.
What are the penalties for not having the required coverage in place?
Employers who do not provide workers’ compensation can face some unfavorable outcomes, and Utah’s labor commission regularly checks to see if companies are in compliance with the rules. Below are some of the potential penalties.
- Employers found to be in violation are subject to a penalty of at least $1,000
- Injunction filed to prevent the business from operating
- Loss of “exclusive remedy” which protects employers from liability should an employee be injured on the job.
What does Utah workers’ compensation insurance cover?
There are several types of benefits provided by Utah workers’ compensation. Not all benefits are available to all workers, and some of the benefits listed will need to be applied for by the injured employee and their doctor. Available benefits include:
All reasonable expenses resulting from the treatment of an on-the-job injury are covered under workers’ compensation. This includes doctor visits, hospital bills, additional medical care, prescription medication, and prosthetic devices. Injured employees can also receive reimbursement of all travel related expenses incurred to receive medical care.
Temporary partial disability
If a worker is unable to earn their regular wage while recovering from an injury, they are entitled to receive partial disability benefits in addition to wages earned while recovering.
Temporary total disability
If an injured worker is found to be temporarily disabled, they can receive wage benefits on day four after an injury has occurred. If the temporary disability extends beyond fourteen days, the first three days of the injury will be paid as well. Temporary total disability benefits are also available to workers that must work fewer hours or have been switched to light duty. The maximum duration for benefits is 312 weeks within a 12 year period.
Permanent partial disability
When an injury leaves a worker permanently impaired, the worker is eligible for compensation, with the payment duration determined by an impairment rating. An employee becomes eligible for permanent partial disability benefits when they reach maximum medical improvement and are no longer expected to improve.
Permanent total disability
If an injured worker is left totally disabled, they are eligible to receive permanent disability compensation. This may be paid in a lump sum or over time.
The family of an employee that dies from a work-related injury will receive funeral benefits up to $9,000. The spouse, dependent children, and other dependents may also be entitled to a monthly benefit.
What happens if an employee is injured?
An employee should report a workplace-related injury immediately; seeking medical attention at the closest emergency care center if necessary. Once an injury is reported, an employer has 7 days to report the claim to its insurance carrier using Form 122E; Employer’s First Report of Injury or Illness, which is sent to the insurance carrier. The insurance carrier is then responsible for filing Form 122 C; Carrier/Self insured Employer First Report of Injury or Illness and forward it to the Industrial Accidents Division within 14 days. The employee must receive a copy of the completed form.
After the first doctor visit, Form 123; Physician’s Initial Report of Injury or Illness will need to be filed within 7 days of the employee’s initial visit. Once the insurance carrier has received the employer’s report or the physician’s report, a claim will be opened for the injured employee.
When injured, is an employee able to use their own physician for treatment?
An injured employee must always see an employer-specified doctor for their first visit (not counting an emergency room visit). After the first visit, an employee may elect to see their own healthcare provider by using the one time change of provider option available. If the employer does not use a preferred provider organization (PPO) to manage their workers’ compensation claims, an injured employee can go to the doctor of their choice immediately.
Other resources for Utah employers
Why workers’ compensation coverage is worth the cost
For many companies, employees are the most valuable resource. That’s why so many employers will invest in a workers’ comp policy to protect them from the costly impact that an on-the-job injury can bring. But as an employer, having this coverage in place also protects your business financially from the impact of those injuries, which can include potential employee lawsuits and state penalties. If you have any questions about purchasing workers’ compensation for your Utah business, our team can 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.