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But I’m not required by law to have work comp unless I have “X” number of employees.

How dangerous could it be to work in an office?

If I get work comp then I’m afraid employees will want to use it.

I could keep listing the excuses. But the general consensus amongst small business owners and small farm owners is that workers compensation insurance isn’t necessary unless somebody makes them take it. However the reality of not carrying work comp is that it could end up hurting your business.

Do you really know if your business is compliant with the law?

A beauty salon that was set up as a corporation had 2 officers (literally co-owners) and for years they had no other “employees”. The other hairdressers were all independent operators who paid a booth fee and were not considered employees of the salon because they determined their own schedules and were not considered under the supervision of the salon. Until the day the salon decided to hire a part time assistant. To sweep and help wash hair. Months went by and neither owner ever thought that they were breaking any laws. However because the salon was a corporation with 2 officers, in North Carolina they each counted as 1 employee and by adding a part time person that reached the 3 employee requirement for work comp. Once put on notice by the NC Industrial Commission they immediately got coverage but are still in negotiations over fines imposed for the months where they were not covered by work comp.

Each state has their own laws regarding work comp and verifying with the industrial commission or other governing body of your state is advisable to prevent non-compliance.

How dangerous could it be to work in an office (or whatever you do that seems really low risk)?

In 2007 an office worker was injured when an object fell off a shelf and hit her in the head. Nine years later work comp is still paying and the claim is nearing $400,000. For a seemingly minor injury in a low risk environment with no obvious safety concerns. You can bet this non-profit with only 3 employees has been happy to pay less than $1000 a year for work comp knowing it didn’t have to budget for the long term medical care of a former employee.

If I get work comp then I’m afraid employees will want to use it.

If you don’t have work comp then an employee might not seek treatment until its almost too late. A small business had an employee that suffered a cut while on the job. Over the next few weeks the cut became infected and the employee ended up in the hospital with blood poisoning. If the employer had insisted the employee seek medical attention at the onset the infection might have been avoided.

So what’s the good news about getting work comp?

Starting now means developing a history while payrolls are still low and makes you a better risk just by having the policy.

Getting work comp when your payroll is low means that the premium will be at a minimum. Once you have work comp insurance your business or farm can develop a favorable claims history that will benefit your rates as your payroll grows. Other insurance policies like general liability are also rated with a good claims history in mind but work comp is more directly correlated.

Once an employer is large enough to be paying more in premium there is a factor applied to the premium called experience modification (or experience mod). A favorable experience mod earned from having fewer claims works like a discount because it lowers the premium. Although a bad claims history will do the opposite to your premium the positive effect is that as time goes by without claims it will improve.

If you wait to get work comp until your business or farm is “large” enough or until you think you are at a higher risk or until you think the law will require it you will miss out on developing a good risk history.

Regardless of the size of your business, your employees are your greatest asset. Purchasing work comp is your way to protect them and their value.

If you don’t have work comp you are gambling that the one employee or two who isn’t covered won’t hurt your business.

One employee with one injury could lead your business into a world of hurt.