As a small business owner, you have a lot on your mind trying to get your new enterprise up and running. One thing you can’t overlook, however, is Workers’ Compensation. Not only does it make economic sense, but it’s also the law. We talked with Chuck Verre, the chief administrative officer of the State of Nevada’s Division of Industrial Relations, Workers’ Compensation Section, and Jana Hermann, the Section’s uninsured employer claims coordinator and compliance audit investigator, to find out how you, your business, and your employees can all benefit from the Workers’ Compensation program in Nevada.
What is Workers’ Compensation?
Workers’ Compensation is a mandatory insurance program that all employers in Nevada are required to have in order to protect their employees in the case of on-the-job injuries. The insurance is “no-fault,” meaning it is an exclusive remedy. It provides medical coverage, loss of wages and job protections for covered employees. Since it is no-fault, the insurance is beneficial to both the employer and the employee. Employees benefit by being protected in the case of on-the-job injuries, without worry about the stress of medical bills, lost wages, or job retaliation. Employers benefit by being protected from other claims or lawsuits.
Who must carry it?
“The first thing — the most paramount thing — I would tell a new small business owner in Nevada is that if you have one or more employees, you must have Workers’ Compensation Insurance. It is mandatory. If you don’t carry the insurance, we will fine you and penalize you, and this will not be pleasant for any of us,” warned Verre, whose office is responsible for enforcement of the law, ensuring that Nevada workers injured on the job receive the benefits to which they are entitled.
What if my workers aren’t “employees”?
Trying to characterize your employees as independent contractors will not help you, because the Nevada statute regarding coverage is very broad in defining both employers and employees. Even licensed principal contractors are deemed to be employers, and their subcontractors are employees for purposes of the statute, which covers both legal and illegal workers. “Just giving a worker a Form 1099 will not work, as the statute has much broader definitions than the IRS,” explained Verre. “You can’t assume your workers are not employees unless specific exclusions from the statute or case law apply to your business. For example, beauty salon operators with separate business and occupational licenses do fall under the ‘independent enterprise exclusion’ found in the law.”
How do I obtain this insurance?
More than 330 private insurance carriers in Nevada are licensed to provide Workers’ Compensation Insurance. Just ask your regular insurance agent for advice. You can also self-insure your company through an approval process overseen by the Division of Insurance (DoI), or you can be self-insured through associations of smaller businesses/associations of self- insured employers. Look on the DoI website for a listing.
I am just starting my new business. Can I wait a while?
Nevada law requires that coverage be immediate, and the penalties for non-compliance are costly. Your business can be subject to fines up to $15,000, plus additional premium penalties. You can have your business closed, and be liable for all injury costs, and subject to possible criminal penalties if you don’t comply. “As business in Nevada is picking up again, so are the numbers of uninsured businesses. We don’t advertise or have promotions, but we do want to get the word out that the penalties for not carrying this mandatory insurance are costly,” explained Verre.
His colleague, Jana Hermann, agreed. “If you don’t have Workers’ Compensation, even one claim can destroy your business and shut it down. Insurance is usually not that expensive, so it is cheaper to have the insurance and be covered. A lawn-care company is an example of where you can have a serious injury and claims can be very costly for potential accidents, such as loss of fingers, or falling from a tree,” said Hermann, who handles the uninsured fund for those claims where an employer does not have the required insurance.
I have the insurance. What else is required?
It is the employer’s responsibility to provide a workplace free of “recognized hazards,” to post the requisite posters in the workplace, to have the policy or certificate of insurance available for inspection at all times and at all permanent locations, to make available reporting forms for the employees, and of course, to provide immediate first aid to anyone injured. “The state does help with training, and private businesses can get assistance with this. Your insurance company can also give you information on what you must have on hand,” said Hermann.
One program that has been helpful in keeping costs down for businesses is the Subsequent Injury Account, which offers incentives for employers to hire workers who have suffered a permanent physical impairment. The impairment can be congenital or caused by a previous accident, illness or work-related injury or occupational disease. The costs of any subsequent injuries for these types of workers are paid from a designated “subsequent injury account” which is supported by assessments received from workers’ compensation insurers rather than having the current insurer pay the entire cost of a qualifying claim. “This has been a very positive program,” said Verre. “It has encouraged businesses to hire workers with disabilities.”
“We are here to protect both the employer and the employee. We try to educate, provide information, and have as much outreach as we can,” Verre concluded.
For more information, go to the Department’s Workers' Compensation website for Employers.
The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of ZB, N.A.