Workers’ Compensation Basics for New Employers

Complying with Workers’ Compensation can be complicated for small buisinesses.Here is a quick guide to ensuring you are in compliance.  

Small businesses hiring their first employees must take several steps in order to ensure compliance with applicable state and federal laws. These steps include 1) obtaining an Employer Identification Number from the IRS, 2) setting up records for withholding taxes, 3) verifying employee work eligibility, 4) registering with the District of Columbia New Hire Reporting Center and reporting all new hires within 20 days, 5) obtaining workers’ compensation insurance, 6) posting required labor notices in the workplace, and 7) setting up employee recordkeeping. This post describes the workers’ compensation insurance requirement.

What is workers’ compensation?

Workers’ compensation provides compensation and benefits to employees injured or killed in the course of their employment. Employees that claim compensation through this insurance are legally barred from pursuing legal action against their employers for damages stemming from the same injury.

What are my obligations?

D.C. law requires all businesses with at least one employee to either secure workers’ compensation insurance or qualify as a self-insurer. Employers seeking qualification as self-insurers must submit satisfactory proof of their financial ability to pay workers’ compensation to the D.C. government and receive authorization from the Mayor’s office. Employers who do not qualify must obtain insurance from private insurers—D.C. does not have a state insurance fund.

After obtaining the necessary insurance, the employer must post a notice in a conspicuous location at his place of business stating that the employer has secured workers’ compensation insurance (or is self-insured) and providing the name and address of the insurance carrier.

Who must my insurance cover?

The only employees not entitled to workers’ compensation under D.C. law are “casual” employees. Casual employees are those who work for a business for a very short time. Employment for several months or even weeks generally does not qualify as casual for the purposes of workers’ compensation laws.

Why do I need workers’ compensation insurance?
As mentioned above, workers’ compensation insurance is required by D.C. law. The primary benefit to employers of workers’ compensation insurance is that it protects the employer from further liability to the employee (or anyone else entitled to damages on the employee’s behalf) as a result of the employee’s injury or death. Once an employee claims benefits through his employer’s insurance, the employee cannot sue the employer for additional damages for the same incident. The employer thereby avoids involvement in potentially costly and lengthy litigation over workplace injuries. Furthermore, court-awarded damages would likely exceed what an employer would otherwise pay in insurance premiums.

Kaavya Gowda