If you employ one or more subject workers in the state of Oregon, you must provide workers’ compensation coverage for your employees.
Almost all employees, and sometimes volunteers, must be provided with insurance coverage. There are some exceptions, such as: domestic servants; people doing gardening, maintenance and repair work on private homes; some casual workers; sole proprietors; partners and officers of corporations; newspaper carriers; amateur athletes; and people who own or have a leasehold interest in and operate motor vehicles carrying logs, rocks, gravel, sand or asphalt. But these are very narrow exceptions that have been qualified by court decisions. You should consult a workers’ compensation lawyer before assuming that your employees or even subcontractors are exempt. Do not assume that a written independent contractor’s agreement insulates you. If the independent contractor fails to obtain coverage for its employees, you could be held ultimately liable for any injuries to its employees. What’s more, the legal test for independent contractor status is very strict.
To obtain coverage, you may purchase workers’ compensation insurance from any qualified commercial insurance company, the State Accident Insurance Fund Corporation known as SAIF, or, if you meet certain rigid requirements, you may provide your own coverage as a self-insured employer. Generally, a small business will have insufficient assets to qualify as a self-insured employer. If you are unable to obtain coverage from an insurance company or SAIF, you may obtain coverage through the Oregon Assigned Risk Pool, managed by the National Council on Compensation Insurance.
If you have workers’ compensation insurance, in most cases your employees injured on the job cannot sue you in a civil court for injuries resulting from your negligence as an employer. The workers’ sole rights are to obtain benefits provided by workers’ compensation insurance.
If you neglect to obtain workers’ compensation insurance for your employees, you will be a “subject and non-complying employer.” Despite your failure to obtain insurance, your employees injured on the job will still receive workers’ compensation insurance benefits. The Workers’ Compensation Division, an agency of the state of Oregon, will provide workers’ compensation insurance benefits to your employees, but you will be obligated to reimburse the department for all claim costs and a penalty. Since an injured worker is entitled to the following benefits, claims costs may be substantial:
All benefits will be processed for the Workers’ Compensation Division and charged against you, along with a percentage processing fee (of around 20 percent) and a penalty. Note that the charge against your business cannot be blocked by any corporate structure. It will be reduced to a lien and collected as a tax that pierces corporate structure and passes through to individual officers and directors as personal liability. Such liens are not dischargeable in bankruptcy.
Additionally, if you are a subject and non-complying employer, the injured worker may be able to sue you in court for his or her injuries. In such a suit, you will be prohibited from asserting certain key defenses. A successful lawsuit may result in a substantial monetary judgment entered against you.
If a worker makes a claim against you for workers’ compensation benefits, you must file that claim with your insurance company within five days. You must accept the claim form, even though you may feel the claim is not justified. If you object to a claim, share that information with your insurer when you file the claim. If you fail to file the claim, you may be required to pay a penalty and the claimant’s attorneys’ fees.
If you have workers’ compensation insurance, and an injured worker files a request for a hearing to obtain additional benefits or some other relief, you will be defended by an attorney hired by your insurance carrier.
Naturally, you must pay for the insurance you purchase. Your premiums will depend on the type of employees you have (how hazardous is the job?), your payroll, and your own experience in providing a safe (or dangerous) work environment. Additionally, different insurance companies may offer different plans for payment of premiums. Carpenters, for example, are subject to a higher rate of classification than librarians because carpentry is a more hazardous occupation. If two new employers hire carpenters for the same salary, they probably will pay the same premium in the first year. Thereafter, if one employer can demonstrate through actual experience that his carpenters have fewer injuries on the job, his or her net premiums in the future periods probably will be lower.
When selecting an insurance company, you should examine such factors as:
Legal Editor: Robert J. Guarrasi, July 2013