If workers’ compensation insurance (work comp) was optional, as a business owner, would you buy it? I ask because current draft legislation would make Florida a work comp opt-in state.
This is just a proposed bill and the legislature isn’t even in session, but it is a sign that the work comp system will be a priority in the upcoming term. To many employers the thought of work comp premiums makes them cringe, especially after the news of a 14.5% increase. The possibility of not having to deal with them might just be music to the ears. But, there is a lot to consider when making the decision to purchase workers’ compensation insurance or to roll the dice and go without.
I think it helps to look back at why work comp came into being. During the early stages of the industrial revolution, when a worker was injured on the job, the sole remedy was to sue the employer. Termed “The Grand Bargain,” the first comprehensive work comp law was passed in Wisconsin in 1911. The Grand Bargain required employers to provide medical treatment and lost wages in the event of a work-related injury. The workers, for their part, agreed not to sue the employer. By 1920, 36 states had enacted work comp laws. Today, there are some exclusions, but for the most part the Grand Bargain has held up. In fact, it extends to all professions regardless of the hazardous exposures.
Deciding to risk it and not purchase work comp insurance should not be made based on emotion. No one likes work comp except those in the industry, but it does protect your company. Without the protection of work comp insurance, an injured worker can file suit against the employer. Whether it be frivolous or not, you’re still going to have to pay an attorney to defend you. If that suit were to go to trial, you face the exposure of a sympathetic jury who will be more susceptible to punishing employers. The plaintiff will demand not only lost time and medical benefits, but also pain and suffering, loss of consortium and potentially punitive damages.
At this point the opt-in idea is just that, an idea. But, if it were to become law, it is vital that employers truly understand the risk of not carrying work comp insurance. I would strongly recommend discussing the pros and cons with your advisor to see if it is a risk worth taking.