Workplace injuries can be costly for both you as an employer and your employee. Even the safest businesses in low-risk industries are susceptible to slippery floors, causing an employee to fall and other accidents.
As a business owner, it’s essential to understand both you and your employee’s rights and responsibilities when an employee gets hurt. If you have workers’ compensation insurance that complies with state laws, employees generally can’t sue for workplace injuries. However, it’s still important to understand when an employee can successfully sue you or your company for a work-related accident.
How Workers’ Comp Insurance Works
Workers’ compensation insurance provides employees financial assistance by paying for lost wages and medical bills related to a workplace injury. Most states, except for Texas, require private business owners to purchase a workers’ compensation policy.
Most of your employees will require some form of workers’ compensation. However, how to insure out-of-state workers or private contractors will vary by state, as each state creates its own workers’ compensation regulations.
Additionally, some states have a monopolistic funding model, meaning you can only purchase insurance from a state-approved provider. Other states follow a competitive model, allowing businesses to buy insurance from any private agency they choose.
In the case of a workplace accident resulting in an injury, workers’ compensation will usually protect an employer or company from getting sued. You can look at your workers’ comp policy as an agreement between you and your employees—they’ll receive proper medical care and lost wages but forgo their right to sue for damages.
The Workers’ Comp Settlement Process
While having workers’ compensation is the best way to avoid a lawsuit after a workplace injury, your employees have the right to reject the compensation package that your insurance company offers.
If an employee does not think they are issued a fair workers’ compensation package, they can begin a settlement process to negotiate how much financial help they will receive. Settlements most often occur when the employee faces a lengthy recovery period and high medical costs.
As an employer, it’s your job to find an insurance provider you can trust and to make sure the settlement process is as painless for your employee as possible. Ensure your employee can quickly contact your insurance company and stay updated using an insurance agent if your provider offers one to assist with the settlement process.
When Employees CAN Sue
Workers’ compensation and the settlement process help protect you from being sued in the aftermath of a workplace injury. However, there are a few instances in which you may be open to a lawsuit. Keep in mind that the circumstances that can lead to a lawsuit depend on statelaws for workers’ compensation insurance.
If you’re concerned that your business may be open for a lawsuit in the aftermath of a workplace injury, it’s best to contact a workers’ compensation agent to determine your risks. In general, you’ll only be reliable in a few circumstances:
- An Employer Intentionally Causes an Injury– If an employee can prove you intentionally caused them harm, you can be open to a lawsuit. This can include physical or mental injury, such as attacking an employee or causing emotional distress.
- Gross Negligence by the Employer– When you’re made aware of dangerous working conditions, it’s your responsibility to mitigate it. For example, if an employee informs you about a loose railing around a staircase, you must fix it or risk opening yourself up to a lawsuit if the safety hazard results in an injury.
- Noncompliance with Workers’ Comp Laws– You must provide the minimum workers’ compensation coverage that your state requires. Not doing so can result in a lawsuit if an employee is injured and not covered adequately because your business was noncompliant.
Your Workers’ Compensation Responsibilities
Having adequate workers’ compensation coverage for all your employees is the best way to protect your business from a lawsuit. When an employee doesn’t believe their compensation package is fair after experiencing a workplace injury, you must allow the settlement process to play out. Not taking your responsibility to provide adequate coverage for your employees seriously can result in a lawsuit against your business, not to mention a hit to your reputation.