If you operate a small business in Missouri with only a few part-time employees, can you forego workers compensation insurance? It’s an interesting question for small business owners, especially because the number of small businesses is rapidly increasing.
The answer is, in a word, no. From the viewpoint of workers’ compensation insurance laws, “employee” is defined as a day laborer, leased employees, borrowed employees, part-time employees, unpaid volunteers (including family members) and most subcontractors (specific exclusions apply). Even small Missouri businesses with just one or two part-time employees need workers compensation insurance. Even if your employee works only a few hours each week or each month, you still need workers compensation insurance, especially in high-risk industries like construction. Why is it so important? To ensure your employees are compensated for workplace injuries and to prevent lawsuits filed against you by employees for injuries suffered on the job.
Purchase Private Insurance or Self-Insure?
Employers can meet their workers’ comp obligation by purchasing insurance or by becoming a state-certified self-insurer. In Missouri, Workers’ Compensation is a state-mandated, “no-fault” insurance system paying benefits to workers injured on the job to cover medical care, some lost wages and permanent disability. In return, employers are protected from civil lawsuits brought by employees over workplace injuries. Self-insurance can lower ongoing premium expenditures and help a business to take control of low-level risks. Self-insured businesses create funds and manage the funds and any claims against the business. As well, several small business owners in a similar industry can self-insure by pooling their risk and financial assets.
Self-insurers must pay into the Second Injury Fund and the state workers compensation tax, and must post a notice to employees concerning specific workers compensation information, which a business owner can download and print from the Missouri’s Division of Workers’ Compensation. The Second Injury Fund compensates injured employees when a current work-related injury combines with a prior disability to create an increased combined disability. This program is funded by a surcharge paid by employers.
For additional questions about Workers Compensation Insurance in Missouri, please contact us.