If you own a small business and manage a crew or staff — even if it’s just you and one other employee — you will most likely need workers’ compensation insurance. Workers’ comp is an essential form of business insurance that’s required by nearly all 50 states. It protects business owners and injured employees from the financial costs associated with an on-the-job injury (think medical expenses, lost wages, and even funeral costs).
If an accident happens at your work, you want to know whether it’s covered by workers’ comp, or not. It may surprise you to learn that workers’ comp does not cover every possible injury your employees may experience — and there are even a few surprising exceptions.
Here’s what you need to know.
Activities and injuries that aren’t covered by workers’ comp
Workers’ comp benefits are determined on a case-by-case basis, but there are several injuries that are typically not covered.
Injuries that occur outside of work
This one may seem obvious, but we aim to be thorough, so we’re including it. For an injury to be eligible for workers’ comp benefits, the injury must occur during the scope of a person’s employment. Typically, that’s defined as an activity that provides some benefit to the employer. If one of your employees gets injured when they’re not working, such as during a weekend pool party, it may not be covered.
This one also feels fairly obvious, but let’s review it anyway. In order to receive workers’ comp benefits, the injury must be reported. The time limit for when an injury must be reported varies by state.
We all get minor scrapes and cuts from time to time — in life and on the job. Typically, minor injuries that can be treated with first aid and heal within a few days after are not covered by workers’ comp.
Injuries caused by the employee’s intoxication
If your employee is intoxicated from drugs or alcohol, and their intoxication causes them to get hurt, that injury may not be covered by workers’ comp.
There are exceptions to this rule. If the employee’s intoxication is not deemed to be the cause of the injury, then it may be covered. For example, if your crew was drinking while working at a client’s house, and another employee caused equipment to fall and injure them, it could be covered. But, if the intoxicated employee caused the equipment to fall themselves, it’s unlikely to be covered.
Injuries that occur during the commute to work
Typically, injuries and accidents that occur during an employee’s commute to work are not covered by workers’ comp. This is known as the “coming and going” rule. It applies when employees have a fixed office or worksite.
There are exceptions, however. For instance, if the employee does not have a set office and travels as part of their job duties, their injury may be covered. The employee could also be eligible for workers’ comp if they get hurt while:
- Traveling for business outside of the office
- Traveling for a specific reason or errand as directed by the employer
- Working from home during business hours
- Taking a training course away from the office
- Traveling between work sites
- Driving a company car
Injuries that occur during company recreational events
Again, workers’ comp focuses on providing benefits to employees who are injured during the course of work or activities that provide benefits to their employers. Typically, an office happy hour or Christmas party doesn’t fall into that category. These are voluntary, recreational activities that fall outside the scope of typical job duties.
However, there are exceptions. Injuries may be eligible for workers’ comp benefits if:
- Attendance was required
- The event occurred at work during business hours
- The employer otherwise benefitted from the employee attending (e.g. if the employee performed a job-related task at some point)
Injuries that occur during a work break
When an employee takes a break, they stop working. So, accidents that occur during lunch or a break are usually not covered under workers’ comp — unless the employee takes their break at the workplace.
If your employee gets hurt in the company lunchroom during their break, they may be eligible for workers’ comp benefits depending on the specific circumstances. Also, if the employee gets injured while performing a job for the employer during their lunch break, their accident may be covered.
Injuries from fights or horseplay
Most jobs don’t include inter-employee fights or horseplay as part of the job description. If your employees get into a fight with each other or someone else during work, and they get injured as a result, it’s typically not a covered activity under workers’ comp.
Injuries from horseplay are also generally not covered by workers’ comp. One exception is if another employee, who wasn’t involved in the horseplay, gets harmed by it. That employee may be eligible for workers’ comp benefits.
Jobs that aren’t covered by workers’ comp
Are all workers covered by workers’ comp insurance? Actually, no. Below is the common list of exceptions.
Business owners, partners, and sole proprietors are not covered by workers’ comp insurance. Although in some states, they can be, as long as they pay the premiums.
If you’re self-employed, you are typically not eligible for workers’ comp, unless you perform hazardous work, like roofing. In that case, your state may require you to carry workers’ comp, even if you have no other employees.
Independent contractors are similar to self-employed individuals in that they work for themselves, not the employer, and are therefore not covered under workers’ comp.
Volunteers are not considered employees as long as they are unpaid for their work. Some businesses choose to purchase workers’ comp coverage for their volunteers, but it’s not required since they are not employees. Two exceptions to this rule include volunteer firefighters and police officers.
Workers in states where workers’ comp isn’t required
Small businesses are required by law to carry workers’ comp insurance in most states, but not all. Further, some states only require small businesses to carry insurance if they have a minimum number of employees. If your small business is exempted from carrying workers’ comp insurance, and one of your employees gets injured, they may not be eligible for workers’ comp benefits.
Other types of jobs that aren’t covered by workers’ comp
The list above covers some of the most common exceptions to workers’ comp, but it is not exhaustive. Depending on your state, other types of workers may not be covered by workers’ comp insurance. These may include:
- Taxi drivers
- Part-time domestic workers
- Part-time gardeners or maintenance workers employed by homeowner
- Certain agricultural workers
Most workers’ comp benefits are managed by state-run programs. Since they’re employees of the federal government, as opposed to the state, federal employees like postal workers and government workers are not covered through traditional workers’ comp. Instead, they are covered under the Federal Employee’s Compensation Act.
Similarly, railroad workers and longshoremen are covered under different acts. The Federal Employers’ Liability Act and the Longshore and Harbor Workers’ Compensation Act distributes workers’ comp benefits for these employees.
What is not covered by workers’ comp? A quick review
Workers’ comp is often determined on a case-by-case basis, but generally, the following types of activities and workers are not covered:
- Injuries that are minor or go unreported
- Injuries that occur outside of work, or during a commute to a fixed workplace, a company recreational event, or a break
- Injuries that are caused by the employee’s intoxication, fights or horseplay
- Injuries suffered by business owners, self-employed individuals, independent contractors, or volunteers
Workers’ comp only provides benefits to your employees in the case of workplace illness or injury. To protect your business from the liability associated with third-party injuries, you need general liability insurance. Learn more and get your instant quote from Thimble now. It only takes 60 seconds to get started.