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In almost every U.S. state, employers are required by law to carry workers’ compensation insurance if they have a certain number of employees. If you’re a business owner in Louisiana, you must carry workers’ comp insurance if you have at least one employee. Like most states, Louisiana specifies a few employee types that are exempt from compulsory coverage.
Workers’ compensation is one of many small business insurance types all Louisiana entrepreneurs should consider.
In this article, we’ll go over who you need to cover, who is exempt, and possible penalties for non-compliance.
How does workers’ compensation insurance in Louisiana work?
The state of Louisiana requires you to carry workers’ compensation insurance as soon as you have one employee, or at least $3,000 in annual payroll. Employers can obtain coverage by purchasing a policy via the private market. Another option is to purchase coverage through a state fund. The Louisiana Workers’ Compensation Corporation is a nonprofit mutual insurance company that helps employers get the coverage they need.
Employers that have sufficient financial resources can also qualify to become self-insurers. You would have to develop a self insurance plan and present it to the department of insurance for approval. Self insurance requires a detailed presentation and must cover claims administration by a third-party in addition to excess liability insurance. You will have to present three years of audited financial statements and a security deposit performance guarantee.
Who needs workers’ compensation insurance in Louisiana?
Nearly every employee in Louisiana must be covered by workers’ compensation insurance, with some exceptions. Employees who are exempt from mandatory coverage include:
- Employees of private residential households
- Employees of private unincorporated farms
- Musicians and performers working under contract
- Employees covered by the Federal Employer’s Liability Act
- Crew members of airplanes engaged in crop spraying
- Uncompensated members of boards of nonprofit organizations
- Real estate brokers or salespersons
- Landmen involved in the exploration, production, development or transportation of minerals
As a business owner or sole proprietor, you don’t have to purchase workers’ compensation insurance for yourself. That doesn’t mean you shouldn’t get coverage. Sustaining an injury or illness while performing your work can lead to sizable hospital bills, medical costs and a lengthy recovery period. Investing in workers’ comp for yourself could save you from a brutal financial setback.
What are the penalties for not having workers’ comp in Louisiana?
Not providing workers’ compensation coverage in Louisiana when you’re required to do so can lead to some serious consequences. If you’re found to have a lapse of coverage, you could be fined $250 per employee for the first violation and $500 per employee for each additional violation thereafter. Total penalties can be up to $10,000, and you could also face mandatory closure, and fines. The state can also pursue criminal penalties for willful failure to provide insurance or for giving false information concerning workers coverage. It is important to note that contract and leased employees are to be covered under Workers Compensation head counts in the state of Louisiana.
On top of that, if you do have a workplace accident and an employee needs medical attention while you don’t have coverage, you could be held responsible for all medical costs and lost wages for that injured employee.
What does workers’ comp cover?
If one of your employees is injured or becomes ill on the job, workers’ comp can cover their immediate medical expenses such as ambulance rides, emergency room visits, x-rays, surgery and prescription medications.
For example, if a kitchen employee reaches into a sink and slices their hand on a broken glass, they might require medical attention. Workers’ comp could cover the costs of their emergency room visit, stitches and pain management prescriptions.
Many work-related incidents can leave employees unable to work for several weeks or months. Workers’ comp can provide some relief for employees in the form of partial wage replacement.
If an employee breaks their foot in a work-related accident, they could end up stuck at home for multiple months. While they’re out of work, workers’ comp would cover some of their lost wages.
Some work-related injuries require long-term care such as physical therapy or pain management. Often, these injuries are more the result of repetitive workplace stress rather than a single traumatic incident. Chronic back issues for construction workers and carpal tunnel syndrome for office employees are two common examples of the types of workers who might receive ongoing care due to repetitive stress. If their claim is approved, workers’ comp can cover the costs associated with their ongoing care.
If the unthinkable happens and an employee passes away because of a workplace incident, workers’ comp can cover funeral costs and other death benefits for the deceased worker’s family or beneficiaries.