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Each state in the U.S. has its own unique laws regarding workers’ compensation insurance, and Wisconsin is no exception. In fact, America’s Dairyland is one of the many states that requires most employers to carry workers’ comp.
Understanding Wisconsin’s workers’ compensation requirements is crucial if you want to run a successful small business. It’s one of the fundamental small business insurance coverages which protect your small business from unexpected loss.
In this article, we’ll cover how workers’ compensation insurance in Wisconsin works, who needs to be covered, who is exempt, and penalties for non-compliance.
How does workers’ compensation insurance in Wisconsin work?
In Wisconsin, you must carry workers’ compensation insurance as soon as you have three or more part-time or full-time employees. You’re also required to get coverage if you have one or more employees to whom you’ve paid $500 or more in gross wages over the past quarter. If you’re a farmer, you must carry insurance if you have six or more employees.
As a business owner in Wisconsin, you’ll likely go through the private insurance market to obtain a workers’ compensation policy. If a private insurer or broker refuses to provide you with coverage, you have another option: the Wisconsin Compensation Rating Bureau. The Bureau serves as a last-resort insurer for businesses that are considered high-risk.
Companies with a large number of employees and substantial financial resources can apply to become self-insurers. Very few companies in the state of Wisconsin meet the criteria to self-insure. For more information on self-insurance, visit the Wisconsin Department of Workforce Development website.
Who needs workers’ compensation insurance in Wisconsin?
If your business meets the threshold for workers’ compensation requirements mentioned above, then every employee in your business needs to be covered under your workers’ comp policy. Employees include:
- Part-time or full-workers
- Family members working at your business
- Minors working at your business
- Corporate officers
There are also certain types of workers who are not considered employees by the state of Wisconsin. Your workers’ compensation policy typically doesn’t have to cover the following types of employees:
- Domestic workers
- Casual workers performing tasks not regularly associated with your business/trade/profession
- Certain agricultural workers
- Sole proprietors
- LLC partners and members
- Certain members of religious sects
- Non-profit volunteers earning less than $10 per week
- Native American tribal enterprise employees
- Certain real estate brokers
Independent contractors are also exempt from Wisconsin’s workers’ compensation mandate, however, the state is very specific in whom it considers an independent contractor. A person must meet nine different criteria before they’re considered an independent contractor.
If you’re a sole proprietor, partner, or member of an LLC, you don’t have to purchase workers’ compensation insurance for yourself. There are advantages to getting coverage, though. Sustaining an injury or illness while operating your business could result in expensive medical bills or even force you to halt or limit business operations. Having workers’ comp coverage could end up saving you thousands of dollars.
What are the penalties for not having workers’ comp in Wisconsin?
There are mandatory penalties for non-compliance in the state of Wisconsin. If you’re required to carry workers’ compensation insurance and go without, you’ll pay a penalty amounting to double the insurance premiums you would have paid during the time you didn’t have coverage. You could also face a $100 fine each day for up to seven days and even be forced to close your business.
On top of fines and penalties, going without workers’ comp insurance creates a tremendous liability risk. If one of your employees gets hurt on the job and you don’t have coverage, you could end up paying for their claim out of your own pocket. Those medical costs, ongoing care expenses and lost wages would likely be several times more costly than paying monthly insurance premiums.
What does workers’ comp cover?
If one of your employees gets injured or becomes ill due to their work, they’re more than likely going to incur at least some medical costs. Those can include emergency room visits, X-rays, medical procedures, and prescription medications. Workers’ compensation insurance can cover those medical costs.
If an employee has a slip-and-fall accident at work and breaks their wrist, they will need immediate medical attention. Workers’ comp would likely cover that workers’ ambulatory services, emergency room visits, and any pain medications or follow-up visits.
If one of your employees gets injured on the job, chances are they’re going to miss some work. Workers’ compensation goes beyond just covering doctor visits—it helps your employees stay afloat while they’re recovering by providing lost wages. In Wisconsin, employees can earn up to two-thirds of their normal wage in lost wages.
The employee with the broken wrist in the above example could miss several weeks of work. Lost wages paid out by your workers’ compensation insurance provider would help them cover their living expenses while they’re recovering.
Not all work-related injuries are the result of a sudden, traumatic experience. Some injuries develop over time by repeating the same work-related actions. These repetitive injuries require a different sort of care than traumatic injuries, like physical therapy or other regular treatments.
An office worker who develops carpal tunnel syndrome is a prime example of someone who might receive ongoing care benefits through workers’ compensation. The policy could cover the costs of visits to a physical or occupational therapist.
While it may be extremely unlikely, there’s a chance that an employee passes away from an injury or illness sustained on the job. In those tragic cases, workers’ compensation insurance can provide death benefits to a deceased employees’ next of kin.
Benefits are paid out to spouses, parents or relatives, with extra benefits going to any children of the deceased employee. In Wisconsin, death benefits are limited to four times the employees’ average annual earnings. Workers’ compensation insurance also covers burial expenses.