WORKERS’ COMP
FIVE WORK COMP ERRORS EVERY AGENT MAKES Workers’ compensation, from a coverage standpoint, is the simplest coverage to understand and even explain. However, statutes and common laws serve to complicate the initial simplicity of workers’ compensation.
tier contractor to provide workers’ compensation benefits to the employees of an uninsured lower tier contractor. Essentially, these are employees because the law says they are. Complexity breeds errors. Five of the most 3. De Facto employees. Calling common workers’ compensation errors agents someone an “independent contractor” make revolve around: does not necessarily make it so. Even if the individual is an “independent 1. Understanding who the insured is responsible contractor” by IRS standards, they may for protecting via a workers’ compensation still be considered an “employee-inpolicy; fact” under workers’ compensation 2. Realizing that legal entity type affects who guidelines and laws. The facts of the counts as an employee; relationship must be known. The 3. Correctly managing the exposures created by key component of a de facto employee travelling employees; is control; how much control does the 4. Understanding combinability; and hiring party (employer) have over the 5. Preparing clients for the premium audit. worker (employee)? The more control over the worker’s ways and means, the Although this list does not present all the more likely the worker is a de facto possible mistakes agents make when writing employee. workers’ compensation, these are the most 4. Borrowed servants are direct common. employees of one entity working under the direct control of another entity. Who is the Insured Responsible for Protecting? Although this is a dual employment situation, when the worker gets hurt, the Insureds are potentially responsible for providing courts look at who was in control of workers’ compensation benefits to potentially the worker. This type of employee/ four types of individuals (employees): employer relationship may require 1. Direct employees. A “direct employee” attachment of the Alternate Employer is a person hired to perform certain Endorsement to avoid “issues” at the services or tasks for particular wages or time of the injury. salary under the direct control of employer. These individuals are How Entity Types Affects Who Counts as an generally found on the insured’s payroll Employee records. Deciphering status as an employee is first a 2. Employees of uninsured function of who qualifies as the employer. subcontractors (“de jure” employees). Forty-four states and the District of Columbia statutorily require an upper 28 | SEPTEMBER 2021 |
wisconsin INDEPENDENT AGENT
