Don’t play Workers’ Compensation hide-n-seek!

by | Aug 2, 2013 | Uncategorized

One subject that many employers may not fully understand is the need for Workers’ Compensation insurance.  Workers’ Compensation insurance was created to make sure that workers are protected in the event that they are injured while doing their job.  It is unlawful and illegal for employers not to have this coverage, regardless of the reason and with very few exceptions.  For this reason we thought it would be a good idea to post answers to a few of the most common “excuses” provided for not having Workers’ Compensation insurance.

“I don’t need to provide Workers’ Compensation insurance.  I am a small company with a few employees”.

Not True.  In the state of Massachusetts it is mandatory that all employers provide Workers’ Compensation- (WC) insurance coverage for all their employees.  This insurance pays for reasonable and necessary medical treatment related to injuries or illness sustained on the job within their normal work environment.  A normal work environment is defined by the Occupational Safety and Health Administration (OSHA) as:

“The establishment and other locations where one or more employees are working or are present as a condition of their employment. The work environment includes not only physical locations, but also the equipment or materials used by the employee during the course of his or her work.”

Workers’ Compensation coverage must be provided to everyone identified as an employee, including top executives.  Coverage is guaranteed regardless of the hours worked in any given week, with the exception of a domestic service employee who must work at least 16 hours per week.   Before you ask, YES you must still provide Workers’ Compensation Insurance even if you have a two person company comprised of yourself and your significant other.

“My employees know that I provide Workers’ Compensation insurance”.

It’s always best to be sure coverage is clear.  All employers are required to ensure that their employees are aware of the name of the Workers’ Compensation insurance carrier.  A “Notice to Employees” poster must be posted in common areas in all appropriate languages.  This poster is free and can also be obtained by calling the Department of Industrial Accidents (DIA) which is the governing organization for the Massachusetts Workers’ Compensation program.  You can also obtain this poster by visiting their website at or calling your insurance company.  Non compliance with this regulation may result in a fine to the employer of $100.

“I won’t get caught not having Workers’ Compensation insurance”.

Honesty is the best policy.  Compliance with the law is always the right thing to do.  If you are caught operating without Workers’ Compensation insurance you may be penalized with one or all of the following actions:

  • You will be issued a STOP WORK ORDER by the DIA.
  • You will be assessed a fine of $250 per day by the DIA beginning on the date the STOP WORK ORDER is issued and accruing until you provide proof of insurance coverage.  Fines must be paid in full before the STOP WORK ORDER is released.
  • You may be subject to criminal sanctions that may include up to, but not more than one year in jail and a fine that may be as large as $1,500 upon conviction.

“I can’t afford Workers’ Compensation Insurance”.

That is not true.  You can’t afford NOT to get Workers Comp Insurance.  Obtaining Workers’ Compensation insurance can be obtained through any insurance agent or broker who offers business insurance.

“I am an independent contractor and don’t need Workers’ Compensation Insurance”.

Massachusetts has the most comprehensive statutes in the country to qualify as an independent contractor.  The Massachusetts independent contractor statute contains a three-prong test and places the burden of proof on the employer, making qualification next to impossible.  If the employer fails to demonstrate any one of the three criteria set forth in the statute, that is enough to establish that the worker is an employee rather than an independent contractor.

  1. The individual must be “free from control and direction in connection with the performance of the service, both under his contract for the service and in fact.”
  2. The service being performed must be “outside the usual course of the business of the employer.”
  3. The individual must be “customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.”

If your “independent contractor” meets just one of these criteria, they are actually your employee and you face the potential penalties of misclassification.

If you have questions about what coverage you need, let our FBinsure Workers’ Compensation specialists help you.  Call our offices M-F at 1-800-734-6604. It’s what we do!


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