Regardless of business size, every employer in Illinois is subject to the requirements of the state’s Worker’s Compensation Act (The Act). Small business owners are not exempt and must understand their obligations under The Act.

 

Who is Covered

Illinois law requires worker compensation coverage for all employees, including full-time and part-time salaried or hourly workers. The only exceptions are sole proprietors, partners in a corporation or Limited Liability Company members, who may elect to be included but are not required to be covered. If you’re confused about who you must provide coverage for, consult a knowledgeable employment attorney.

Use Caution with Contractors

In some cases, contractors may be considered employees if:

• Taxes were withheld from pay on their behalf
• The contractor worked exclusively under the direction of the employer
• The employer provided a company uniform, tools or equipment
• The contractor worked hours scheduled by the employer

Always verify workers comp coverage for contractors before hiring them. If a contractor without coverage is injured while working for a client, the client may be responsible for covering all injury benefits.

Where to get Insurance

There are three ways to obtain worker’s compensation coverage. These are:

• Purchase workers compensation coverage from any licensed carrier in the state. Cost depends on the industry and business safety record.
• Employers unable to find a carrier can purchase insurance through the market of last resort administered by the National Council on Compensation Insurance. Premiums may be as much as 50 percent higher than standard rates.
• Self-insure by receiving permission from the Illinois Department of Insurance after verifying that the business has sufficient assets to provide worker’s compensation benefits.

What kind of injuries are Covered

All injuries and illness that result from employment are covered, including:

• Lacerations, broken bones and physical trauma
• Repetitive motion injuries
• Cardiovascular problems including heart attack or stroke caused by work

Pre-existing conditions aggravated by a worker’s job are also covered, although injuries from non-work, company social events are not.

Reporting an Injury

When a work injury occurs the employer must:

• Ensure that the employee receives first aid and medical treatment
• Report the injury or illness to your insurance carrier
• After three days of missed work due to the injury, begin making Temporary Total Disability (TTD) payments of two-thirds of the employee’s salary, or provide a written request for additional information before paying TTD

If the claim and TTD is being denied, give the employee a written explanation and reason for the denial

Fraud

Workers compensation fraud is a Class 1 felony whether committed by a worker, the employer, medical provider or insurance carrier. Fraud includes:

• Filing a false claim
• False statements to deny benefits or prevent a claim filing
• Using a false proof of insurance certificate
• Providing a bill for medical services not received by the injured party
• Falsifying applications for workers compensation insurance to reduce the rates
• Falsifying information provided to obtain permission to self-insure
• Making false statements to investigators conducting a fraud investigation

Penalties include fines, restitution and jail time, and persons who assist in any of these activities may also be prosecuted under the provisions of The Act.

Protect Your Small Business

Failing to carry workers compensation coverage can subject the business owner to civil penalties of $500 a day with a $10,000 minimum and criminal penalties, including:

• Up to a year in prison and a $2,500 fine for negligent failure
• One to three years in prison with a fine of $25,000 for knowingly failing to provide coverage

An understanding of the Illinois Workers Compensation Act is essential to protecting your small business.