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What Happens When You Don’t Buy Worker’s Comp Insurance?

The price of worker’s compensation insurance can vary significantly from company to company. A software engineering firm will usually spend less on insurance than a construction company because construction workers are more likely to get hurt on the job. No matter what industry you’re in, though, you have to buy worker’s comp insurance or face the consequences.

 

Facing the Consequences

 

The consequences depend on a lot of factors, including where you’re business operates and how you get caught.

 

In 2001, for instance, Davey’s Roofing Washington State was charged a measly $3,000 when a state audit revealed that the company hadn’t paid premiums for 13 employees. The state gave the owner, David Rau, information about his obligations.

 

Not surprisingly, another audit in 2011 found that Rau still didn’t have worker’s comp insurance. At this point, he owed $150,000 in fines and penalties.

 

To make matters much worse, one of his employees had gotten hurt when he fell of a roof the year before. Now, Rau faces felony charges claiming that he didn’t underreported his employees’ work hours to avoid worker’s comp insurance.

 

It’s also likely that he will have to pay for his injured employee’s healthcare bills.

 

To sum it up, that’s:

 

  • $153,000 in fines and penalties
  • A felony charge
  • Potentially thousands of dollars in medical bills

 

all because he didn’t want to abide by the law and do the right thing for his employees.

 

Worker’s Comp is There for a Reason

 

Worker’s compensation insurance protects employees, but it also protects employers. Without the right insurance coverage, an employer could be held responsible for hundreds of thousands of dollars in medical bills. If anything, Rau is lucky that none of his employees had life-threatening accidents over the past decade when he wasn’t paying for insurance. What if the employee had died? His family could have sued for millions.

 

In the long run, worker’s comp is not only a legal responsibility, it’s a smart way to protect a business.

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