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This article is oriented toward limousine and van operators, considering the unique aspects of their operations that result in workers’ comp exposures varying from other types of businesses.

Companies such as yours are often smaller, family owned, and involved with independent contractors. There are a few key elements you need to understand since their consequences can make or break your business. The purpose of this article is to arm you with basic facts. It’s up to you to learn more by simply contacting your insurance agent and/or doing some Web searching. Getting involved will alert you to questions and issues that you’ll know need your attention.

Who is eligible for workers’ comp benefits?
Workers injured on the job have a legal right to receive workers’ compensation benefits. Those benefits include medical care, compensation for wages lost while recovering from an injury, and compensation for future earnings lost due to the injury or illness. Also, remember workers’ compensation is a no–fault process which means that an employee injured at work receives medical care and benefits regardless of who was at fault for the injury.

Do all companies need workers’ comp coverage?
Often, company owners ask if they are big enough to require coverage. Nearly all states give the employer no choice on the purchase of workers’ compensation coverage. If you have employees, you are required to have coverage. There are exceptions, state by state, that may involve a minimum number of employees; Texas allows an employer not to buy coverage. However, if an employer doesn’t buy coverage, and it was required, the employer can be punished with fines and jail time. Additionally, not having insurance coverage exposes the employer’s assets to claims from injured employees.

Does using independent contractors mean I don’t have to buy workers’ comp?
Frequently, companies use independent contractors and have agreements stipulating those parties are independent contractors and not employees. The usual conclusion business owners make is this arrangement negates the need for workers’ compensation coverage. The problem is badly injured workers (here the term “workers” includes contractors) almost always engage an attorney whose number one job is to show the contractor in fact was directed by the company (make this pickup at this location, go to, and then go to another, by this time, etc), or that the company provided the working tools (such as the vehicle they may have leased to the driver). These elements, along with others, result in disputes that often end in court, with the goal of the injured party being to be declared an employee who was acting under the company’s scope and control. Once declared as an employee, the injured party is covered by your workers’ compensation coverage. If either party disagrees with the court, they may have the case reviewed further by the Workers’ Compensation Appeals Board, the court of appeal for workers’ compensation claims. In addition to claim costs, another consequence of a contractor being found to be an employee is your insurance carrier is likely to re-audit all payrolls, payments and expenses to develop premiums to cover this exposure. Such audits often produce surprisingly large additional premiums developed from payments to contractors that get converted to wages as a consequence of the contractor being declared an employee.