What Are the Penalties for Not Having Workers’ Comp?
The workers’ compensation system in South Carolina has made it easier for injured workers to obtain benefits after an on-the-job injury. At a minimum, injured workers should have their medical care paid for, but they might also qualify for temporary or permanent disability benefits, which replace a portion of their wages. Some employers are unsure about their obligations under the workers’ compensation system. The general rule is that most businesses must purchase an insurance policy unless state law exempts them. An uninsured employer could end up losing assets for failure to purchase insurance.
What Businesses Must Carry Workers’ Compensation?
In South Carolina, any employer that has at least 4 employees must purchase workers’ compensation insurance. The employees can be either full- or part-time but do not include casual workers or independent contractors. Further, you must have at least $3,000 in payroll this year.
There are some exclusions for certain workers:
Licensed real estate agents
Employees at railroads
Agricultural employees
Some businesses have an option of self-insuring if they meet certain requirements.
Penalties for Not Having Workers’ Compensation in South Carolina
Some Aiken employers choose to forgo insurance, even though they do not qualify for an exemption. Technically, South Carolina does not fine them for being uninsured. There are also no criminal penalties.
However, South Carolina does have an Uninsured Employers Fund. This fund will pay benefits to an injured worker with a valid claim whose employer does not have workers’ compensation. So any worker who suffers an on-the-job injury is able to receive benefits in most cases, even if their employer refuses to self-insure or purchase insurance.
As you can imagine, South Carolina is eager to get back all the money they pay to injured workers. Over the past decade, the state has spent millions of dollars on claims. State law grants the fund a lien against all the assets of an employer. These assets include real property and moveable assets, like equipment or inventory. The lien stays in effect until the employer pays the state all the fees, expenses, and costs related to the injured worker’s benefits.
Imagine that an employee works as a secretary and is injured in a fall at work. Her employer refused to purchase workers’ compensation insurance. Helpfully, the employee can get benefits through the Uninsured Employers Fund. In total, she might receive $10,000. The fund can now put a lien on the employer’s assets for at least this much.
The lien will survive bankruptcy, but the employer can remove it by paying the amount owed.
What Collection Actions Can the State Pursue?
The Department of Revenue is empowered under South Carolina Code § 42-7-200 to undertake collection actions against an uninsured employer. For example, they can levy any employer asset and sell it to satisfy the lien. If the proceeds from the action satisfy the lien, the state releases the lien.
This type of collection action could make it impossible for an employer to stay in business. Potentially any and all company assets are vulnerable to being seized and sold.
Helpfully, uninsured employers have the option of coming to an agreement with the state to pay off the lien, which can forestall any collection action. This agreement could be in the form of a payment plan to pay off the debt. If an uninsured employer defaults on the agreement, then the state can reinstate the lien.
Is Workers’ Compensation Insurance Expensive?
Most employers purchase a workers’ compensation insurance policy that meets state requirements. They should consult with a qualified agent to discuss the premiums. Their rates will depend in part on the Experience Modification Rate (EMR). A new business has an EMR of 1.00, which does not increase or decrease premiums. However, a company’s EMR can change depending on its history of claims.
Any business should also consider the alternative: they do not purchase insurance, and a worker is injured on the job. The uninsured employer will ultimately need to pay the state for any benefits their worker receives, as well as attorney fees and costs. A company could end up losing assets if the state tries to collect.
Employer Obligations after an Accident
Injured employees usually get 90 days to report their injury to their employer. The clock starts on the day of the accident or when the worker discovers the injury. Someone suffering from an occupational illness usually gets two years from the date of their diagnosis.
Once notified, an employer has certain obligations under the law. They must file a report with their insurance carrier within 10 days. They must further report the injury to the South Carolina Department of Labor by filing an appropriate report unless their insurance carrier takes care of this step. This reporting is necessary to protect workers.
If your employer simply refuses to make the reports, you should contact an attorney. It is possible to file the necessary reports yourself, but legal help is advised.
When Are Independent Contractors Covered by Workers’ Comp?
Many companies employ independent contractors. In fact, this is a very popular form of employment. If you are paid with a 1099, then you are probably an independent contractor. However, many will misclassify employees as independent contractors to avoid buying workers’ compensation and unemployment insurance.
Under the law, whether you are an independent contractor or employee doesn’t depend on how you are paid or what label is used in an employment contract. Instead, the state looks at the reality of the work, including who furnishes equipment or tools and whether the employer has a right to control when and how work is performed.
If an employer has labeled you as an independent contractor, don’t assume you can’t qualify for benefits. Instead, consult an experienced lawyer for a case analysis.
Call Surasky Law with Workers’ Compensation Questions
Our law firm can help any injured employee with a claim. On-the-job injuries and occupational illnesses are devastating, but the workers’ compensation system can provide vital benefits. CallSurasky Law today to speak with an Aiken, SC workers’ compensation attorney.
