Workers’ Comp 101: What Small Business Owners Should Expect

small business owners

Small business owners have a lot to do on their side, from managing employees to handling finances and everything in between. One area that can often be overlooked is workers’ compensation. This type of insurance benefits employees who are injured or become ill due to their work, and it’s mandatory in most states. As a small business owner, it’s essential to understand the requirements, benefits, costs, and procedures associated with workers’ compensation.

This article covers the basics of workers’ compensation and what small business owners should expect. The article discusses the state requirements, the benefits provided, costs to the business, reporting injuries, managing claims, and preventing injuries.

As a small business owner, you’ll better understand workers’ compensation and how it affects your business. You’ll also have the knowledge and tools to comply with workers’ comp laws, provide your employees with the appropriate care and benefits, and create a safe work environment.

State Requirements

Workers’ compensation is mandatory in most states, and small business owners are typically required to carry this insurance. The specific requirements vary by state, so it’s essential to check with your state’s workers’ compensation agency to determine what your business needs to do to comply. This may include purchasing insurance from an approved carrier or providing proof of self-insurance.

Benefits Provided

Workers’ compensation provides a range of benefits to employees injured or who become ill due to their work. This may include medical care, wage replacement, and vocational rehabilitation. The amount and duration of benefits vary by state. The duration and the number of benefits a worker receives also depend on the severity of the injury or illness.

Costs to the Business

As a small business owner, you’ll be responsible for paying your workers’ compensation insurance premiums. The cost of workers’ comp insurance varies by state and industry. Your premiums will be based on the type of work your employees do, your claims history, and other factors. You can expect to pay higher premiums if your business has an increased risk of injury or illness.

Reporting Injuries

If an employee is injured or becomes ill while carrying out their duties, they should report the injury to their supervisor or manager as soon as possible. It is also essential for employers to have procedures for reporting and investigating workplace injuries. This will ensure that your employees receive the appropriate care and benefits and that you comply with workers’ compensation laws.

Managing Claims

If an employee files a workers’ comp claim, you must manage the claim with your insurance carrier. This may involve providing information about the injury or illness, working with the employee’s healthcare provider, and cooperating with any investigations or dispute resolution processes. You should also communicate with your insurance carrier throughout the claims process to ensure everything is handled correctly.

Preventing Injuries

One of the best ways to manage your workers’ compensation costs is to prevent injuries from occurring in the first place. This means creating a safe work environment, providing safety training, and addressing hazards as soon as they’re identified. Preventing injuries can reduce the likelihood of workers’ compensation claims and lower your insurance premiums.


Workers’ compensation is an integral part of running a small business. As a small business owner, it’s essential to understand the requirements, benefits, costs, and procedures associated with workers’ compensation. You will ensure your employees have a safe working environment by staying informed and taking proactive steps to prevent injuries.