Why Managing your own Workers’ Compensation Policy is not ideal.
Think back to why you became a business owner. Did “spending time in the back-office juggling employer liability, governmental compliance, and business management” come to mind? Good, because it shouldn’t. Running a business does not have to run you into the ground mentally and financially. So let’s start at the most foundational, complicated, but necessary, pillar of owning a business: Workers’ Compensation.
Like most trends in the U.S., California was an early adopter of the law mandating that employers must provide workers’ compensation insurance to all employees. In fact, the state started requiring employers to carry workers’ comp insurance in 1913. Since then, California’s workers’ comp program is the single largest privatized social benefits system in the world, second only to Social Security in the delivery of medical and indemnity benefits.
In the last 15 years, California’s workers’ comp laws have been reformed considerably. Evidence-based medicine guidelines, the mandatory utilization review process, and the repeal of vocational rehabilitation are just some of the reforms that disrupted the industry in the early 2000s. A decade later, Senate Bill 863 restructured the state’s workers’ comp system and increased injured worker benefits — netting more than $1 billion in savings. Nevertheless, it has been the employers and business owners who have received the brunt of the change along with the added legal liabilities and administration.
Procuring a Workers’ Compensation Policy in California and administering said policy are two completely different things. Anyone with a business can apply and procure a workers’ compensation policy for their employees but when it comes to the administration and maintenance of the policy is where a lot of employers tend to run into costly fines and lawsuits. Below are some of the California-specific governmental regulations regarding workers’ compensation policies.
- Workers’ comp benefits must be provided to full-time and part-time employees in California. In fact, workers don’t need written employment contracts to be considered employees, and the term “employee” can include legal and illegal immigrants, minors, and prisoners. Independent contractors and subcontractors may also be considered employees in some cases.
- Sole proprietors, independent contractors, partners, and officers of closely held corporations are considered employees but may elect to be excluded from coverage.
- Workers’ comp in California is a no-fault system, meaning that the employer agrees to pay regardless of fault. As a result, you can’t claim common law defenses like “assumption of risk,” the “fellow servant rule,” or “contributory negligence.”
- California employers are required to give a Workers’ Compensation brochure to all new employees at the time of hire, or no later than the end of the first pay period. Failure to do so can result in lawsuits and fines.
Given all of this, why would an employer, of any size, administer their own workers’ comp. policy and retain the liability for it?
“It comes down to educating and advocating for an all-encompassing solution that relieves business owners and employers of the time-consuming administration and the stress-inducing liability of running a business.”
-ChampionPEO
Transfer Administration & Liability, Effortlessly.
More and more business owners and employers across the nation are looking towards a single-source solution to help with non-revenue generating back-office administration and the employer-related liability that comes with it. It couldn’t have come at a better time either, given the drastic changes in workplace policies, regulations, and federal laws that have been enacted since the outbreak of COVID-19 almost two years ago. These changes in America’s workplace have affected almost every business owner in every state regardless of size.
Professional Employer Organizations (PEOs) have existed since the early 90s and have been providing small to medium-sized businesses (SMBs) a single-source back-office solution that includes full administration and risk transfer for payroll and tax filings, human resources, workers’ compensation, and employee benefits.
Seems too good to be true, right? That’s because the PEO industry has only an 8% market penetration when looking at the Nation as a whole. “It comes down to educating and advocating for an all-encompassing solution that relieves business owners and employers of the time-consuming administration and the stress-inducing liability of running a business,” said Michael J. Smith, Esq. Founder and Owner of ChampionPEO a Michigan-based PEO serving SMBs across the nation. “It is our job to not only service our clients but to educate business owners who are not so they are aware of the benefits that an organization like ChampionPEO can bring to their table while at the same time taking the liability and administration that comes with running a business off their plate completely.” From pay-as-you-go workers’ compensation to the complete transfer of employer-related liability, PEOs can be an employer’s saving grace when facing the constant uphill battle of running a business.
Still Not Convinced? Let’s Talk.
ChampionPEO serves small to medium-sized business owners throughout the nation saving employers money, stress, and most of all, time. Through their Single-Source Back-office Solution, business owners no longer have multiple vendors or waste time and money “doing it themselves” when juggling Payroll, Taxes, HR, Comp., and Benefits. By outsourcing your back-office to ChampionPEO, business owners can refocus on what really matters: growing their business.
If you are interested in learning more about how ChampionPEO can provide your business The Freedom to Grow, contact our Business Development Department by sending an email to Sales@championPEO.com or by calling 313-67-CHAMP to talk to one of our Representatives.
