The process of who's paying what for workers compensation insurance is simple to explain. It breaks down like this:
- The employer buys workers compensation insurance from an insurance company.
- The insurance provider pays the employee while they are out of work on workers compensation coverage.
It really is as simple as that. The employer buys the policy from the insurance company, and then the insurance company pays the employee.
Where it can get complicated is only when you're left with the question of whether workers compensation is the right kind of insurance for your business or project.
For instance, if you are hiring contractors, then you're probably going to want to make sure that they carry their own insurance. General liability can protect you up to a point, but when you are bringing professionals onto your work or home premises, you're inviting certain risks that might not be covered on your current plan.
If you have temps or interns, that's another matter entirely. A paid intern is considered an employee. They should be covered on your workers compensation plan. An unpaid intern — who is being paid in experience or class credit — will be covered if their schedule and duties are determined by you as an employer.
Volunteers are a whole other story. If you are using volunteer labor in a project, you will want to talk to your insurance provider about whether your general liability plan covers them.
You will be required to carry workers compensation insurance in most states if you have five or more employees. Note that the regulation refers specifically to employees, not contractors or freelancers. However, you need to make sure that you treat your contractors like contractors. If you're setting a contractor's hours, then you're treating them as an employee. In this case, they can easily sue you for damages if you don't provide them with insurance.
Complications tend to arise based on the ambiguous nature of what constitutes an employee in the modern age. But the process of workers compensation is otherwise quite simple: You pay the insurer, the insurer pays your injured employee.