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A Workers Compensation Term Defined, Described and Explained

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Who Is Considered A Workers Compensation Employee

An individual who performs services for another under an implied or expressed contract for wages or other valuable consideration. Who works under the direction of that party. But when it comes to workers compensation you may have more Employees than you know!

Most of the time when you think about an employee it's the gal or guy that you hired to work for you. And in most cases that is exactly who they are. But when it comes to workers compensation issues the term "Employee" has a broader, more encompasing meaning and you must consider the other type of Employee, the one you did not know you had.

For workers compensation purposes you should always look to state statute to tell you just who is considered an employee. In most states, unknown employees can include "Statutory Employees," "Uninsured Subcontractors" and "Independent Contractors." A statutory employee is someone that is defined under statute, because of their work relationship with your business, to be treated as an employee by workers compensation.

In workers compensation, there are two areas of consideration that those unknown employees may effect. Those are Premium and Coverage. As far as premium goes, when responsibility is established, either unknown by the employer through statute or a direct hire, and a workers compensation policy would have to respond to a claim then the insurance carrier is due a premium for the exposure to loss. So if you have statutory employees any payments made to them will be counted as payments made to an employee and included in your workers compensation premium. Most of the time employers find out about this after the policy has ended and the audit has been completed when they get a large additional premium bill. From a coverage point of view, an unknown employee, for example an uninsured subcontractor, when injured on work they are performing for you, can make a claim against the employers workers compensation policy. Claims can cost the employer by increasing experience rates all throughout the experiece period on their EMR.

Needless to say, many employers are surprised at just who may be considered an employee. So head's up on this topic!

Be sure to check out Our Blog for much more information on Workers Compensation Employees, Uninsured Subcontractors and Independent Contractors!

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