What Are Arizona Workers Compensation Requirements?
September 10, 2019
Workers’ compensation insurance is a type of insurance coverage that is designed to protect employees and businesses in the unfortunate event an employee becomes injured or ill as a direct result of their job, while on a job site. Workers’ compensation insurance will provide the injured or sick employee their wages, even when they are unable to work. It also will cover the medical costs, vocational rep and any other treatments associated with the illness or injury. Workers’ compensation insurance requirements vary from state to state. The following is a breakdown of workers’ compensation insurance requirements for the state of Arizona:
What Are The Legal Requirements in Arizona For Workers’ Compensation Insurance?
In the state of Arizona, every business with employees is legally required to provide workers’ compensation insurance for workers. This includes both part and full time employees. This means even if you as a business owner employ only one singular part-time employee, you are required to provide workers’ comp insurance. This is true even if the employee is your relative. There are some exceptions, though, for certain business owners such as those who are corporate officers, members of LLCs, partners within a partnership, sole proprietors and independent contractors do not have to adhere to the Arizona law to provide their employee’s with workers compensation insurance.
Where You Can Get Workers’ Compensation Insurance?
In the state of Arizona, you as a business owner can purchase worker’s compensation through private insurance companies. The comprehensive list of companies that are licensed to issue workers’ compensation insurance can be found here. Self-insuring is an option for smaller businesses, but it requires a substantial amount of money being held back in order to ensure potential claims are covered.
What to Do If An Employee is Injured on the Job
Any accident that occurs on the job should be reported as quickly as possible to the employer. The employee should also move quickly in getting any needed treatment. As soon as possible after the injury, the injured employee should file a claim with the Industrial Commission of Arizona (ICA). You as a business owner will be required to provide important information to your employees, such as the address of your workers’ comp insurance carrier, the policy number, and its expiration date. You also need to notify both the ICA and your workers’ comp carrier within ten days after you are notified of an employee’s injury. When reporting your employee’s injury, use Form 0101, titled Employers’ Report of Injury.
Non Legal Reasons to Purchase Workers’ Compensation Insurance
Legally, you as an Arizona business owner are required to provide your employees with workers’ compensation insurance, unless you fall into one of the exceptions. However, workers’ compensation insurance actually provides protection to you as a business owner from having to cover the extremely high cost of medical care for an employee injured on the job. It also mitigates employees from bringing suits against you due to an illness or work-related injury. Therefore, even aside from the legal requirement, having workers' compensation insurance is beneficial.
What Happens if Your Business Fails to Follow The Legal Requirement for Workers’ Compensation Insurance?
If you are legally required to carry workers’ comp for your employees but have not done so for whatever reason, you could be in some serious trouble if one of your employees is injured on the job. If this happens, your employee has the option of suing you for damages in state court or filing a claim with the ICA. If they choose to go with the ICA claim, the employee will be paid via Arizona’s special fund. After they are paid, the state will then demand reimbursement from you to repay all benefits paid to your employee. However, that isn’t all. You will also have to add either $1,000 or 10% of the benefits paid or whichever number is greater. You might also be forced to pay a $1,000 penalty for not adhering to the legal requirement to provide workers’ comp for your employees. If this happens more than one time, the penalty can increase from $1,000 to $5,000 and even up to $10,000.
What if You Feel an Employee’s Claim Isn’t Valid?
If you believe your employee’s claim is invalid either completely or partly, you are free to dispute the claim with your insurance carrier. You have 21 days to either deny or accept the claim from the file date. If you don’t object within 21 days of the file date, the claim is legally accepted. Unlike other states, Arizona allows you to, in essence, contest a claim without having to formally contest it, since you have to allow the claim. Not accepting the claim is, in essence, denying it. If your employee disagrees with the insurance’s claim, they can arrange a hearing before an administrative law judge ICA. This isn’t a formal hearing and you can appeal a decision with the state Court of Appeals at a later date.
How to Set up Workers’ Compensation Insurance
Running a business requires a great deal of effort and organization. In many cases, the employee organizational aspect can become overwhelming. Setting up employee’s workers’ compensation insurance is just one of the many tasks you as a business owner have to complete. Thankfully, you can utilize a professional employer organizational company like Consolidated Personnel Services to take care of your business’s workers’ compensation along with other employee organization tasks.
Workers’ compensation insurance is an important protective element for any business owner. Even if you don’t meet the legal requirements for workers’ compensation insurance, can be a wise investment and a valuable means of protection for your business. Contact us at Consolidated Personnel Services for more information on getting workers’ compensation set up, along with other employee organizational tasks.
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