Workers’ compensation insurance
Workers’ compensation and payroll go hand-in-hand. Although it falls outside of the payroll process, having a workers’ comp policy is mandated by nearly every state in order to protect employees who get hurt on the job.
When an employee gets injured at work, they can file a workers’ compensation claim. In return, they (generally) aren’t allowed to sue their employer for any negligence that might have caused the injury.
In nearly all states, a workers’ compensation policy is the only remedy available for accidental workplace injuries. That means that as long as clients pay their premiums, they’re protected from a big out-of-pocket payment if an employee gets injured on the job.
Most states have laws that dictate how much employees should be paid out and what type of benefits they should receive. Usually workers’ comp covers around two-thirds of an employee’s wage, but it can also cover things like medical care, retraining costs, and survivor benefits.
To make sure your clients stay compliant, check state laws to be clear about their workers’ compensation requirements.
Employers pay for workers’ comp insurance and if an employee files a claim, the insurance company pays out the benefits.
Like any type of insurance, the cost really depends on your client’s business, industry, and the type of work that their employees perform. However, the average cost of workers’ comp insurance is around 1.4% of a person’s total compensation.
There are three major types of workers’ compensation insurance policies to be aware of:
● Traditional insurance: this works the same as most insurance policies, in that clients pay a regular premium
● “Pay as you go” insurance: the premium is calculated based on the amount paid in each payroll period and is only available if the policy is integrated with a payroll provider
● State fund: insurance is purchased through a state-governed insurance provider
While most states allow employers to buy private insurance, five states and two US territories require insurance to be purchased exclusively through state-operated funds. Those states and territories are: Ohio, Wyoming, Washington, North Dakota, West Virginia, Puerto Rico, and the US Virgin Islands.
Workers' Comp with Gusto
I am a partner with Gusto, because of the great services and compliance as well as continuing training that keeps I'm the Bookkeeper up-to-date with all the latest changes in law and compliance issues. Gusto offers pay-as-you-go workers’ comp through their partnership with AP Intego. The premium is automatically calculated based on the actual amount of payroll each pay period, which means no estimates, no hefty upfront payments, and accurate deductions.
And with direct communication with the insurance carrier, this model also helps minimize or potentially eliminate the pain of expensive audits altogether.
As your bookkeeper, should you decide to have I'm the Bookkeeper handle your payroll for you as a stand alone service, you should feel confident to know that I have partnered with Gusto Payroll.
US News has rated Gusto a 4.3 in their Best Payroll Software of 2022 list and report that "more than 100,000 businesses across the country use Gusto to run payroll and administer benefits".
Yes, with Gusto we can offer your employees benefits, with the current state of the country and difficulty retaining good employees - this is a valuable resource!
If you would rather administer your own payroll and are currently shopping or considering a change, I recommend Gusto. Check it out and sign up using my link if you want to manage your own payroll account and you'll automatically be added to my client list.
Even if you decide not to retain my services for your payroll, I still recommend Gusto, and if you sign up using THIS DIFFERENT LINK and run your first paid payroll, you’ll receive a $100 Visa gift card!