Worker's Compensation:
What Every Salon Owner Needs to Know
But did you know that in nearly all 50 states, common law requires every employer to provide worker's compensation insurance for their employees? If you currently don't have this important coverage, you may be putting yourself, your salon and your financial future at risk.
Broadly defined, worker's compensation provides medical expense coverage, disability and life insurance coverage for your employees. Employer's liability coverage also may be required in your state and is normally a part of your worker's compensation insurance. Payment benefits are set by law, although in many states employers are allowed to purchase higher limits of liability if they desire.
Unless a person performing a job for you is an independent contractor, as defined by the IRS, you as an employer are responsible for any injuries they may sustain in the course of their work under both common law and worker's compensation laws.
It is also important to know that without worker's compensation insurance, the injured employee is entitled to receive three times the amount of damages which he or she normally would have been awarded had the coverage been in place. Court-awarded damages, as you may well imagine, can top $100,000.
As a responsible salon owner, you may become aware of potential hazards and take the appropriate steps to correct them, assuming along the way that you are removing any basis for a worker's compensation claim against you.
Unfortunately, nothing could be further from the truth. Consider the case of a 22-year-old female employee who worked for a Missouri tanning salon. This young woman decided to change a hot tanning lamp--despite specifically being warned never to do so. In the process, she seriously burned both hands, which resulted in permanent disfigurement.
The court ruled that even though the employee was clearly at fault in causing the accident, she received a worker's compensation settlement in the tens of thousands of dollars, which would have driven the salon owner into bankruptcy had the insurance not been in place. At her worker's compensation hearing, the court ruled in favor of providing the employee with worker's compensation benefits, even though she freely admitted she was at fault for changing the lamp.
Let's talk for a moment about some of the other types of injuries often claimed under worker's compensation injuries--which need not always be physical or obvious. Psychiatric stress claims often net employees huge worker's compensation settlements. In fact, many cases have been won where the cause of injury was cited only as work-related stress leading to psychological impairment. This is definitely an area that you, as an employer, should be aware of and guard against, as it often is impossible to refute claims of undue stress. As with many other liability issues against businesses, juries are quick to side with the employee when a claim is made.
How eager are juries to award large worker's compensation settlements to injured employees? Consider that, if an employee sustains an injury while on the job, even if the employee is committing a crime at the time, he or she is entitled to worker's compensation benefits.
Sound far-fetched? Not to the New York Court of Appeals, which recently ruled that benefits should be awarded to an employee who died, even though he was in the act of burglarizing his employer at the time of his death. Lest you think that such cases are the exception rather than the rule, consider that many far-less dramatic cases result in millions of dollars in worker's compensation benefit settlements every year--settlements that very well could be made against you.
There are things you can you do to reduce worker's compensation claims. Start by paying closer attention to your employees' safety and health. Keep them informed at all times about any and all existing hazards. Take the time to listen to their concerns and give your employees the proper tools and training to do their jobs. Most importantly, consider securing worker's compensation insurance to protect your employees, your business, and your own peace of mind. Remember, in most states worker's compensation insurance is more than just a good idea--it's the law.
Universal Insurance Facilities, Ltd. offers a variety of flexible and affordable coverages for every size salon. Universal's program is rated A++ (Superior) by A.M. Best and Company--that's the highest possible rating from the most-respected rating service in the country. To get more information about Universal's specialized tanning salon insurance coverages please contact Universal Insurance Facilities, Ltd., P.O. Box 40079, Phoenix, AZ 85067-0079, (800) 844-2101, fax (480) 970-6240, e-mail: uif@vpico.com or www.vpico.com/universal.
