Worker's Compensation

Worker's Compensation
What Every Salon Owner Needs to Know

Common law requires every employer to provide a certain standard of working conditions for their employees. For example, employers are required to provide a safe working environment and all necessary safety training for their employees. But did you know, that in nearly all 50 states, common law requires every employer to provide workers 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 many states allow employers 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 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 be 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. The woman decided to change a hot tanning lamp despite specifically being warned never to do so. In the process, she seriously burned both hands-resulting 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 amount of 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 bulb.

Let's examine some other types of injuries often claimed under worker's compensation--injuries that need not always be physical or obvious. Psychiatric stress claims often net workers 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 is often 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 too far-fetched? It wasn't 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. If 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 workers compensation benefit settlements every year, settlements that very well could be made against you.

There are steps you can take to reduce worker's compensation claims. Start by paying closer attention to the safety and health of your employees. Keep them informed at all times about any and all existing hazards. Take the time to listen to their concerns. 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--its the law.

To better help you protect your business, Universal Insurance can provide workers compensation in many states, depending upon salon size. The insurance also can be written to provide valuable protection for you, as an employer, should you suffer a work-related injury.

Universal's Tanning Salon Insurance Program is underwritten by the American International Group (AIG), one of the world's largest commercial insurance and financial services organizations. Rated A++ (Superior) by A.M. Best Company-that's the highest rating possible from the nations most respected independent rating service. To receive more information, please contact Universal Insurance Facilities, Ltd., P.O. Box 40079, Phoenix, AZ 85067-0079, (800) 844-2101, fax (602) 970-6240, www.vpico.com/universal.