Determining which workers’ compensation regulations apply to your business depends on several factors.
The most significant factor is where you’re located.
Workers’ compensation laws and regulations change from state to state. Figuring out which of your employees must be covered, and how much it should cost, can be a confusing process.
Although determining coverage requirements can be challenging, workers’ compensation insurance is incredibly valuable. Providing workers’ compensation insurance for your employees protects them from injuries and illnesses they may suffer as a result of their job.
In this article, we’re going to explore the ins and outs of part-time employees and workers’ compensation requirements and considerations, as well as how to get the best policy.
Part-Time Employees and Workers’ Comp
ConnectPay is not an insurance broker, nor do we sell insurance. We’re a payroll service provider. Instead, we connect our clients with local insurance brokers within our extensive network. We work with many local brokers who provide excellent services to our clients. If you’re interested in connecting with a ConnectPay representative to chat about your insurance and payroll options, you can schedule a call today.
What Qualifies as a Part-Time Employee?
The Fair Labor Standards Act (FLSA) doesn’t give any definition for part-time employees. So, the term does have some ambiguity depending on the local laws. Even then, it can be ambiguous.
So, for the sake of being safe, in the context of this article, we’ll use the IRS to reverse-engineer what a part-time employee is. The IRS defines a full-time employee as anyone who works over 30 hours per week. So, a part-time employee is generally someone who works less than 30 hours per week.
Is Workers’ Comp Required for Part-Time Employees?
Ultimately, your state laws dictate whether workers’ compensation insurance is required or not.
Most states require small businesses to have workers’ compensation insurance for all employees, regardless of their status as part-time or full-time. In New York, for example, it's mandatory. Your company could be charged with a misdemeanor or a felony with fines up to $50,000 if you are found to be uninsured or underinsured. In Texas, though, workers’ comp insurance is optional.
The minimum number of employees before a workers’ compensation insurance policy is required varies state-to-state as well. In Maine, once you have a single employee, you are required to get workers’ comp insurance. In Georgia, however, you are required to have insurance after you have three employees.
A general rule is that if your state law requires you to carry insurance for full-time employees, chances are you need it for your part-time employees too. Your insurance broker can help you figure this out as well.
What About Seasonal Employees?
In most states, seasonal employees are considered the same as regular employees. If you employ them, even for a week, they are still employees. If your regular employees require workers’ compensation, seasonal employees require the same.
This is why pay-as-you-go workers’ compensation is ideal.
With pay-as-you-go, the amount you pay for workers’ compensation depends on actual payroll rather than projections. Adding and removing employees and paying for workers comp doesn't add complexity. For companies that hire seasonal workers, pay-as-you-go makes workers’ comp much more accurate and manageable.
The Best Way to Buy Workers’ Compensation Insurance
With traditional workers’ compensation insurance, there is a lot of guessing involved with coverage. If you’re underinsured, you risk potential penalties, and if you’re overinsured, you’re paying more than you should.
At ConnectPay, we recommend pay-as-you-go workers’ compensation insurance to our clients. For pay-as-you-go, you only pay for the coverage you require. Since the premium is based on actual payroll numbers every pay period, your workers’ comp payments are always accurate. You won’t have to worry about surprise audits or paying large unexpected payments.
If you want more information about working with ConnectPay to solve payroll and pay-as-you-go workers’ compensation insurance for good, schedule a call with us today.