Oklahoma Workers Compensation Insurance - Explained
Running a business with employees is a huge undertaking. In addition to developing a competitive product and winning business, you also have to manage people and deal with the regulations associated with having employees.
It is a large responsibility, and not one you should take lightly.
Once you become an employer, you have to start thinking like an employer. What if an employee gets hurt on the job? What are the workers comp laws in Oklahoma, anyway?
We hope this insight will help you learn about these laws and comply with them – as well as spare you from reading all the Oklahoma statutes.
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What is Oklahoma workers compensation insurance?
Oklahoma workers compensation is an insurance policy governed by a series of state laws and statutes that guarantee benefits to workers injured in the course of their employment. Although the insurance policy that you purchase does provide some coverage, most coverage is governed by state laws (such as the Administrative Workers' Compensation Act) and not the insurance company.
Here are a few examples of the protections that the Oklahoma state workers compensation laws provide:
- Medical care for work-related injuries or illnesses.
- Payments for wages lost as a result of work-related injuries or illnesses.
- Replacement for lost wages.
- Compensation for permanent disabilities within limitations set by law.
- Death benefits for the families of workers who died due to a work-related injury.
- Vocational retraining for workers who are unable to return to their prior occupation.
Workers compensation operates under a"no-fault" system, meaning if you have an employee that gets hurt onthe job, it doesn't matter if your business was at fault in the injury. Workers compensation will be responsible for paying the aforementioned benefits.
What are Oklahoma workers compensation laws for employers?
Are you required to purchase workers compensation insurance in Oklahoma? Generally, you need to get it if you have any employees working for you that do not own more than 10% of the company.
Workers compensation is designed to protect employees. Therefore, in Oklahoma, owners are not required to purchase workers compensation on themselves.
Furthermore, owners are automatically excluded from these insurance policies. If you wish to be covered under your workers comp policy, you must elect to be included.
Are there any Oklahoma workers compensation exemptions for certain employers?
Although we recommend that you purchase workers compensation insurance when you have any non-owner employees, there are some elements in the law that might exempt you from doing so.
Small Family Businesses: If you own a business with five or fewer total employees, all of whom are related by blood or marriage to the employer, then you may be exempt. The employer must be "a natural person," a "general or limited partnership," or "an incorporator of a corporation if the corporation is the employer.”
Sole Proprietors: Sole proprietors are not "employees," and are therefore not obligated to secure compensation on themselves. Although similar to the owners of a corporation exemption listed above, they may elect to purchase workers compensation on themselves if they choose.
Agricultural And Horticultural Employees: If you are an agricultural or horticultural employer who had a gross annual payroll of less than $100,000, these workers are not "employees" for purposes of workers compensation.
What about independent contractors?
When it comes to who you should purchase workers compensation on and what you are liable for, independent contractors are one of the most confusing aspects of the current system.
Remember this: Just because you pay someone as an independent contractor doesn't mean they are considered one under Oklahoma workers comp laws.
Many factors go into deciding whether someone is regarded as an employee. After all, workers compensation is meant to protect workers from unsafe conditions and workplace injuries.
Here is the list that Oklahoma released on determining who is and who is not an independent contractor. It is important to note that this determination is made on the totality of circumstances rather than a single factor like payroll.
- The nature of the contract shows that the worker is independent from the contractor. For example, the contract may contain an agreement that the contracting party is an independent contractor.
- The degree of control exercised by the principal(employer) over the work. The greater the degree of control exercised by the principal, the greater the likelihood is that the worker is an employee, rather than an independent contractor.
- Whether the worker is engaged in a distinct occupation or business for others. For example, the worker is a painter who paints houses for multiple employers.
- The kind of occupation, and whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision.
- Whether the occupation requires special skills, license, education, or training, which tends to indicate that the worker is a contractor.
- The worker supplies all or most of the materials that he or she needs to perform the job. If this is the case, it tends to indicate that the worker is an independent contractor.
- The length of the job; is it a one-time occurrence or will it be performed on a regular basis?
- The worker is paid as a separate contractor; an invoice is provided to the worker for his/her services; the worker is paid by the job; the worker files a federal income tax return for his/her business; the worker is provided with an IRS Form 1099 from the principal.
- Whether or not the work is a part of the regular business of the employer.
- Whether or not the parties believe they are creating the relationship of employer and employee.
- The right of either party to terminate the relationship without liability.
What are the penalties for not having workers compensation in Oklahoma?
The penalties associated with failing to secure workers compensation insurance in Oklahoma can be catastrophic. They can include hefty monetary fines and can even lead to criminal charges.
Here a list of the potential penalties:
- Penalties up to $1,000 per day that workers compensation is not provided to employees
- Liability in district court in a negligence action maintained by an employee.
- A potential court order prohibiting you from engaging in further employment or until full payment of civil penalties.
- Order of cessation of business activities until insurance is procured.
- Misdemeanor charges and subject to fine.
How does a business get workers compensation insurance in Oklahoma?
There are two primary ways to obtain workers compensation in Oklahoma (excluding those businesses who self-insure): through insurance agents and directly through CompSource Mutual.
The benefit of using an agent is that they can work with multiple insurance companies to find you the best deal for your company.
What is CompSource Mutual?
If your business has any employees, workers compensation insurance is mandatory in Oklahoma. But what happens if a business is in a hazardous industry or has had claims in the past, and no private insurer will write the policy?
Although CompSource is a private company, they operate as a "market of last resort," which means they will provide workers comp to any employer in Oklahoma who seeks insurance and meets reasonable requirements.
Without that protection, many businesses would be unable to legally operate in Oklahoma!
Although different from many private insurance companies, CompSource Mutual is still a privately-owned company. They provide excellent claims service as well as competitive rates on almost all classes of business. When looking for workers compensation in Oklahoma, this should be one of the insurance carriers you should consider.
Private Market Alternatives
Although CompSource is a great option for insuring your business, you may have to do some searching to find the right combination of price and services.
Here are some of our recommendations for specialty workers compensation insurance carriers:
The Zenith is a great insurance company to partner with. In addition to great rates, they specialize in helping companies manage costs through improving safety programs and better handling of claims.
Zenith has a Financial Strength Rating of A (Excellent) from AM Best and does business in most states across America.
Through its parent company, Blue Cross Blue Shield of Michigan, Accident Fund is a top 10 workers compensation carrier in the U.S. They have a broad variety of industries they service and are known for their prompt and thorough claims handling.
Although they only entered Oklahoma within the last three years, they have quickly gained a large market share in the state and are continuing to grow.
AmTrust is the fifth-largest workers compensation carrier in the U.S., and the largest in this group. With a Financial Strength Rating of A-, they are a strong partner for any businesses needing workers compensation insurance.
With so many workers compensation options to choose from, it is vital to partner with an insurance broker who knows the Oklahoma insurance market. They’ll help you find not only the best deal, but the insurance company that best aligns with your business goals.
Let us know if you need help finding coverage and protecting your business. We have relationships with over 15 Oklahoma workers compensation insurers in addition to CompSource.
About The Author: Austin Landes, CIC
Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.
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