The Elementals of Worker’s Comp
The human body, when reduced to its basic elements, is worth about $160. We’re mostly made of water, which means we’re basically a bunch of skin-clad oxygen molecules walking around the planet. Nevertheless, model Heidi Klum insured her legs for $2 million each, guitarist Keith Richards insured a single finger on his hand for $1.6 million, and competitive eater Takeru Kobayashi reportedly insured his stomach for $100,000. (Hot dog eating, who knew?)
Though the human body alone may not be worth much, when evaluating how much our body parts are worth relative to our jobs, they suddenly take on incredible value. Those same molecules of oxygen, when put to work, create profits—for the individuals, their families, and their employers. When an injury occurs, that value and those profits are disrupted, or halted altogether. Workers’ compensation was invented to mitigate this risk shared by employees and employers—unless, that is, the employee is a 1099 worker.
The Unacceptable W-2 / 1099 Workers’ Comp Disparity
Businesses are required by law to provide their W-2 employees with workers’ compensation insurance. This statutory insurance serves a critical function. Injuries and illnesses incurred by full-time workers cost US businesses $170 billion annually. According to CERS, the average employee lawsuit costs employers up to $250,000, with the average out-of-court settlement coming in around $40,000. Clearly, there is a need for a mechanism that protects both businesses and individual employees from financial ruin in the event of a workplace injury.
Where do 1099 contractors fit into this? What happens if an independent contractor falls off a ladder and breaks an ankle while installing cabling? What should a business do if a 1099 worker suffers whiplash from a vehicular accident? Whom should a freelance IT tech call about lost wages and medical expenses due to a severe eye injury?
The answer to these questions has historically been “Well, sorry, but everyone is basically on their own.” Sure, individual 1099 workers could attempt to purchase their own insurance coverage, but with no bargaining power this is rarely a feasible alternative. Employers also had limited options. Neither the government nor the the private sector developed anything resembling a practical insurance policy plan. Independent contractors, freelancers, and 1099 workers—including their employers—were powerless and exposed to risk, while full-time, W-2 employees enjoyed the peace of mind of full coverage.
1099 Workers: Alone No More
The Government Accountability Office reports that 40% of the US workforce is comprised of independent contractors and freelance workers. This is a staggering number of people who work every day without protections provided by workers’ compensation. It should not come as a surprise that when a 1099 worker does incur an injury at the workplace, many file civil suits against the employer or hiring company. Both workers and employers lack a mechanism to cover work-related illnesses and injuries. Until now. This month WorkMarket announced its 1099 Workers’ Compensation offering, which affords employers and employees comprehensive no-fault coverage.
WorkMarket’s 1099 Workers’ Compensation offers the following straightforward benefits:
No-Fault Coverage: WorkMarket’s no-fault coverage protects employers from extended, costly legal actions should a contractor incur an injury on site, while ensuring that contractor receives proper medical care.
Mitigates Lengthy Legal Claims: Contractors who are injured on site deal directly with the insurance company, removing the employers from the sometimes contentious claims process.
Competitive Edge: 1099 Workers’ Compensation Insurance empowers employers to grow business by taking on clients who require workers’ compensation insurance by their vendors.
For many employers the idea of purchasing workers’ compensation insurance is difficult to embrace. No one likes to imagine a worker getting hurt. But it happens. All of the time. And the financial consequences can be devastating for employers. The logic behind purchasing 1099 workers’ compensation insurance is the same rationale behind buying health insurance, or home insurance, or car insurance. Unfortunate things happen. Considering the amount of time 1099 workers spend on the job, chances are they will experience a work-related injury or illness.
Learn how WorkMarket’s 1099 Workers’ Compensation insurance can protect your company from financial jeopardy due to injuries or illnesses at the workplace.