Recently, a part-time stable employee was kicked by a horse and suffered a compound fracture to her leg. Because she was injured on the job and her employer did not provide Workers Compensation insurance, there were no funds to pay for her surgeries, physical therapy and months of lost wages.
Last week, a stable owner told me about a serious riding accident suffered by one of her employees. Lying in the arena and fearing for her future, the badly injured trainer despaired, “I don’t have insurance for this.” Fortunately, this employer was able to say, “Yes, you do!”
If you pay anyone to work on your farm, you’ve thought about what might happen if your employee suffered a serious or catastrophic injury. “What if John hurts his back or rolls a tractor or gets kicked in the face? What if Sue is paralyzed? What if Carlos is killed? What about their families?” You’ve heard about it happening at other places, and you wonder…
WOULD MY HOMEOWNER, UMBRELLA OR GENERAL LIABILITY POLICY RESPOND?
Personal Liability and General Liability policies are designed to protect against Bodily Injury & Property Damage claims from third parties, but specifically exclude injury to your employees. The only insurance protection against employee injury is Workers Compensation.
WHAT IS WORKERS COMPENSATION?
Workers Compensation is employer-paid insurance, and provides state-mandated medical and disability benefits for injury, incapacity or death sustained on the job by employees. Workers Compensation was developed as a compromise in which injured employees are assured of benefits, and employers are shielded against lawsuits from injured employees. Workers Compensation benefits apply without regard for who might have been at fault for the injuries.
WHY DOES MY FARM NEED WORKERS COMPENSATION INSURANCE?
There are three good reasons to provide Workers Compensation insurance for your farm employees:
- Protect your employees from injury and financial ruin.
- Protect yourself from financial liability.
- Protect yourself from the State.
Protecting your Employees.
It’s no secret that working with or even near horses is dangerous, and that serious injury is always just a breath away. Your farm employees take good care of you, your horses and your customers, and you take pride in looking after them. But what could you really do if one of your employee was badly injured or paralyzed or even killed? How could you compensate their families? Would you have the means to help, or the will to turn away?
Protecting yourself from financial liability.
If an employer provides Workers Compensation insurance, an injured employee must accept the statutory Workers Compensation benefits as the “sole remedy” for his injuries – and may not sue the employer regardless of fault. But in the absence of Workers Compensation insurance, an injured employee may sue his employer for the costs of medical treatment, rehabilitation and lost wages. If that happens, the employer will have to fund his own defense and pay any jury award out of his own assets, because General Liability insurance specifically excludes injuries to employees.
Protecting yourself from the State.
Georgia law requires that any employer with three or more employees, whether full or part time, must provide Workers Compensation benefits. Corporate officers (and LLC members) count toward this three-employee minimum, so the threshold may be lower than it sounds. An employer who fails to maintain Workers Compensation insurance as required by law will be held responsible for employee injuries just as if Workers Compensation insurance was in place. In addition, a noncompliant employer may face civil penalties and attorney’s fees, and pay a 10% penalty in compensation to the injured employee.
FREQUENTLY ASKED QUESTIONS
Q: Do farm owners have to be covered by Workers Compensation insurance?
No. Sole proprietors, partners, corporate officers and LLC members may exclude themselves from Workers Compensation coverage. The reason is that business owners and officers may have other options to insure against work-related injuries that are not available to their employees.
Q: My farm operates as an LLC. At what point am I required to provide Workers Compensation?
LLC members (and corporate officers) are included in the three-employee eligibility calculation, even though they may opt out of coverage for themselves. An LLC with one member and one employee (1+1=2) is not required to provide Workers Compensation for its one farm employee, but an LLC with two members and one employee (2+1=3) must provide WC for its employee.
Q: I am a Sole Proprietorship. When am I required to provide Workers Compensation for my employees?
Sole Proprietors (and business Partners) are not counted toward the Workers Compensation threshold. A sole proprietorship with two employees (0+2=2) is not legally required to provide coverage for its two employees, nor is a partnership with two employees (0+2=2). But a sole proprietorship or partnership with three employees (0+3=3) must provide Workers Compensation benefits to its employees.
Q: Am I eligible to provide Workers Compensation if I have fewer than three employees?
Yes, and we encourage you to consider Workers Compensation insurance for the sake of your valued employees and your own financial protection.
Q: I treat my farm workers as independent contractors, not employees. Do they count?
Be careful! Simply calling someone an independent contractor does not make him one! If your workers use your equipment, work at your pleasure, on your schedule and under your direct supervision, it is likely that they are your employees and not independent contractors.
Q: Does an “agricultural exemption” apply to horse farm employees?
No, stables are not engaged in livestock production and are not exempt from Workers Compensation.
Q: How is the cost of Workers Compensation insurance determined?
The premium for Workers Compensation insurance based upon annual payroll for specific job types. At the beginning of the policy year, a deposit premium is based upon estimated payroll. Then at the end of the policy year, a payroll audit determines actual payroll and the final premium is settled accordingly.
Q: Is Workers Compensation insurance expensive?
Workers Compensation for horse farms is not cheap, and neither are horse-related injuries. Well managed, safety-conscious businesses enjoy the best rates, and good experience is strongly rewarded over time.
Q: How can I explore Workers Compensation for my horse farm?
The Workers Compensation market for horse farms is limited due to the catastrophic nature of stable operations. An experienced and knowledgeable risk advisor can help design a plan to protect your valued employees and your business.
Bill Harris is a Risk Advisor with The Harbin Agency, Inc., an independent insurance agency with major specialties in Equine Mortality and Farms as well as Commercial, Personal and Life & Health insurance. Bill can be reached at billh@harbingency.com.