Who has to carry workers compensation insurance?
Over the years, mandated coverage under The Workers’ Compensation Act (ACT) has increased in Massachusetts to the point where it is compulsory for nearly all employers to carry workers compensation insurance. There are exceptions, including seasonal, causal, and part-time domestic servants, and non-profits staffed exclusively by volunteers. The default is that employers must provide coverage through an insurance company licensed for the purpose in Massachusetts; however, some companies can qualify as self-insurers.
The Act covers employees who are working in Massachusetts, even if the employee does not live in MA or the contract hiring them was made outside of the Commonwealth. It also covers all employees hired by a contract of employment that was made in Massachusetts. Generally when neither the contract for employment, nor the injury occurred in Massachusetts, the Act will not apply. However, there are exceptions.
What if an employer fails to carry workers compensation insurance?
If an employer fails to provide coverage, the employer is liable for damages through court action, and the employer will lose the ability to assert certain defenses. In addition, a stop work order may be issued, civil penalties assessed, or criminal sanctions brought.
If an employer has failed to comply by not keeping up to date with its insurance premiums, a private suit may be brought to force compliance with the law, but only after giving the employer notice and time to correct the defect. If the person bringing the suit proves a violation of the act, then they can collect 25% of the recovery or $25,000.00, whichever is less.
The cost of workers compensation insurance depends on a number of factors: the riskiness of the job, past injuries and accidents, the employer’s bargaining power, the market, and the potential financial exposure for the insurer.