Why farmers should obtain worker’s compensation policies

Dec 29, 2016

Avoid penalties that may result if an employee is injured on the job

Worker’s compensation insurance for farm and agricultural classes can be hard to come by. First of all, few insurance companies offer coverage for many of the employee classifications that are scheduled on a farmer’s worker’s compensation policy. Secondly, some insurance companies may have minimum premium requirements that make small farming operations with smaller insurance premiums ineligible for the program.

This leaves many farmers with few options when it comes to worker’s compensation insurance coverage. But, if you operate a farm of any kind, you may want to look into obtaining a worker’s compensation policy to avoid penalties or legal actions in the event one of your employees is injured on the job. Here are a few things to keep in mind:

Exemptions
Research your states worker’s compensation laws pertaining to any agricultural exemptions that may be available for employers with workers scheduled in agricultural classifications. Some states offer fairly liberal exemptions for farmers to the compulsory worker’s compensation laws.

The exemption criteria vary greatly between states. Your best bet is to contact a licensed insurance agent or worker’s compensation attorney in your state to verify if you fall within the exemption.

Independent contractors
Independent contractors report their earnings with a 1099 form, rather than a W-2. Paying workers with a 1099 doesn’t necessarily make them an independent contractor. Many states have stringent requirements for workers to be legally considered as an independent contractor.

These requirements may include things such as: carrying their own liability insurance, using their own tools and equipment or compensation by the job (rather than by the hour).

Every state may vary, but it is important to note that the sole act of paying workers on a 1099 doesn’t absolve an employer of his/her responsibility to his/her workers from a worker’s compensation standpoint if the employer has established an employer/employee relationship with the workers in the eyes of the law.

Employee responsibilities
Consider dividing your employees’ job responsibilities. Your insurance company will audit your worker’s compensation policy at least once annually. You will have to provide the insurance company with details regarding how much you paid your employees and for what jobs performed. Having your payroll separated by job classification and avoiding employee crossover from job duty to job duty (when possible) can potentially save you money.

More information can be found on the Ruhl Insurance website.

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