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Insurance , Payroll , PEO , Small Business , Workers Comp

The Basics of Workman’s Compensation for Small Businesses

No matter what size your company is, workers’ compensation—or workman’s comp—is necessary for protecting your employees as well as your business itself. While larger corporations typically have the financial means for coverage, it can be more challenging for smaller businesses to manage the cost.

If you’re a small business owner, keep reading to learn more about the basics of workman’s compensation for small businesses.

Why is workers’ compensation a necessity?

Most states legally require workers’ compensation insurance for businesses, though the exact requirements vary from state to state. Workman’s comp is crucial for protecting workers if they get injured on the job. It typically covers the cost of medical care, rehabilitation, lost wages, disability benefits, and death benefits.


Work-related injuries and illnesses are typically covered, though there can be exceptions. If intoxication or misconduct played a role in the accident, for instance, it’s unlikely that the employee would be eligible for coverage. To begin the documentation process of a workman’s comp claim, employees who are injured at work must report the accident as soon as possible. The incident and injury should be detailed as thoroughly as possible to help ensure the employee is eligible for benefits.


Not only is workman’s compensation crucial for protecting employees medically and financially, but it also helps protect the business. Having workers’ comp in place can decrease the likelihood of your company being sued in the event an employee is injured at work. It’s also possible that without workers’ compensation insurance the business owner would be required to cover the cost of medical care.

How does it look different for small businesses?

Workers’ compensation is a legal requirement for businesses in most states, regardless of how large or small the company is. Even if you have just one employee, you’re most likely required to have workman’s comp. While it can be challenging for some small businesses to bear that financial burden, there are some great options available for coverage.


Partnering with a professional employer organization (PEO) offers alternative solutions to traditional workers’ compensation. Some PEOs specifically provide workman’s comp for small businesses, offering pay-as-you-go programs. OCMI customizes their programs to meet your needs as a small business. Their workers’ compensation plans allow you to pay as you go—without the steep upfront premiums—so you only pay for what you need in terms of benefits.


Handling workers’ compensation can be complex—particularly for small businesses that may not have the manpower or resources to spend a lot of time figuring it out. Working with a PEO allows you time and freedom to focus on your work—the growth of your business and satisfaction of your employees—while a team of professionals takes care of the legalities of workers’ comp.


It’s always a good idea to compare features and pricing to ensure your company has the coverage you and your employees need. If you own a small business, consider partnering with a PEO that offers a flexible approach to workman’s compensation.