By Samantha J. Bily, Esq.

Workers’ compensation claims can make small business owners nervous, particularly those who do not have insurance, even employers who are not legally required to have insurance. Most uninsured employers face a legal battle without any experience with prior claims. Uninsured employers also face exposure for potential penalties for failing to have insurance. In order to minimize exposure, uninsured employers should consult with an attorney immediately upon learning of a claim against them. Below are some considerations uninsured employers should be prepared to discuss with an attorney:

Was the company required to have workers’ compensation insurance?

Under Georgia law, any employer who has three or more employees “regularly in its service” within the same business within Georgia is required to have workers’ compensation insurance. There are several defenses that can be raised to show that an employer was not required to maintain insurance and, therefore, is not liable for workers’ compensation. For example:

  • The employer did not have at least three employees
  • The employer did not have three or more employees regularly in its service
  • The employer’s workers are independent contractors, not employees
  • The business’ corporate officers have exempted themselves from coverage
  • The employer is of a particular kind of business not required to have insurance
    (i.e. farm labor, certain railway commerce, and domestic servitude)

Did coverage exist?

In some instances, an employer believes it was uninsured but coverage actually exists. For example:

  • The employer had an insurance policy that was not properly cancelled by the insurance company
  • The employer maintains coverage in another state under a policy which may also allow limited coverage for Georgia claims
  • The employer is currently uninsured but had valid coverage on the alleged date of accident

What should the employer do if they were required to maintain coverage but did not?

If the employer was required to maintain coverage but failed to do so, the employer should obtain coverage immediately. The State Board of Workers’ Compensation can assess fees of up to $6,000 per violation, which in some cases, is determined by the number of days the employer failed to maintain coverage. The Board is more likely to grant leniency to an employer who has actively worked to fix an issue of no coverage than one who has not.

What other defenses are available to uninsured employers who were required to maintain coverage but did not?

For uninsured employers who are otherwise unable to avoid liability, an attorney can assist in building a defense through the most cost-effective means. After meeting with an attorney to discuss exposure and expectations for defense costs, an attorney can counsel the employer as to what defense is most likely to result in the lowest overall exposure and what the employer can do to minimize defense costs. Potential defenses that can be pursued include:

  • There was no actual work accident
  • The employee did not sustain an actual or compensable injury
  • The employee sustained an actual or compensable injury but was not disabled
  • The employer believed it had coverage but was sold an incorrect insurance policy by its broker
  • Another employer is liable, for example, in situations where contractors and subcontractors are working together on a single project