Why employers need workers' compensation insurance: program benefits both businesses and employees.

• Author: Sergeant, Deborah Jeanne

Workers' compensation premiums represent one expense employers should not forego. Except for a few employment scenarios, the law requires employers to carry workers' compensation coverage, either through a carrier or if the company qualifies, through self-insurance.

Despite this fact, Randy Weddle, an attorney for Holmes, Weddle & Barcott, PC in Anchorage, said that he's surprised to learn that a lot of employers don't have workers' compensation insurance. "You could get in a lot of trouble not having it," he said. "There are terrible penalties." These can include jail time and fines in the thousands of dollars.

In addition to having coverage, employers must also post workers' compensation information for employees, make forms available for employees and file claims for each instance of work related injury or illness within 10 days of knowing that an employee has been injured or ill. Employers must also distribute three copies of the form (one to the employee, one to personnel, and one to the insurance claim adjuster) and file an electronic annual report along with fees for the Second Injury Fund and Workers' Compensation Fund.

Like most things in life, exceptions apply. The Alaska State Division of Labor lists certain employers who are not required to provide workers' compensation insurance. These include sole proprietors in a sole proprietorship, part-time babysitters and noncommercial cleaning people, among others. For a complete listing, refer to the Division of Labor's Web site at www.labor.state.ak.us/wc or call (907) 465-2790.

The concept of workers' compensation (originally called workman's compensation) started during the Industrial Revolution. Suing employers provided the only recourse for injured employees or the surviving families of employees killed on the job. These lawsuits often ended unsuccessfully and cost injured employees even more lost work time.

These lawsuits hurt employers, too. They could strip companies of revenue, both through awards and the legal process itself, and also eroded morale and portrayed management as the bad guys.

Workers' compensation provided a solution that limits employees' means of obtaining restitution. They cannot sue the employer because of exclusive liability. Workers' compensation also provides nearly immediate relief to the employee by providing a percentage of the injured employees' wages, medical care, and, if needed, employment re-training to pursue other employment. Surviving families...