If you have a business in Illinois and you have employees you generally must have workers’ compensation insurance coverage. According to the Illinois Workers’ Compensation Commission, everyone hired, injured, or whose employment is located in Illinois must be covered. As an employer, you must have workers’ compensation coverage even if you have just one part-time employee.
Workers’ compensation insurance provides your employees with medical benefits and temporary and permanent disability benefits if they suffer a work-related injury or illness. By having workers’ compensation insurance, you as the employer are protected against lawsuits filed by employees for work-related injuries or illnesses.
The Illinois Workers’ Compensation Commission points out that if you are a sole proprietor, a partner, or a member of a limited liability company, you are generally not obligated but can choose to have workers’ compensation coverage for yourself. If you have employees who are covered and you elect not to cover yourself, you would have to notify your workers’ compensation insurance company that you are opting out of coverage. But if you are in the construction business, trucking business, or other businesses considered hazardous, you would generally have to carry workers’ compensation coverage for yourself as well as your employees.
Family members who work in your business would generally have to be covered by workers’ compensation insurance unless they are corporate officers. Agricultural workers must also be covered if your business employed 400 or more working days of labor per quarter in the preceding calendar year. This total excludes the working hours of the members of your immediate family who live with you.
If your business is not located in Illinois but does any work in Illinois, the employees who do that work must be covered by a workers’ compensation policy that includes Illinois coverage, even if the employees do not reside in Illinois.
According to Advanced Insurance Management, an independent company of insurance auditors and consultants in Illinois, if your business uses independent contractors, they could be treated as your employees if they are injured on the job and do not have their own workers’ compensation insurance. If you use independent contractors, you need to have insurance certificates from them showing that they have current workers’ compensation coverage.
There is no state workers’ compensation fund in Illinois. You can purchase a workers’ compensation insurance policy from any authorized private insurance company licensed to provide workers’ compensation in Illinois.
Advanced Insurance Management explains that workers’ compensation insurance premiums in Illinois are calculated based on classifications of types of business activities according to the National Council on Compensation Insurance (NCCI). A rate for each classification is applied per hundred dollars of payroll. Initially, the policy is based on estimated payroll. Later, the actual payroll is determined and the premium is adjusted according to an experience modification factor. The premium may be reduced by applying a premium discount factor.
Sources:
Edward Priz, “The NCCI Classification System”, Yahoo Voices
Workers Compensation in Illinois, Advanced Insurance Management
Workers’ Compensation Insurance: It’s the LAW, Illinois Workers’ Compensation Commission
Workers’ Compensation Summary – Illinois, WorkWorld
Reference:
- Business, State of Illinois: www2.illinois.gov/business/Pages/default.aspx
- Safety at Work, National Safety Council: www.nsc.org/safety_work/Pages/Home.aspx
- Top 10 Ways to Control Your Workers Comp Costs: www.workerscompensation.com/compnewsnetwork/workers-comp-blogwire/14746-top-10-ways-t
