Workers' Compensation Laws

Workers’ compensation laws are designed to assist employees who suffer from occupational injuries. Government-mandated workers’ compensation laws require most employers to pay employees for lost wages, medical bills, and related expenses. However, workers’ compensation insurance—an important part of church, school, and ministry insurance programs—is not always purchased because people are misinformed or fail to realize its importance.

Employer Responsibility

Government-mandated workers’ compensation requires most employers to pay employees for lost wages, medical bills, and related expenses. It also provides benefits to dependents of employees who die as a result of a work-related accident. In exchange for these benefits, employers generally cannot be sued by employees for compensation for injuries or illnesses covered by the act. Most employers meet this obligation by purchasing workers' compensation insurance.

Having workers' compensation coverage as part of your insurance program is important because church public liability policies sold by insurance companies specifically exclude claims arising out of work-related injuries.

In addition to covering these claims, workers’ compensation insurance provides important benefits* to your employees in the event they are injured on the job:

• Payment for medical expenses and rehabilitation services.
• Cash benefits if an employee is temporarily or permanently disabled and unable to work.
• Lump sum payments for scheduled injuries such as the loss of an eye, foot, or hand.
• Survivorship benefits for fatal injuries, including a burial allowance and a partial replacement of a deceased worker’s weekly wages.

Common Questions About This Coverage

Q: Will workers' compensation insurance take the place of an employee’s own health or disability insurance?

A: No. Workers’ compensation covers only work-related injuries (or illness) caused by an accident.

Q: Are minors and volunteers covered by workers’ compensation laws?

A: Minors are covered. Many states impose hefty penalties when a minor is injured if employed in violation of child labor laws. In most cases, workers’ compensation benefits are doubled and the employer—not the insurance carrier—is liable for the additional amount.

As a general rule, volunteers aren’t covered by workers’ compensation statutes because they aren’t employees.

Q: How do you determine my premium?

A: Workers’ compensation premiums are based on employee wages and compensation subject to different job classification rates. Typical classifications for church policies include church professional, teacher, clerical, and janitorial.

Q: What is involved in an audit?

A: Brotherhood Mutual audits your workers’ compensation policy annually to compare estimated employee remuneration with the actual remuneration paid during the policy period. The audit procedure requires your church to complete a form listing the wages and compensation earned by your employees. If your payroll estimates were too high, you will receive a refund. If your actual payroll exceeded initial estimates, your church will be charged an additional premium.

Q: How are actual wages determined?

A: Actual wages should be determined from your payroll records, including cash allowances such as utilities, housing, or education, and reimbursed Social Security. Payments made by the employer for pension, health insurance, annuities, or any reimbursed money for business expense should not be included.

*Benefits may vary from state to state.

The information in this article is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.