If you own a business in Oklahoma and have people working for you, workers’ compensation coverage is not optional in most cases. Under the Administrative Workers’ Compensation Act (AWCA), employers are generally required to secure workers’ compensation insurance for their employees. Failing to do so can expose your business to significant financial risk, penalties, and operational disruption.
Below is a practical breakdown of what Oklahoma business owners need to know, written with one goal in mind: helping you avoid costly mistakes.
When Is Workers’ Compensation Coverage Required?
The AWCA requires employers to secure coverage for all employees by one of the following methods:
- Purchasing a workers’ compensation insurance policy
- Qualifying as a self-insured employer
- Joining a group self-insurance association
Many business owners assume they are exempt because they use independent contractors. That assumption can be dangerous. Misclassifying an employee as an independent contractor, or failing to properly document exempt status, can trigger federal penalties, workers’ compensation penalties, and personal liability.
It is also important to investigate whether your subcontractors have insurance coverage as a prime contractor may become liable for compensation benefits under the AWCA if the intermediate subcontractor fails to secure coverage or fails to file an Affidavit of Exempt Status with the Oklahoma Workers’ Compensation Commission.
Who Counts as an “Employee” Under the Act?
Under the AWCA, an employee is broadly defined as any person performing services for an employer. Most workers are considered employees unless a specific exception applies.
Exceptions include federal workers, licensed real estate professionals paid by commission, qualifying family members, youth sports league workers exempt from federal taxation, business owners with qualifying ownership unless they elect coverage under a policy, certain volunteers, owner-operator truck drivers, domestic and agricultural workers under payroll thresholds, and unpaid interns.
What Happens If You Don’t Secure Coverage?
Failure to carry workers’ compensation insurance may result criminal and civil penalties for employers who fail to secure coverage as required. Criminal action includes misdemeanor charges and fines up to $10,000. The Commission may issue a proposed judgement if it believes an employer has failed to secure coverage including penalties of p to $50,000.00 assessed at $1,000 per day of violation and seek to shutdown your business (injunction) until compliance is achieved.
Additional Financial Exposure
If an employee is injured while uninsured, your business may be responsible for lost wages, medical treatment, permanent disability benefits, vocational rehabilitation, and ongoing medical maintenance. The out-of-pocket expense of one claim could be an extensive financial burden on any business. The investment in coverage is almost always less expensive than cost of defending yourself in front of the Oklahoma Workers’ Compensation Commission. In addition, the insurance company will take over the administration of the workers’ compensation claim as well as the expense of defending your business in front of the Oklahoma Workers’ Compensation Commission so you can continue business as usual.
Protect Your Business
Workers’ compensation insurance is a critical risk management tool. Call our experienced team with Davis Business Law for help evaluating your obligations under the AWCA and ensure compliance.
