A Common and Costly Mistake of Small Oklahoma Employers;

Failure to Carry Workers Compensation Insurance    

Many federal and state employment laws have minimum number of employee requirements to trigger coverage (i.e., compliance) under the law. Unfortunately, minimum threshold requirements in some employment laws may lead unwary small employers to believe they do not have enough employees to be required to carry workers' compensation insurance in Oklahoma. This can be a costly and potential business ending mistake.

Oklahoma employers are required to obtain workers' compensation insurance for their employees even if the employer only has one (1) part-time employee. The employer may not rely upon an accident policy or a health insurance policy for their employees, but must provide a valid workers' compensation policy issued by an insurance carrier or independent agent authorized to sell workers' compensation insurance in Oklahoma. It is a criminal violation for an employer to deduct the cost of workers' compensation insurance from an employee's wages.

So, what are the risks of non-compliance? If an employee is injured on-the-job and the employer does not have workers' compensation insurance, the employer may be held civilly liable for damage far beyond those available in the workers' compensation court system. The employer would also be subjected to monetary civil penalties for violating Oklahoma's Workers' Compensation Act. It does not take an injury, however, for the latter violation to come to light.

Even if there is no injury, the employer is liable for a maximum civil penalty of $250 per employee for the first offense. The number of employees is not calculated, however, by the number of employees the employer has working for them at the time of the citation. An audit of the employer's records would identify the cumulative number of employees the employer has had working for them during the entire period of non-compliance. Hence, the fine could result in thousands of dollars depending on the employee turnover rate. The "I didn't know" excuse will not help. A second violation of the Act will result in a penalty of $1,000 per employee during the non-compliance period, with a cap on the penalty of $10,000. The cap is little consolation to the small employer struggling to stay afloat.

The expense of carrying workers' compensation insurance is part of the cost of doing business in Oklahoma.    

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