As nonprofits that work to advance shared member interests, trade associations face complex liability risks from events, services, publications, and daily operations. Securing adequate and tailored coverage is mandatory for these entities to pursue their public service missions sustainably. Fortunately, trade association insurance protects against a broad range of risks.
An often overlooked but imperative component of a trade association’s insurance portfolio is workers’ compensation. Read on to learn about workers’ comp insurance and its importance to trade associations.
Understanding Workers’ Compensation Insurance
Workers’ compensation insurance provides medical, rehabilitation, and wage replacement benefits to employees who suffer job-related illnesses, injuries, or fatalities. Every U.S. state, other than Texas, mandates that employers above a particular size threshold carry this no-fault coverage.
By accepting benefits under workers’ compensation insurance, employees forfeit certain rights to sue their employer for negligence. In exchange, they receive swift assistance for loss of earnings and treatment expenses without dispute.
The requirements for carrying workers’ compensation insurance vary by state. For example, in Alabama, employers with five employees or above must have worker’s comp coverage. In California, workers’ comp is obligatory for all companies, even if they have a single employee.
Most states have penalties for failing to carry mandatory workers’ compensation insurance. Not complying with requirements can lead to fines, criminal charges, and even jail sentences in some states.
For instance, in California, it is a criminal offense that carries a potential sentence of up to a year in jail and a fine of at least $10,000. Illinois levies a penalty of $500 per day of non-compliance, with a $10,000 minimum fine. In Pennsylvania, intentional non-compliance is a felony with potential fines of up to $15,000 and up to 7 years in prison.
Given the legal obligations and risks, nearly all employers should carry compliant workers’ compensation policies. Since eligibility rules differ among states, researching and complying with all pertinent laws and rules is paramount.
Associations with staff or operations spanning multiple states must pay particular attention to varying jurisdictional requirements.
But ultimately, failing to secure proper workers’ compensation insurance poses threats of substantial fines, criminal liability, civil lawsuits, and reputation damage across industries and states.
Relevance of Workers’ Compensation in Trade Associations
The nature of trade associations makes injury risks for workers relatively higher than those of traditional companies. Reasons include:
- Numerous offsite events, including conference and fundraising galas, are prone to slip-and-fall accidents.
- A heavy reliance on volunteers who may lack safety training and orientation.
- Potential overseas travel into areas with security issues or health hazards.
- Limited control over third-party premises leased for sponsored activities.
Furthermore, specific categories of workers may be overlooked unless expressly covered. For instance, elected leaders who contribute time without compensation could be legally construed as volunteers or employees.
Thus, precise and sufficiently broad policy wording is essential to avoid disputes following any incident. Associations must also appraise the adequacy of their existing coverage in light of potential state law changes and evolving exposure scenarios.
Benefits of Workers’ Compensation for Trade Associations
Appropriate workers’ compensation coverage offers trade associations two key advantages:
Financial Protection for the Association
By covering injury-related expenses upfront through insurance, trade associations avert significant outflows that could destabilize operations or trigger reputational damage. Legal fees are also covered when disputed claims arise.
Tighter budgets make nonprofits far less able to absorb unplanned costs than large corporations. Therefore, uninsured losses necessitate spending cuts that ultimately undercut the association’s industry advocacy and public service goals.
Safeguarding Employee/Volunteer Health
While mitigating financial risks, workers’ compensation protection upholds employee welfare following accidents. Quick medical assistance coupled with wage support during recuperation offers essential help for affected personnel and their families. This aligns with the people-focused values of most nonprofit entities.
Common Challenges in Workers’ Compensation for Trade Associations
Despite the benefits, optimizing workers’ compensation protection does pose some key challenges for industry groups, including:
Adapting to Changing State Regulations
Laws and compliance directives regarding this insurance evolve constantly. For associations with national footprints, keeping track of expanded liability, benefit rate revisions, new filing requirements, and more across multiple states becomes onerous.
Disputing and Settling Injury Claims
Given their tight budgets, associations may face pressure to dispute questionable claims aggressively. However, appearing to contain insurance costs through stringent settlements might result in permanently losing the injured employee or volunteer and inviting backlash for perceived ruthlessness.
The converse also causes problems—settling too easily makes the association susceptible to recurring dubious claims and premium hikes. Finding the right balance requires legal, medical, and negotiation expertise that in-house teams don’t often possess.
Best Practices for Managing Workers’ Compensation
Trade associations can overcome the above hurdles through a combination of safety initiatives, training programs, expert advice, and specialized risk transfer mechanisms:
Safety Protocols and Loss Prevention
Pre-emptive risk assessments enable associations to spot and control physical, ergonomic, chemical, biological, and other hazards before mishaps occur.
Particularly for offsite activities, checklists help systematically identify and mitigate risks at third-party venues lacking association oversight. Ongoing safety communication campaigns also help foster a culture of individual accountability among employees and volunteers.
Education for Leadership and Staff
Regular training ensures that personnel stay updated on workplace safety laws, protocols, and best practices related to their roles.
For traveling executives and event managers routinely exposed to exotic hazards, specialty workshops build caution and essential risk mitigation skills and vigilance. Across the entity, a shared language and understanding around safety ultimately help curtail preventable incidents over the long run.
Legal and Claims Assistance
Leveraging experienced counsel for workers’ compensation matters is invaluable for associations lacking specialized expertise internally. Beyond resolving complex legal questions, having external expert guidance on reporting, settling, and appealing disputed claims results in more favorable outcomes.
Protect Your Team with Trade Association Insurance from CI Solutions
CI Solutions has worked with countless trade associations and nonprofit entities to obtain and optimize workers’ compensation and more generalized trade insurance.
Our team of experts can assist your organization in protecting itself and its people through consultations, guidance on risk management, tailored coverage, and much more.
Contact us today at 703.988.3665 or online to schedule a consultation on optimizing workers’ compensation and other insurance coverage for your trade association or nonprofit entity.