Homeowner Associations »
Workers' Compensation FAQs
Question: Does my HOA need
to maintain WC coverage?
Answer: California Law requires ALL employers to maintain Workers’ Compensation
insurance California Labor Code, Section 3600 (a). Furthermore,
nearly every set of CC&Rs requires a Board of a common interest
development to purchase Workers’ Compensation coverage “to
the extent necessary to comply with applicable law.”
If the association hires a contractor who does not carry Workers’ Compensation
insurance, even if the contractor misrepresented that fact, the
association becomes the employer as far as injury is concerned.
Question: But, wouldn’t an injured worker be covered under the Association’s
general liability policy?
Answer: No, all general liability policies covering community associations
contain specific language excluding coverage for “any
obligation” of
the Association “under a Workers’ Compensation
(sic) law.” (ISO Language – 1992 – CG 00
01 10 93)
Question: If the Board is
sued by the homeowners for failing to purchase coverage,
wouldn’t the Board have coverage
under their Directors and Officers Liability policy?
Answer: Again, the answer is no, but this is a common trap. Directors
and Officers policies, like General Liability policies are
not intended to act as a catchall for liability purposes.
As such,
all Directors and Officers policies contain language specifically
excluding any claim, “arising out of, directly or indirectly
resulting from or in consequence of or in anyway involving” bodily
injury or sickness – whether workplace related or not.
Question: What
Happens to an Employer Who Does Not Purchase Workers' Compensation
Insurance?
Answer: Employers who fail to purchase Workers' Compensation insurance
are in violation of the California Labor Code. The Director
of the Department of Industrial Relations has the authority
to issue
a stop order against any company who is discovered to be
unlawfully uninsured for Workers' Compensation. A stop order
closes down
business operations until Workers' Compensation insurance
is secured. Besides issuing a stop order, the Director can
assess
fines based
on whether a company has been discovered to be unlawfully
uninsured through normal investigation or through the filing
of an injured
workers claim with the Uninsured Employers Fund. Failure
to comply with a stop order can result in a $10,000 fine,
while
the fine
for failure to carry Workers Compensation insurance is $1,000
per employee. Employers can be prosecuted for insurance fraud
for willful failure to secure Workers' Compensation insurance
as prescribed by law. Also, if Workers Compensation is not
purchased, an employer opens himself/herself up to liability
lawsuits from
injured employees. Exclusive remedy protection does not apply
if Workers' Compensation insurance is not in force at the
time of employee injury.
Question: Should I report every work related
injury
no matter how minor?
Answer: As of January 2003, California law requires doctors to report
employee injuries to the employer’s Workers’ Compensation
insurer regardless of the size
or scope of the injury. The good news is that First Aid injuries
will not appear on your loss run or affect your premium.
Even
if you pay the employee’s First Aid treatment yourself
and there’s a full recovery you should still report
the claim. It will give your insurer a factual record of
the injury
that can protect your HOA from future litigation.
Question: How do
I report injury?
Answer: Download & print the Workers' Comp Loss Form (DWC 1). http://www.dir.ca.gov/dwc/DWCForm1.pdf Fill
out the form as per the directions. Retain a copy for your records.
Give a completed copy to the injured worker. Submit the form
to your Workers’ Compensation Carrier as per the information
included in the policy and carbon copy us. If you do not have
information in your policy about where to submit, then submit
directly to our office and we will connect you with the appropriate
party. Our contact information is as follows:
Timothy Cline Insurance Agency, Inc.
Attn: Claims Department
725 Arizona Avenue, Suite 200
Santa Monica,California 90401-1713
Fax: (800) 736-3830
info@timothycline.com
Question: What if the employee refuses to see
a doctor?
Answer: Make sure you report the injury to your Workers’ Compensation
carrier regardless of whether or not the employee opts for
medical attention. If they do refuse treatment, make sure
you document
that treatment was offered & refused.
Question: My HOA didn’t
file any WC Claims last year. Why does our premium continue
to rise?
Answer: It’s important to keep in mind that as the cost of health
care rises, so will the cost of Workers’ Compensation premiums.
A person isn’t necessarily entitled to the health care
prices from 1985 just because they haven’t been ill since
that time.
Other factors include the economy, fraudulent claims, and
evolving workplace hazards such as asbestos, carpal tunnel
and terrorism.
Question: How do I keep my premiums as low as possible?
Answer: Prevention, prevention, prevention. Promoting a safe work
environment is the best way to prevent the possibility
of injury. Take
a look around the work place take notice of any potentials
for
injury such as a crack in the sidewalk or exposed wiring.
If any tools are required to do the job, ensure they are
in a
proper working order. Most importantly, take time with
your employees
to make sure they are aware of the proper safety procedures
required to perform their duties.
Whenever possible try to provide your employees with an
ergonomic work environment as well. Remember, injuries
can occur as
the result of a specific accident as much as they can be
the result
of a series of activities which wear down on the body or
mind over a period of time.
Since the majority of employees for a homeowners association
consist of groundskeepers, this link offers helpful preventative
suggestions for keeping on the job injuries as low as possible. http://www.thezenith.com/employers/services/pi/indsaf/grounds/rmb/groundskeeping_injuryillnessprevention_rm116.pdf
Question: My
HOA already paid the premium for the Workers' Compensation
policy at the beginning of the policy term. Why did we
just receive another invoice? Do we have to pay it?
Answer: The most likely cause of the most recent invoice is the
result of information your association provided during
the most
recent audit. Your Workers’ Compensation carrier has the right
conduct a payroll audit throughout the policy term. If the results
of the audit show more employees or a higher payroll than the
association originally mentioned the carrier will submit a follow-up
invoice for the difference. And yes, you are required to pay.
Failure to pay in a timely manner may result in cancellation
of the policy.
By the same token, if the association’s audit reveals less
employees or a smaller payroll than originally intended a premium
decrease will occur leading to a credit to the association. Increases & decreases
depend entirely on the accuracy of the information submitted
to the carrier at the time of binding. If the association
experiences payroll as projected from the beginning the
policy will neither
increase or decrease.
Question: I noticed that
our Workers’ Compensation policy actually
consists of two coverages, Workers’ Compensation and Employer’s
Liability. What is the difference between these two coverages?
Answer: Employer’s Liability is actually part II of most Workers’ Compensation
policies. While Workers’ Compensation (Part I) is designed
to protect the employee by providing for medical expenses, a
percentage of pre-injury salary, vocational rehabilitation and
Return to Work Assistance, it does not by itself provide any
protection to the employer from liability for negligence or failure
to maintain a safe work environment. This is where employers’ liability
coverage comes into play.
Take, for example, an employee slipping and falling because
a section of the floor was wet. The first part of the Workers’ Compensation
policy would take care of their medical bills, but Part
II would protect the employer for negligently allowing
that spot on the
floor to be wet.
While it is designed to protect against negligence or failure
on the part of the employer it is not designed to encourage
it. The policy will exclude any intentional negligence
or failure. Employers’ liability is not meant to be a safety net against
providing a safe working environment. If the employer had been
warned about the wet floor condition, but did nothing to correct
the problem they would not be covered under Part II of the Workers’ Compensation
policy.