Most Illinois businesses with employees are required to pay for workers' compensation insurance (WC or workers' comp insurance). The insurance provides compensation to employees who suffer work-related injuries. Here are some basic facts that you need to know about workers' comp insurance in Illinois as a business owner and employer.
If your Illinois business has just one employee, even if the employee is part-time, you're required to carry workers' compensation insurance in virtually all cases. Business owners, such as members of LLCs, corporate officers, partners in partnerships, and sole proprietors, usually are not required to be covered by workers' compensation insurance. However, owners of businesses engaged in extra hazardous occupations, such as construction, are required to be covered by WC insurance in almost all cases.
The Illinois Workers' Compensation Commission (IWCC) is the primary state agency that handles workers' comp claims. Most of the law for WC insurance is contained in Illinois's Workers' Compensation Act (820 ILCS 305). In addition to the Act, there are also administrative rules (Title 50, particularly parts 9010 through 9140) that cover workers' compensation in Illinois.
In Illinois, workers' compensation insurance is available through private insurance companies. The IWCC has a website where you can search for insurers. If your business is unable to obtain coverage through a private insurer, you can get coverage through the state's insurer of last resort, which is administered by the National Council of Compensation Insurance. However, premiums through the Council can be 50% higher than through private insurers. There is also an option to self-insure, but this may not be advisable for smaller businesses, in part because it requires that a lot of money be set aside to cover potential claims.
An injured employee usually must notify you if he or she is injured at work. The notice can be oral or in writing. An employee must notify you of the injury within 45 days of the date of the injury.
After you receive notice from the employee, inform your WC insurance carrier or WC administrator. You must do this even if you want to dispute the employee's injury claim. If the employee cannot work for more than three days because of the injury, you also must do one of the following:
If an injury causes an employee to miss more than three days of work, you also must file a Form 45, Employer's First Report of Injury, with the IWCC. You should submit reports electronically through the IWCC website. Minor injuries, such as those only requiring first aid, do not need to be recorded or reported.
Beyond these initial steps, there are subsequent steps to the WC claims process, not covered here. The IWCC has a handbook with details.
If you think your employee's workers' comp claim is partly or totally invalid, and therefore don't provide benefits to the employee, the employee will file a Form IC-1, Application for Adjustment of Claim (Application for Benefits). In most cases, an employee must file with the IWCC within three years of the injury or else lose his or her right to benefits. The IWCC assigns a case number and an arbitrator to the matter when it receives the application. Within three months, or sooner in certain emergency situations, there will be a so-called status call to check on the status of the matter.
Beyond the status calls, an employer or employee may request a hearing. If no one requests a hearing, status calls will continue every three months for at least three years. Initially, hearings are conducted by IWCC arbitrators. An arbitrator's decision can be appealed to a state trial court. That decision can, in turn, be appealed in a state appellate court.
If you knowingly fail to carry workers' compensation insurance, you may be subject to a fine of $500 per day with a minimum fine of $10,000. Corporation officers can be held personally liable for fines. In addition, you will lose employer protections you would otherwise have under the Workers' Compensation Act. Some of the penalties are covered on an IWCC FAQ page.
There are many other workers' compensation requirements for Illinois employers, such as putting up posters about workers' compensation coverage where employees can see them, that are not covered here. The Nolo website has a section devoted to workers' compensation. In addition, the Illinois Workers' Compensation Commission website also contains many useful resources.