New Workers Comp Law Impacts Small Family-Owned Businesses

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Small family-owned and -operated businesses are not required to provide workers compensation coverage under a new law which takes effect Saturday.

Under Senate Bill 730, family businesses with five or fewer employees related by blood or marriage to the owner are exempt from mandatory workers compensation requirements.

"Philosophically, it's a great idea to grant this sort of relief to small family-held businesses," Labor Commissioner Brenda Reneau said Thursday. "Ideally, I would like to see all small business owners in similar situations receive the same benefit." At the same time, Reneau said the new law presents "an enforcement nightmare" to her agency and workers compensation underwriters, because it is not specific with regard to degree of blood relationship. However, she said the labor department will recognize blood lineage so long as companies are prepared to provide proper documentation to support this claim. The new law also strengthens fines for non-compliance and for employer-coerced fraudulent applications for certificates of non- coverage for employees. "The new law gives employers the benefit of the doubt initially," said Reneau. It reduces fines for business owners who fail to provide coverage for their employees from $250 to $75 per employee if coverage is obtained within 30 days of receiving a citation. Reneau said the first-offense $75 fine generally covers administrative costs associated with issuing a citation. Beginning Saturday, the civil penalty for employers who fail to provide workers compensation coverage on a second or subsequent offense increases from $500 to $1,000 per employee, up to a maximum of $10,000. …