Insurance Journal reports that repetitive stress injuries, like carpal tunnel syndrome, are one of the 10 most common Workers' Comp injuries, costing employers $1.8 billion each year.
You might be thinking, "Hey, I'm a programmer. My work isn't exactly the most dangerous." That's true – you don't work with any wild animals or rotating blades. But this research shows that even if you're sitting at your computer all day, you could still suffer one of the most common (and expensive) workplace injuries.
Repetitive motion injuries are caused by performing small physical motions over and over. Tech workers are at risk because of all the typing and clicking they do. These problems typically include lack of ergonomic seating, adequate keyboards, and appropriate desk height (see OSHA's recommendation for computer workstations).
Because IT contractors are exposed to RMI risk, we'll answer three basic questions about Workers' Comp liabilities and your coverage options:
- How much does a typical Workers' Comp injury cost for an IT company?
- Are IT contractors required to have Workers' Compensation Insurance?
- How much does Workers' Comp Insurance cost?
How Much Does a Workers' Comp Injury Cost for an IT Company?
One reason that a Workers' Comp claim is so expensive for small-business owners and IT companies is that for every work injury or illness, you'll have to pay a variety of costs, such as…
- Medical treatment expenses.
- Rehabilitation or physical therapy expenses.
- Reimbursement for lost wages.
Because repetitive motion injuries are common among tech workers, we'll use carpal tunnel syndrome as an example.
First Hand Medical reports that surgery and therapy can cost $10,000. After surgery, an employee will need downtime for recovery, which can last between six weeks and three months. In that time, the employee may not be able to work, which means you'll have to pay for some lost wages.
For an employee making $45,000 a year, six weeks of lost income could amount to $5,000. This means that between lost wages and medical treatments, a simple repetitive stress injury could cost your business $15,000 to $20,000.
In reality, Workers' Comp costs are often much more than that. You'll lose productivity and need to hire temporary workers or part-time staff to make up for the time the employee misses. If an employee doesn't heal fully and needs more treatment, you could have to pay for additional surgeries and therapy.
Do Small IT Companies Need to Have Workers' Compensation Insurance?
Workers' Comp laws vary from state to state. In some states, employers are required to have Workers' Comp Insurance even if they only hire contractors. In other states, you won't need coverage until you hire a certain number of employees.
It's usually a safe bet to assume that once your business expands and begins hiring its first employees, you're probably legally required to have Workers' Comp.
The benefit of Workers' Comp is that it shields you from the costs of work injuries, which as we saw above, can be exorbitant. Workman's Comp typically covers…
- Medical expenses.
- Physical therapy.
- Some lost wages.
- Disability and death benefits.
How Much Does Workers' Compensation Insurance Cost?
Workers' Comp costs vary from one IT business to the next. Let's assume you run a small business. On the low end, insurance for independent contractors and micro businesses can cost between $300 and $400 each year. On the higher end, Workers' Comp Insurance for more physically demanding tech work (i.e., telecom installation and cabling) could cost around $1,000 in annual premiums.
These costs are much, much lower than our $20,000 cost estimate for a repetitive motion injury. A mobile dev company with $400 premiums would have to be able to pay for 50 years of coverage before they spent $20,000. What does that mean? Workers' Compensation is not only legally required, but it makes financial sense given how expensive workplace injuries can be and how small premiums are in comparison.
To learn more about IT insurance, see TechInsurance's sample insurance quotes for IT professionals.