PAYING TOO MUCH IN WORKERS’ COMPENSATION INSURANCE PREMIUMS? HERE’S HOW TO GET SOME OF IT BACK.

Minnesota contractors pay millions of dollars annually to buy workers’ compensation insurance. As required by Minnesota law, all employers must have workers’ compensation insurance covering their employees. The purpose of the workers’ compensation system is to guarantee that employees hurt on the job will continue to receive a portion of their regular wage and have medical bills paid, all without the need to sue the employer to get it. In exchange for the certainty of receiving workers’ compensation benefits on a “no questions asked” basis, the employee gives up the right to sue his or her employer for an injury sustained at work.

Workers’ compensation insurance, like all other types of insurance, requires the employer to pay annual premiums for the coverage. Premiums are calculated based on numerous factors, including the number of employees, type of work, and prior claims. Common sense indicates that employers will pay higher premiums if they have a large number of employees working in an area with a greater risk of injury. Similarly, premiums generally increase as the number of claims made under the policy increase. Building contractors and subcontractors are frequently forced to pay higher premiums than other businesses because the risk of injury to employees in the construction industry tends to be greater than the risks associated with other types of work.

Contractors can make efforts to maintain a safe job site and thereby reduce the risk of employee injuries, but what happens when your employee is injured because of the negligence of another worker? Despite your best efforts to maintain a safe job site (and keep your workers’ compensation insurance premiums down), you are stuck with having to make a claim for your injured employee even though someone else caused the injury. The next time you want to renew your insurance coverage, you will likely pay a higher premium because of the claim. Most claims stay on your “record” for three years, resulting in increased premiums over that term.

Fortunately, Minnesota law provides a mechanism by which contractors may be able to recover increased workers’ compensation premiums if the incident giving rise to the injury is caused by the negligence of somebody else. Minn. Stat. § 176.061 permits an employer to bring a claim against anyone who causes injury to an employee and necessitates the payment of workers’ compensation benefits. The amount of money that may be recoverable is the difference in the amount of premium the employer is required to pay, versus the amount that would have been paid had the accident not occurred. Most insurance agents are able to calculate these numbers for you. Mid-size contractors can see premiums increase as much as $50,000 over the course of three years, all due to one on-the-job accident caused by someone else.

Here is an example of how this process works: During the construction of a three-story apartment building, ABC Electric Company has employees on the job running wiring throughout the first floor of the building. XYZ Drywall Company has employees on the third floor putting up sheetrock. ABC’s employee walks outside and past the dumpsters used to dispose of construction debris. At the same time, XYZ’s employee carries a load of scrap sheetrock over to a third floor window, and begins throwing the pieces out the window into the dumpster. A larger piece of sheetrock misses its target and instead hits the ABC employee in the head and neck, causing serious injuries. Because the ABC employee is hurt on the job, he receives workers’ compensation benefits. When ABC Electric Company tries to renew its workers’ compensation insurance the next year, it finds out that over the next three years, it will have to pay an additional $50,000 in premiums. In this situation, ABC Electric Company may be able to pursue a claim against XYZ Drywall Company for the increased premium.

Accidents on the job are inevitable. When they are caused by someone else, however, you may have a right to recover the additional money you pay for workers’ compensation insurance. Any time an employee is hurt on the job, do some investigation to determine whether there is a possibility that somebody else is at fault. Doing so may end up saving you a lot of money when it comes time to pay your next workers’ compensation insurance premium.

Ben Bohnsack is an associate attorney with Rinke-Noonan and practices in the areas of construction litigation, employment litigation and general civil litigation.