Workers' compensation

How does workers' compensation work for a trucking and logistics business?

When an employee is injured or becomes ill because of the job, workers' compensation is the system that generally pays for medical treatment and replaces part of lost wages, and it provides death benefits to dependents if a worker dies, under the benefit rules your state sets. The U.S. Department of Labor lists workers' compensation benefits as wage replacement, medical treatment, vocational rehabilitation, and other benefits, and tells people hurt on the job while employed by private companies or state and local government to contact their state workers' compensation board.

Workers' compensation for most private employers is run by states, not by the federal government. The Department of Labor keeps a directory of state workers' compensation officials for each state and territory. Because each state has its own system, the details differ, including:

• Which employers must carry coverage, and how many employees trigger the requirement
• Who counts as an employee for coverage purposes, and how contractors are treated
• Whether owners and officers are covered, can opt in, or can opt out
• How benefits are calculated and how long they last
• How a policy is bought and where coverage is placed

Do not assume that what is true in one state is true in another. If you hire, run, or operate in more than one state, ask your state workers' compensation agency, and your insurance agent, how coverage applies in each. This page does not state any one state's rules.

Employer's liability. Many workers' compensation policies also include a second part, often called employer's liability, which generally responds to certain claims by or related to an injured employee that fall outside the workers' compensation system. Ask what your policy's employer's liability limit is and how it works.

Employees versus owner-operators and independent contractors. This is the question that matters most in trucking.

• Employees. Drivers, mechanics, dock and yard workers, dispatchers, and office staff who work for you as employees are generally covered by workers' compensation where state law requires it. The label on the pay stub does not decide it.
• Independent owner-operators. An owner-operator who runs under their own authority or leases onto a carrier is often treated as an independent contractor, not an employee, but this depends on the facts and on your state's tests. If you are a sole owner with no employees, workers' compensation may not apply to you at all. A private policy, such as occupational accident, is often used instead.
• Classification is a legal question. Whether a worker is an employee or a contractor is decided by the facts of the working relationship under the law of the state and, for other purposes, federal law. A contract that says "independent contractor" does not settle it. The IRS, for example, looks at behavioral control, financial control, and the type of relationship, and says there is no magic number of factors that decides it. That is a tax test, and your state may use a different one for workers' compensation.
• Federal safety rules use their own definitions. The FMCSA's safety regulations define "employee" to include an independent contractor while operating a commercial motor vehicle. That definition is for those regulations and does not decide whether a driver is an employee for workers' compensation.

Occupational accident is not workers' compensation. Occupational accident is a private policy with the benefits and limits written into it. It is often used by independent contractors, it is not a substitute for workers' compensation where state law requires workers' compensation, and having one does not change whether a worker is an employee under your state's rules. See occupational accident.

What does workers' compensation cover, and what doesn't it?

Benefits and coverage rules are set by state law and by the policy. Read your declarations, definitions, and exclusions. In general:

Often covered

• Medical treatment for a work-related injury or illness, as your state's rules define it
• Partial wage replacement while an employee cannot work, under the state's benefit rules
• Disability benefits and vocational rehabilitation, where the state provides them
• Death benefits to dependents, where the state provides them
• Employer's liability, if the policy includes it, up to its limit

Often not covered, or outside the policy

• Independent contractors who are not employees under your state's rules. See occupational accident for the private policy often used instead.
• Injuries that are not work-related, as the state and the policy define that
• Injuries to other people. If a visitor or a member of the public is hurt, that is general liability, or primary auto liability if a truck was involved.
• Damage to your trucks, trailers, tools, or freight. Those are physical damage, inland marine, and motor truck cargo.
• Employment-practices claims, such as discrimination or wrongful termination. See management liability.
• Workers in states or operations the policy does not list. Make sure the states where your people work are on the policy.

These are common patterns, not universal ones. State law decides much of this.

What affects the cost of workers' compensation?

We don't publish prices. Cost is set by insurers, the licensed agents you work with, and the rules in your state, not by BreadRoute. These are the factors that generally move it:

• Payroll. How much you pay in wages, and how that is reported
• Job classification. What each employee does. A mechanic, a driver, a dock worker, and an office employee are generally classified differently.
• State. Each state sets its own rules and rating approach, and employees working in more than one state may need coverage in each
• Claims history and experience. Your own record, and an experience rating where one applies
• Safety practices. Training, equipment maintenance, and a return-to-work process
• Number of employees
• Owners and officers. Whether they are included or excluded, where your state allows a choice
• Subcontractors and independent contractors. How they are classified, and whether you collect proof of their coverage
• Audit. Some policies are reviewed after the term against actual payroll and classifications, so ask whether yours is

Who typically needs workers' compensation?

• Small fleets: Once you have employee drivers, mechanics, or yard staff, workers' compensation rules are likely to apply. If you also use owner-operators, how you classify them matters. See occupational accident.
• Towing and repair: Tow operators and mechanics are hands-on jobs, and shop employees are usually employees. This is generally the starting point for injuries on the job.
• Brokers and dispatchers: Office staff and dispatchers are employees in most arrangements. Ask how your state treats a small office, and what it requires of you.
• OTR and local haul: Carriers with employee drivers. For owner-operators leased on, read the lease and your state's rules before assuming either way.
• Couriers: Courier fleets often have both employee and contract drivers. Classification matters.
• New authority: If you are a sole owner with no employees, workers' compensation may not apply to you. Once you hire, it likely will. See occupational accident for injury protection for yourself.