For your business to thrive in Minnesota, it’s essential to understand and implement specific regulations. Operating a business without any knowledge of your local laws can result in legal repercussions and expensive penalties. It may even reduce your business’s lifespan.
Workman’s compensation and unemployment insurance are two of the most common terms you’ll hear when you start a business in Minnesota. While these programs might require additional costs, they can save you from litigation and expenses down the road.
This article will discuss workman’s compensation and unemployment insurance and answer whether these are public and private programs.
What is Workman’s Compensation?
Also known as worker’s compensation, workman’s compensation is a type of insurance that covers employees for any disabilities or injuries they may face on the job. States are responsible for regulating workman’s compensation. Under Minnesota law, all businesses are required to provide workman’s compensation for their employees.
What Are the Benefits?
Through the workman’s compensation, workers receive guaranteed compensation for major injuries or disabilities they may sustain at their place of work. While from a business standpoint it may sound like a negative to pay the associated expenses of workman’s insurance, it has a variety of benefits for businesses.
One of these benefits is that, because medical bills are covered, employees that aren’t completely and permanently disabled may recover faster. This will allow them to return to work so long as their condition improves.
Along with this, when employees accept workman’s compensation, they waive the right to sue their employers. This insurance protects you from paying expensive legal fees. In addition, a large-scale lawsuit may damage your company’s reputation, so having workman’s insurance in place negates this outcome.
How Does It Work?
Workman’s compensation isn’t deductible from the employee’s payroll taxes. As an employer, you are responsible for paying premiums to an insurance company, and it’s the insurance company that pays out for the employee’s medical expenses, lost wages, and retraining costs.
Workman’s comp insurance in Minnesota includes temporary total disability benefits (TTD), medical benefits (usually covers the cost of surgery, physical therapy sessions, and other medical expenses), and death benefits for fatal injuries.
The duration and amount of benefits an injured employee receives from the workman’s compensation depends on the severity of their injuries.
For example, if employees qualify for TTD because their injury prevents them from working, the employee will receive financial benefits in check that represents two-thirds of their average weekly rate.
Are There Any Penalties for Failing To Provide Workman’s Compensation?
Failing to meet the requirements of workman’s comp insurance in Minnesota can negatively impact your business. Usually, you will be prohibited from hiring new employees until you have insurance.
The state might also require you to pay a fine of up to $1,000 for every employee every week if you fail to provide workman’s compensation insurance. This means that the longer you operate without the insurance, the more expensive your fines can get.
What is Unemployment Insurance?
Unemployment insurance or UI is another type of state-provided insurance that gives financial benefits to individuals who lost their jobs but met certain eligibility requirements.
To qualify for this insurance in Minnesota, an individual must be a state resident, have worked in Minnesota during the past 12 months, and earned within a certain wage threshold as stipulated by the Minnesota guidelines.
Generally, individuals who were fired from their jobs or quit aren’t qualified to receive financial benefits from unemployment insurance. Simply put, only those who were separated from the job at no fault of their own qualify for this insurance.
What Are the Benefits?
Unemployment insurance usually lasts up to 26 weeks and aims to replace at least half of the employee’s previous wages. This is especially important during a recession and can help employees pay their bills without being employed.
How Does It Work?
The benefits provided to the employees under unemployment insurance are funded by state and federal taxes paid by employers. The Federal Unemployment Tax Act (FUTA) covers the administrative costs of unemployment insurance and is filed by businesses once a year.
As a business owner in Minnesota, you are required to pay state and federal unemployment taxes if you pay wages to employees totaling at least $1,500 in any quarter of a year or if you have at least one employee working 20 weeks in a calendar year.
Are There Any Penalties for Failing to Pay FUTA?
You’ll face several consequences if you fail to file and pay FUTA on time.
If you fail to pay FUTA on or before the due date (January 31), you’ll have to pay a penalty between 2% to 15%, depending on how late your payment is and whether you received a notice from the Internal Revenue Service (IRS).
Your penalty may increase as you continue to incur charges. Depending on the amount of money you owe, the IRS might charge you with an interest rate of 3% to 6%.
If local authorities think that you’re trying to evade taxes on purpose, they might subject you to even more penalties, jail time, or both.
Are Workman’s Compensation and Unemployment Insurance Public or Private Programs?
Both the workman’s compensation and unemployment insurance are public programs mandated by the government. There are laws in Minnesota that require employers to purchase workers’ compensation insurance (or become self-insured before starting its operations) and register with the Minnesota Unemployment Insurance or UI Program.
Having extensive knowledge about unemployment insurance and workman’s comp insurance in Minnesota is key to protecting your business. When you know how to maximize the programs, you can avoid spending an excessive amount of money or getting into legal trouble.
If you need professional help concerning unemployment insurance and workman’s comp insurance in Minnesota, feel free to contact us at Osterbauer Law Firm. Our team comprises highly experienced lawyers who can provide high-quality legal services to your business.