California Riding Magazine • March, 2010

Get Covered!
Workers compensation insurance
is critical in the horse industry.

by Polly Hey Panos, of Hey & Hey Attorneys at Law

We receive calls on a monthly basis from clients who are interested in protecting their liability. In general we help draft documents, form businesses, etc., however we always insist that our clients speak with an insurance agent to make sure they have the proper insurance as it is just as important as having the correct papers. We don’t get kickbacks from insurance companies, nor are we brokers ourselves. However, we feel strongly that our client’s interests are best served by having the proper insurance.

In the horse industry, workers compensation insurance is often overlooked by employers, perhaps because of the costs involved. For any person who has employees it is a critical investment. All employers are required under California law to carry workers compensation insurance, even if they only have one employee. Workers compensation insurance provides coverage if an employee is injured on the job.

In our office we see the need for workers compensation insurance most often when trainers or stable owners have grooms or assistants working for them. Often times people mistakenly believe that if they classify someone as an independent contractor then their classification legally makes that person an independent contractor and, thus, they do not need to carry workers compensation insurance. Most of the time this is not the case. In fact, the majority of the cases reviewed by the workers compensation board find that a person is an employee, not an independent contractor. The other mistake we often see is a person believing that they will self insure themselves and just pay the medical bills if a worker is injured. It is illegal for an employer to pay medical bills directly. Additionally, in order to self insure for workers compensation, a business must have state approval as well as a net worth of $5,000,000 and a net income of $500,000 a year.

Many people often ask if they can afford workers compensation insurance, and our response is that you, as an employer, can’t afford not to have it. Yes, it is expensive, but it is required by law and the penalties for not carrying it can be astronomical. The California Labor Code makes not having workers compensation insurance a misdemeanor punishable by either a fine of up to $10,000 or one year in the county jail or both. Additionally, there can be state fines of up to $100,000. On top of those fines an employer will be liable for a medical costs related to the injury, and the employee can file a civil suit against the employer in addition to the workers compensation suit. Finally, on top of all of those fines, the State Labor Commissioner can issue a stop order that prohibits the employer from using employee labor until workers compensation insurance is obtained and they can levy additional fines.

So where should you turn now? Workers compensation insurance can be obtained through an agent or broker of a privately licensed insurer who is authorized to write policies in California. If you are unable to find an agent to write you a policy, the State Compensation Insurance Fund, often referred to as the State Fund is required to provide coverage.