What penalty can an insurance company get for not paying a worker's lump sum compensation?


Quick Answer

Penalties vary for cases in different states, as reported by the Department of Labor. Individuals who have been injured on the job should contact a state compensation official for information on specific penalties and laws as federal laws are not in place for worker's compensation.

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Full Answer

Federal employees and certain federal contractors are covered by federal worker's compensation and are the only workers for which federal law dictates specific penalties, as the Department of Labor explains. Employees of private companies are enrolled in other workers compensation programs. These programs differ by state, and the local laws governing them usually require a percentage penalty or a specific lump sum amount to be paid within a specific period of time to the beneficiary. Interest payments are also owed to the worker if the company makes late payments or no payments.

Employers may be required to obtain insurance for all employees, as stated by the National Federation of Independent Business. In some states, the employer makes workers compensation payments directly to the work and would be held responsible for the penalties and interest associated with payment avoidance. Workers should find and contact the correct responsible party for their payments by inquiring with the state workers compensation official.

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