Author: Bob Walton |
The new (revised) Iowa workers’ compensation law does not specify responsibility for notifying Iowa business owners of its existence. At the Walton Agency, it is our opinion the Iowa Workers’ Compensation Division, as the governing body, should have been made totally responsible for notification, a flaw that must be rectified as soon as possible. The law became effective, July 1, 2015.
It is obvious that if an Iowa business is to fulfill its filing requirement under the law, it must first be made aware of the existence of the law and its broader filing requirements. As of this writing, that critical notification process has been left to others to perform; namely, the insurance companies and the agents who represent them. It is at this point the flaw becomes apparent.
Neither the insurance agent nor the insurance company should be expected to possess knowledge of a business entity with which they have no relationship what-so-ever. These anonymous businesses will remain anonymous and not appear in any single data base. Many will fall through a proverbial crack in the notification process. The primary focus here are the thousands of small businesses, many of which carry no workers’ compensation insurance, but who retain a filing requirement under Iowa law. This poses a large, though entirely unnecessary, legal trap for all parties involved.
Many insurance companies and agencies will assume the notification responsibility for their existing insureds as a normal part of due diligence; they will post their website and mail a client advisory letter. However, through this existential act, they may violate some legal standard of care unknown to them at the time. Unfortunately, the unknown standard may be defined in an adverse court judgment. I.e., the agent’s notification process was not conducted in an accurate and thorough manner, as a prudent man would certainly do. Every agent and agency should consult an attorney on these legal issues.
For existing insurance agency customers, many agents will continue to process the workers’ compensation exemption forms for the newly classified sole proprietors, LLC members and partners, just as they have done for corporations over many years. In the vast majority of cases, they will be successful in properly carrying out the notification effort. But one must understand the inherent legal risk of assuming this undefined duty and proceed with enlightened caution.