It's State Law

January 1, 2016

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(This article first appeared in the January-February 2016 issue of The American Postal Worker magazine.

Recently, an APWU local union received a “penalty assessment order” from a state agency that instructed the local union to pay $41,000 for failure to carry workers’ compensation insurance.  

The amount was based on 822 days of alleged non-coverage with a penalty of $50 per day. However, after closer scrutiny, it was discovered that the state agency had made a mistake in the number of employees and amount of payroll for the local.

There have been other instances where APWU state and local unions have had to pay fines and other penalties because they lacked state-mandated workers’ compensation insurance. The state fines vary: In Wisconsin the fine is $100 per day; in Virginia it’s $250 per day; in Illinois it’s $500 per day, and in New York it’s $200 per day.  

Unions often end up paying these fines because they are unaware of their obligation to maintain this type of insurance. Unfortunately, ignorance of the law does not exempt unions from responsibility.

Since local and state unions are treated as small businesses under state law, each local union that has employees must help fund the state’s workers’ compensation program. These employees can be full- or part-time union officers, stewards, or members, as well as non-postal office staff. If they are injured while working for the union, they are entitled to file for state workers’ compensation benefits.

Most state workers’ compensation premiums are computed based on the payroll of the local or state union. The rate structure for workers’ compensation coverage is established by each state. The premium is usually based on the nature of employees’ work and their estimated annual salary.

The idea behind workers’ compensation is simple: It’s a no-fault insurance program. As the employer, the union pays for workers’ compensation insurance and in return the union is covered for work-related accidents and injuries. Similar to OWCP, employees trade the right to sue their employer for the guarantee of replacement of their salary, reimbursement for medical treatment, and compensation for permanent or partial impairment.

Although an officer or steward would be covered by federal workers compensation while on official union time at the post office or while on official travel between post offices, when they are being compensated for working for the union, they must be covered under the state program.

For the most part, state worker’s compensation functions like federal programs. The three major components of worker’s compensation are compensation for lost wages and earning power, reimbursement for medical treatments, and benefits paid to dependents in the event of a worker’s death.

While these three components are standard and nearly universal, the qualifications, exemptions, exclusions, limitations, and mandates differ from state to state. In five of the 50 states, the workers’ compensation insurance is administered by what is known as the State Fund: North Dakota, Ohio, Washington, West Virginia, and Wyoming. Workers’ Compensation for these states should be secured directly with the State Fund in their respective areas. The State Fund will then issue the policy and collect the premium from the local union.

In the other states, the premiums and benefits structures are set by each state government, but the actual insurance coverage is provided by standard insurance companies and obtained through insurance agents.

Special problems may arise with local unions where the local payroll is small or the officers receive no pay at all. Never assume that you don’t need to have the insurance! Failure to maintain this mandated insurance can result in significant fines, especially if someone gets hurt while working for the union.

Workers’ compensation insurance is required by law in almost every state. Each state’s rules and requirements vary significantly. Union officials should contact the state agency or an insurance agent to determine if they need coverage and if so, the steps to secure coverage. Local and state officials can also call the Secretary-Treasurer’s Department if they have questions about this insurance.

What Does Your State Require?

Workers’ compensation insurance requirements vary from state to state. The differences can be substantial. Knowing the requirements of your state is essential to protecting your local. Some states never require workers’ compensation insurance, some always require it, and for some, whether it is required depends on the number of employees your union has.



Mandatory if …


5 or more employees


4 or more employees


3 or more employees


Annual payroll gross of $20,000 or less are exempt


Texas Worker’s Compensation: Except for public entities, which must have coverage, most employers have the option of obtaining workers compensation coverage or going without. However, employers must provide written, multi-lingual notification to new and existing employees detailing the extent of their workers compensation benefits. Moreover, “non-covered employers” with more than four employees must report workplace injuries to the Division of Workers’ Compensation. Due to increased liability, including forfeiture of certain common-law defenses, many employers opt for workers compensation coverage either in the form of a private insurance policy, self-insurance, or group self-insurance. Contact the Texas Division of Workers’ Compensation.


All other states

State workers compensation insurance is required if there are one or more employees.

W-2s and 1099s

Don't forget that local and state unions must issue 2015 W-2s and 1099s by Jan. 31, 2016. 

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