Iowa workers’ compensation insurance and how coverage protects employees and employers

How do Iowa employers and employees benefit from workers’ compensation?

Workers’ compensation can have benefits for both employees and employers in the state of Iowa. Should an employee experience a work-related injury or occupational illness, workers’ comp can provide medical benefits and partial wage replacement if the injury requires missing time from work to recover.

For employers, a workers’ compensation policy can also provide peace of mind — as in most situations, the insurance offers the company protection from legal claims that might arise if an employee gets sick or injured while working.

Which employers must have workers’ compensation in Iowa?

In Iowa, the workers’ comp law requires most employers to provide wage loss and medical benefits to employees who are injured or contract an occupational illness while on the job.

Are there any exceptions?

There are various types of employees or individuals who are not covered by workers’ compensation insurance. Here are some examples:

• Independent contractors, partners in a partnership, or members of an LLC that are not employees are not covered by Iowa workers’ compensation law. If they choose to, each may purchase insurance that expressly includes them. See FAQ’s for more information
• Domestic and casual employees who earn less than $1,500 from their employer during the 12 consecutive months prior to the injury.
• Agricultural employees whose employer has a cash payroll of less than $2,500 in the calendar year preceding the injury.
• The spouse of the employer, parents, brothers, sisters, children and stepchildren of either the employer or the spouse of the employer, and the spouses of the brothers, sisters, children, and stepchildren of either the employer or the spouse of the employer.
• Exchange labor in agricultural employment.
• The president, vice president, secretary, and treasurer of a family farm corporation and their spouses, and the parents, brothers, sisters, children, stepchildren, and their spouses of either the officers or their spouses.
• Police officers and firefighters who are entitled to benefits under pension funds  established by Iowa Code chapters 410 and 411.
• A proprietor or partner who is actively engaged in the proprietor’s or partner’s business on a substantially full-time basis.
• The president, vice president, secretary, and treasurer of a corporation (other than a family farm corporation), not to exceed four officers per corporation, may elect not to be covered under the workers’ compensation law. In order for the rejection of coverage to be valid, a “rejection of workers’ compensation or employer’s liability coverage”(a form available through the Workers’ Compensation Commissioner’s office) must be completed. (See Appendix O)
• Employees who are entitled to benefits under any rule of liability or method of compensation, for employees, established by the Congress of the United States.
• Members of a limited liability company. Proprietors (independent contractors), partners and limited liability company members are not considered employees but may elect to be covered by purchasing a valid workers’ compensation insurance policy specifically including the proprietor or partner.

How does an Iowa employer purchase workers’ compensation?

An employer in Iowa may purchase a workers’ compensation policy through a private insurance company or become self-insured by meeting certain requirements of the Iowa Insurance Commissioner. When an employer chooses self-insurance, it means they can pay their own workers’ compensation claims instead of submitting them to an insurance company.

Keep in mind that it is against the law for an employer to take deductions from an employee’s earnings for the purpose of paying workers’ compensation insurance premiums.

When do employees need to communicate an incident to their employer?

An employer must have notice or knowledge of an alleged injury from their employee within 90 days of when it occurred, according to the Iowa Division of Workers’ Compensation employer’s guide. The 90-day period begins to run when the employee knew, or should have known the injury arose out of and in the course of employment.

Per the Iowa Workforce development website, once an employer is aware of the incident, they are responsible for filing a First Report of Injury (FROI) with the Iowa Division of Workers’ Compensation (DWC) within four days when the injury results in:

• Temporary disability for a period longer than 3 days
• Permanent partial disability
• Permanent total disability or death

All incidents (either injury or illness) must be reported through Iowa’s electronic data exchange.

Are there penalties for employers who do not carry workers’ compensation?

Failure to maintain workers’ comp insurance is a serious civil and criminal offense in Iowa. If a company willingly and knowingly lacks coverage, it is a Class D felony. A felony of this level is subject to five years in prison and fine ranging from $750 to $7,500.

Additionally, any employer who fails to provide insurance coverage for eligible employees, as the law provides, may be liable to an employee for either workers’ compensation benefits or for damages in a civil action.

More workers’ comp resources for Iowa employers

• Iowa Employer’s Guide to Workers’ Compensation
• Iowa Division of Workers’ Compensation
• Questions and answers brochure for Iowa employers
• Iowa Workers’ Compensation Law