EMPLOYED MINORS AND WORKERS COMPENSATION INSURANCE

(December 2020)

BACKGROUND

Labor laws limit the amount of time a child or minor can spend at work, and the type of work a child may perform. These laws vary by state, but their purpose is to protect children from abusive or inappropriate work situations.

Some states require that minors obtain work permits or certificates before they are hired. These documents provide information on the minor, including his or her age, and refer to the labor laws of the state involved and any limitations or restrictions that apply. They must be given to the employer at the time of hire.

Workers compensation coverage responds to injuries to minors the same way it does for regular employees when the employer obeys state laws. The insurance company pays benefits on the employer's behalf according to the workers compensation law that applies if the minor employee is injured on the job.

The employer that violates the law by hiring minors without the required work permit or by having minors work excessive hours or at excluded activities acts illegally and is subject to penalties and fines.

PENALTIES

Each state's workers compensation laws specify the penalties and sanctions for employers that act illegally. The point when they apply is after a workers compensation claim is made. The minor is entitled to an excess payment beyond the state’s benefits. The insurance company pays only the benefits due as if the minor was employed legally. The employer is responsible for the excess required above and beyond those benefits.

Part One–Workers Compensation Insurance, F. Payments You Must Make, requires that the named insured employer pay for employment that violates the law or for improper conduct. In addition, it must also reimburse the insurance company for any payments it made that the employer should have made under those circumstances.

As a result, if the named insured employer knowingly and illegally employs minors, the resulting penalties and sanctions are strictly enforced, and the named insured must pay them, not the insurance company. The employer controls hiring and must obtain birth certificates, social security numbers, and all required work permits and certificates. In nearly all cases, the employer is legally responsible for hiring minors, even if it did not know about the details or received with false information.

EMPLOYERS LIABILITY EXCLUSIONS

Part Two–Employers Liability Insurance applies specifically to employer’s liability. C. Exclusions, 2. states that coverage does not apply to punitive or exemplary damages because of bodily injury to employees whose hiring violated the law. C. Exclusions, 3 states that coverage does not apply to bodily injury to employees that the named insured employer hires in violation of the law that it or its executive officers knew about.

Any employer’s liability award made for punitive or exemplary damages is excluded, whether or not the employer knew the minor was employed illegally. Even if the employer did not know the minor child's age at the time of hire, the insurance company is not responsible for excess payments that result from punitive damages. It pays only the benefit amount the state workers compensation law requires for the injury.

If the employer or any of its executive officers know about a situation that involves illegal employment, Part One–Workers Compensation Insurance still applies. However, Part Two–Employers Liability Insurance does not. This means that coverage does not apply to any bodily injury in cases where the minor waives recovery under workers compensation coverage and makes a claim or brings a suit under employers liability coverage.

STATUTORY APPLICATIONS

Most states establish the benefits that minors employed illegally receive. A few provide increased benefits in amounts that range from an additional 50% to 200% or more of the stated benefits. In states where workers compensation laws prescribe benefits for minors at either the established amount or at the increased percentage amount, recovery is based on the workers compensation laws, not on employers liability.

HOMEOWNERS EMPLOYING CHILD LABOR

The analysis to this point has emphasized commercial employment. It now addresses personal exposures. This involves situations where an insured homeowner uses a minor child to do certain types of work at the residence premises, such as babysitting, housework, painting the fence, or mowing the lawn. Is this form of employment subject to workers compensation legislation?

This is a difficult subject. In most cases, the types of jobs minors do for homeowners are usually the same as the work that domestic employees perform. A homeowner who uses a minor's services must understand and follow the state law that applies to determine if workers compensation coverage for domestic employees is needed. In most cases, coverage triggers based on the type of work performed, the number of employees, and the number of hours worked.

A homeowner must also be aware of state laws that involve work permits or certificates when minors are employed. The homeowner must not exceed any limitations or restrictions with respect to the type of work the minor performs or the number of hours he or she works.

Example: Alaska does not require homeowner "employers" to provide workers compensation insurance to part-time babysitters. This means the "employer" does not have to purchase workers compensation insurance for minors who occasionally provide baby-sitting services. However, the “employer” must know the minor's age and the number of hours he or she is allowed to work. The homeowner "employer" is subject to fines and penalties if the minor is employed illegally, based on the minor's age and the number of hours worked.

Note: Just because workers compensation insurance is not required in certain cases does not mean that the homeowner "employer" is not responsible for injuries to a minor who performs work or provides services similar to a residence employee. The homeowner "employer" should consider adding workers compensation coverage to its homeowner’s policy in order to protect his or her personal assets in situations when permitted to do so. Otherwise, other endorsements and options may be available.

Related Article: Voluntary Compensation Insurance