How Does Workers’ Compensation Work?


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Injured employees across the country are able to receive medical treatment and have a portion of their wages replaced after being injured in a work-related accident or becoming ill on the job through the workers’ compensation program. Employers and employees both have a number of responsibilities under the program.

General Information

Workers’ compensation is a type of insurance program that insures employees for illnesses and injuries that arise out of the job. The program is mandated by the state, and each state establishes different rules for when an employer must acquire such insurance.

Employees benefit from the program by receiving medical care after sustaining an injury or illness that is work-related. Injured employees receive a certain portion of their wages while they are off work for the treatment of such injury or illness, depending on state rules. States also establish their own rate of compensation when an employee loses a member, is permanently disabled or dies as a result of the work-related accident.

Workers’ compensation is a no-fault insurance program, meaning that the injured employee does not have to go the traditional tort route of proving negligence in order to recover. In exchange, the employee generally cannot sue the employer for his or her injuries.

Covered Employees

Each state establishes its own parameters about when an employer must acquire such insurance. Some states have a rule regarding the minimum number of employees that an employer has to have in order to be required to purchase workers’ compensation insurance. Other states require workers’ compensation if the employer has any employees at all.

States may also exclude certain industries from coverage. For example, a state may exclude agricultural workers, domestic workers or seasonal workers from having to be covered. If such individuals are injured on the job, they may have a claim under a tort theory of liability but would not have a claim under a workers’ compensation program. Additionally, independent contractors are also usually excluded.

Covered Injuries

Workers’ compensation coverage is meant to compensate employees who sustain work-related injuries. Some states further expand this definition to include illnesses that are work related. Other states only allow specific illnesses to trigger coverage.
The work-related injury may not have to be caused by a single incident. For example, repetitive stress injuries or an illness that results because of continued exposure to certain chemicals in the work environment may trigger a workers’ compensation claim.

Employees do not necessarily have to be at work to be covered under such programs. If they are completing a work-related task at their employer’s request and are injured in the process, workers’ compensation may cover these injuries. However, workers driving to and from work who are injured are generally not considered to be work-related accidents.

Additionally, some states allow employers to conduct a drug or alcohol test after an accident and will hold the employer blameless if the employee fails such a test. Workers’ compensation also does not usually cover self-inflicted injuries or intentional acts of the employer or other employees.

Benefits

The types of benefits that are available to an injured worker depend on the nature of the injury, state requirements and the benefits included as part of the policy. In addition to the payment of medical expenses and wage replacement, workers’ compensation may also include vocational rehabilitation, compensation for permanent injuries and survivors’ benefits.

States vary as to how medical providers are assigned to the case. Many states allow employers to send the injured employee to the medical provider of their choosing. However, some states allow injured workers to visit their own healthcare providers if they formally make such a request.

Claims Process

Both employers and employees have a number of obligations under the workers’ compensation system. Employers are required to carry workers’ compensation insurance. This may be achieved by purchasing the insurance from an insurance broker registered in the state or through self-insurance. If the employer fails to carry the necessary coverage, it can be fined and may face an employee lawsuit in court.

Injured employers must report their injuries to the employer. There may be a specific form that they must submit to the employer. If the employee does not report the injury within a certain period of time, the employee may lose his or her right to receive benefits. Employers may also be required to provide employees with fact sheets or pamphlets regarding their rights and responsibilities that employees should review. If the employee is confused about his or her rights or responsibilities, he or she can contact the state agency that is responsible for administering the workers’ compensation program.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.

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