Workers Compensation - 7 Basic Facts for Employers
Workers' compensation is insurance paid by companies to provide benefits to employees who become ill or injured on the job. Through this program, workers are provided with benefits and medical care, and employers have the assurance that they will not be sued by the employee (in most cases).
Basically, companies pay into workers' compensation funds (both federal and state), like other types of insurance. Then benefits are paid to workers who become ill or injured while on the job. Payment for pain and suffering and negligence claims are not included in workers' compensation.
In each of the statements below, specifics differ from state to state. If you have questions about the worker's compensation laws in your state, contact your state's regulations on this list of state workers' compensation agencies.
Fact 1: Workers' compensation is required for all employers.
That statement is essentially true, but the level and type of coverage is different for each state. States differ in:
- Who are covered employees
- Types of injuries covered and proof
- Excluded injuries
- Statutes of limitations (the length of time an employee has to file a claim)
- Employer defenses against claims, including self-inflicted injuries, willful misconduct, and injuries with drugs/alcohol.
Employers may self-insure for workers' compensation, as long as their policy meets state regulation minimums. Most companies choose to belong to their state's workers' compensation program. Some federal companies are required to also have Defense Base Act insurance if hiring contractors on military bases overseas.
Fact 2: Worker's compensation covers long-term illnesses and injuries as well as incidents.
Workers' compensation benefit payments help workers by replacing their wages, paying for medical treatments, and providing vocational rehabilitation programs so they can go back to work. Death benefits are also paid for.
Some workplace injuries can occur over time or on a long-term basis; repetitive stress injuries like carpal tunnel, for example. Illnesses caused by exposure to a workplace environment, like black lung, are also considered work-related and are covered by worker's compensation.
Fact 3: Workers' compensation is paid by employers to a state fund.
As noted above, worker's compensation programs are administered on a state-by-state basis. The federal government administers separate worker's compensation programs for specific groups, including federal employees, longshore workers, and coal miners. Employees do not contribute to workers' compensation premiums.
The cost of workers' compensation benefits is based on the gross payroll and the number and severity of illnesses and injuries that type of employer experiences. For example, a manufacturing company would have higher workers' compensation costs than a professional practice.
Fact 4: Employees may be able to sue an employer for workplace injuries.
Although worker's compensation payments preclude employee lawsuits against employers, there are some circumstances in which an employee can still sue an employer for an on-the-job injury or illness for various reasons, including:
- If the injury was intentional on the part of the employer, or
- If the injury was outside the scope of the worker's job assignment.
Fact 5: Some workplace injuries are outside the scope of worker's compensation.
On the other hand, some workplace injuries are outside the scope of worker's compensation, and the injury or illness is not compensated by worker's compensation:
- If the injury was self-inflicted,
- If the injury happened during the commission of a crime,
- If the employee violated company policy, or
- If the employee was not on the job when the event happened.
Fact 6: Employees may not be discriminated against for filing a worker's compensation claim.
Under both federal and state laws, employers are prohibited from firing, retaliating against, or otherwise discriminating against employees who file worker's compensation claims.
Fact 7: Workers' compensation fraud can result in high fines and penalties.
Workers' compensation fraud by employers is usually undertaken to reduce premiums. Common examples of workers' compensation fraud include:
- Mis-classifying employees as non-employees or owners and
- Under-reporting the number of employees
Employees may also commit workers' compensation fraud by falsely claiming an injury. And sometimes providers contribute to the fraud by claiming fees for non-existent medical treatments or services.
For More Information:
You can find more information on federal worker's compensation programs on the website of the U.S. Department of Labor's Office of Workers' Compensation Programs.