Under the workers' compensation system, employers are required to purchase insurance that provides benefits to employees who suffer work-related injuries and illnesses. The system strikes a compromise between employers and employees: Employees get benefits regardless of who was at fault. In return, employers get protection from lawsuits by injured employees seeking money damages for pain and suffering or mental anguish.
Workers' compensation is governed by state law, and each state's system differs slightly in the details. (There is a separate federal workers' comp system for those working for the federal government, such as U.S. Post Office employees.) However, the structure and operation of the overall workers' compensation system is very similar from state to state. The main differences are the rates paid to injured employees and the procedural rules employers, employees, and insurance companies must abide by.
To find out the details of your state's law, contact your state department of industrial relations or workers' compensation. You can also find information on state workers' compensation laws at the U.S. Department of Labor's website, www.dol.gov. From the home page, click "Audience," then "Employers," then "State Workers' Compensation Laws" (listed under the "Workers Compensation" heading).
What Does Workers' Compensation Cover?
Workers' compensation laws cover only work-related injury or illness. But, the injury or illness does not necessarily have to occur in the workplace. As long as it's job-related, it's covered. For example, employees are covered if they are injured while traveling on business, running a work-related errand, or attending a business-related social function.
Covered injuries and illnesses can range from sudden accidents -- such as falling off a scaffolding -- to injuries that happen over time, such as computer-related repetitive stress injuries (RSIs), or illnesses that result from exposure to workplace chemicals, air pollution, or radiation. For example, many workers receive compensation for repetitive stress injuries such as carpal tunnel syndrome and back problems. Workers also receive compensation for illnesses and diseases that are the gradual result of working conditions -- for example, heart conditions, lung disease, and stress-related digestive problems.
What Doesn't Workers' Compensation Cover?
Not all problems that occur in the workplace are covered. Coverage may be denied in situations involving:
- injuries caused by intoxication or drugs
- self-inflicted injuries
- injuries from a fight started by the employee
- injuries resulting from horseplay or violation of company policy
- felony-related injuries
- injuries an employee suffers off the job
- injuries claimed after an employee is terminated or laid off, or
- injuries to an independent contractor.
When Can an Employee Sue an Employer in Court?
Employers aren't protected from all employee lawsuits related to injuries. There are limited exceptions which would allow an employee to sue an employer in court, but they vary from state to state. In some states, if the employee is injured because of the employer's intentional or reckless actions, the employee can bypass the workers' compensation system to sue the employer in court for a full range of money damages, including punitive damages (intended to punish the employer) and pain and suffering (the mental anguish, physical discomfort, or overall loss of enjoyment of life caused by the injuries). The same is usually true if the employer failed to secure the required workers' compensation insurance.
Employees may also be able to sue outside third parties, such as when the employee is involved in a car accident that is someone else's fault or the employee was injured by a defective piece of equipment. For more information, see Nolo's article Workplace Injury: When You Can Sue Outside of Workers Compensation.
What Benefits Are Available Under Workers' Compensation?
The workers' compensation system provides:
- replacement income when employees are off work
- payments for medical expenses, including doctors' visits, surgeries, and prescription drugs, and
- vocational rehabilitation benefits -- including on-the-job training, education, or job placement assistance (depending on the state where the employee is injured).
An employee who is temporarily unable to work will usually receive temporary disability payments of two-thirds of the employee's average wage, up to a fixed amount set by law. An employee who becomes permanently unable to do the work he or she was doing prior to the injury, or unable to work at all, may be eligible for long-term or lump-sum benefits for permanent disability. The workers' compensation system also pays death benefits to surviving dependents of workers who pass away from work-related injuries.
What Are an Employer's Responsibilities for Workers' Compensation?
Employers have a number of obligations under the workers' compensation system. If these requirements are not met, employers can be fined and injured employees may be able to sue an employer in court.
Carry Workers' Compensation Insurance
If a business lacks the workers' compensation coverage required by law, employees may file a lawsuit against the business in civil court or, in some states, file a workers' compensation claim against a special uninsured employers fund (for instance, California has the Uninsured Employers Benefits Trust Fund).
Post Notices and Advise Employees of Their Legal Rights
Employers must post required notices in a convenient location frequented by employees during working hours. The notices or posters contain important information about employees' rights and:
- provide the name of the company's workers' compensation carrier, or the fact that the employer is self-insured, as well as who is responsible for claims adjustment
- state that injured workers have the right to receive medical treatment and to select or change treating doctors, and
- give details about available workers' compensation benefits.
Employers must also notify new hires of the above information.
Provide Claim Forms to Injured Employers
Employers must typically provide injured employees with a workers' compensation claim form within 24 hours of receiving notice of the injury. Employers must also supply the employee with written information (usually a pamphlet) about the employee's rights under the workers' compensation system. The written material should provide details about available benefits and how to file a claim.
For more information about employee health and safety laws, as well as other human resources issues, see The Manager's Legal Handbook, by Amy DelPo and Lisa Guerin (Nolo).