What should I do if my employer doesn’t have workers’ compensation insurance?

Learn about your legal options if you’ve been injured at work and your employer doesn’t carry workers’ comp insurance.

Question: I work at a small restaurant as a dishwasher. The other day at work, I slipped on something wet and broke my leg in two places. My doctor said I need surgery and physical therapy and that I’ll need to be off work for several weeks. I want to file a workers’ compensation claim, but my supervisor told me that our company doesn’t carry workers’ compensation insurance. My medical bills are starting to pile up, and I’m worried about how I’m going to support myself while I’m not working. What should I do?

Answer: When employees are injured at work, they usually have to go through their state's workers’ compensation system to get reimbursed for their medical treatment and receive other benefits, like partial wage replacement when they’re away from work because of their injuries.

In almost every U.S. state, the vast majority of employers must carry workers’ compensation insurance, either through a third party insurance carrier or through a self-insured program set up by the employer. In most states, employers must get workers’ comp insurance when they hire just one employee. In other states, employers only need to get insurance when they hire a few employees, usually between two and five.

But what can you do if your employer doesn’t have this insurance?

Most states will allow employees in your situation to sue their employers in court, through a personal injury claim. There are some benefits to a personal injury lawsuit as opposed to a workers’ comp claim. For one thing, you can seek the full amount of your losses (or “damages,” in legalese) without being subject to an arbitrary cap set by law. (Most states only pay around two-thirds of the worker's wage loss for temporary disability benefits, only up to an established maximum amount, and for only a limited period of time.) Another benefit of a personal injury lawsuit is that you can collect money damages for the emotional distress caused by your injuries (called “pain and suffering” in legal jargon). You may also be able to collect "punitive damages," which are intended to punish the employer if its particularly bad misconduct caused your injuries. Neither of these types of awards is available through workers’ comp.

However, there are also drawbacks to suing in court. It can be a much slower process. While you might receive benefits through workers’ comp in a matter of weeks, it can be months or even years before you see any money through a lawsuit. Also, unlike workers’ compensation—which is a no-fault system—you’ll need to prove that your employer was at fault for the personal injury accident. You should talk to a lawyer right away so that you can start the process and make sure your suit is filed in the proper legal timeframe.

There are a couple of other ways that you can seek compensation for your lost wages and medical treatment. Many states have special funds reserved for people who are injured while working for an uninsured employer (often called “Uninsured Employers’ Funds”). You may be able to get your medical bills covered by this fund or receive payments for a portion of your wage loss from the fund. Check with your state’s workers’ compensation office for more information on how to file a claim. A few states also have temporary disability insurance programs, which may provide you with short-term benefits while you’re unable to work.

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