What Is Workers’ Compensation?

Workers’ compensation was created to protect employees from being injured or becoming ill at work. The coverage is managed and administered by the U.S. Department of Labor, which also offers several programs and resources to prevent work-related illness and injury in the first place through their Workplace Safety and Health Services.

Workers’ compensation coverage is required for several businesses and industries, including those in the private and public sectors, as well as federal workers and their dependents. There are special programs for certain groups and circumstances, too, helping to alleviate the financial burden that comes from being injured at work.

Here’s what you need to know.

The Basics of Workers’ Compensation

While the federal program is managed by the Department of Labor, each state is generally responsible for managing its own claims and coverage. The requirements for coverage vary from one state to the next and Texas is currently the only state that doesn’t require employers to have workers’ comp insurance. This is essentially a disability insurance plan for employees that can provide:

·  Cash benefits for lost wages

·  Healthcare benefits and coverage related to the injury/illness

·  Vocational rehabilitation services

·  Other related costs and benefits

The important thing to understand about this coverage is that by accepting the benefits, employees waive the right to sue their employer for related damages. That means that if Jeff slips on a mess someone didn’t clean up at work and he files a workers’ compensation claim to get treatment for his broken arm, he can’t come back in 10 years and try to sue his employer because he now has chronic back problems that originated from the fall.

Granted, there are exceptions and extenuating circumstances that need to be considered on a case-by-case basis. However, the general rule of thumb is that if you take a workers’ compensation settlement or use the benefits, you’re giving up your right to sue for any current or future related issues.

What Does Workers’ Compensation Provide?

Once a workers’ compensation claim is approved, it will provide salary replacement for any work missed that is related to the injury or illness. It’s important to note, however, that most state programs only pay two-thirds or less of the worker’s salary (gross) while they are off work on a workers’ comp claim. The good news is that these benefits usually aren’t taxable, which helps compensate for some of the loss.

Workers’ compensation benefits cover all medical expenses and healthcare costs related to injuries or illnesses that happen on the job. This can include rehabilitation and long-term care costs, as well as acute care for emergencies and urgent situations. Again, the exact coverage will vary based on the state where the business operates.

Workers’ compensation can also pay benefits to the dependents of workers who die as a result of a work-related incident. Again, the exact coverage will vary by state. The Department of Labor has a list of State Workers’ Compensation Officials that provides information on who to contact in your state.  

Disputes and Resolutions

Employers do retain the right to challenge or dispute workers’ compensation claims. This can only happen, however, if they truly feel that the injury or illness was not work-related or if it happened under suspicious circumstances. For example, if a worker fell off scaffolding, but was intoxicated at the time because they had been drinking on the job, the employer could dispute the claim, and likely win their argument.

Whether you are an employer or an employee, half the battle in understanding workers’ compensation comes in getting to know the programs, how they work, and what’s required by law.