Workers compensation provides assurance to all workers, regardless of industry or job, that they will receive compensation for injuries received while working. Workers compensation covers office workers who are injured lifting boxes of office supplies in the store room just as it covers electrical line workers electrocute or burned while working on electric service lines.
The underlying principle of workers compensation is that workers are insured by their employer against on-the-job injuries in exchange for waiving the right to sue their employer for such injuries. This system is implemented through a set of laws that will vary from state to state. While the general principles of workers compensation will remain consistent among the various states, the details will differ.
For example, 48 states require employers to buy workers compensation insurance. Most states offer employers three options for insuring:
- State fund: The state maintains a workers compensation fund that employers pay into. When an injury occurs, the claim is paid from the fund.
- Private insurance: The employer buys an insurance policy from a private insurer. If an injury occurs, the employer reports it to the insurance company, which pays the claim.
- Self insurance: The employer establishes a fund to pay claims from. The fund must comply with the same rules and regulations as the state fund or private insurers must meet.
That is a high-level overview of workers compensation information. However, the program is very detailed and there are many nuances to understand workers compensation. Here is some additional workers compensation information for workers and employers who are covered by the program:
Not Everyone is Covered
Although the theory of workers compensation is to cover everyone, there are some exceptions, including:
- Business owners: Most business owners are excluded from workers compensation even if they perform work tasks that places them at risk of injury.
- Independent contractors: An employer’s workers compensation premium is calculated based on the number of employees. If an employer hires independent contractors, they are not included in the premium and are not covered if they are injured.
- Volunteers: If an organization relies on volunteer labor, those unpaid volunteers are not covered by workers compensation.
Keep in mind, however, that being excluded from workers compensation is a tradeoff. While an excluded worker cannot be compensated for on-the-job injuries by filing a workers compensation claim, the worker can hire a personal injury lawyer to sue the employer for negligence. If the employer informs the worker that workers compensation information shows the worker is ineligible for workers compensation, the worker should consult a personal injury lawyer to determine if alternatives for compensation exist.
Thus, an employer who hires independent contractors to avoid workers compensation requirements will save money on insurance premiums. However, the employer will be exposed to lawsuits if any of the independent contractors are injured due to the employer’s negligence.
Claims are Filed by the Employer
When a covered employee has a workplace injury, the burden is supposed to be low for the employee to receive compensation. For example, most states require the employer to report the workplace injury to its insurer without requiring the worker to hire a workplace injury lawyer. The purpose of this is to relieve the employee of the burned of understanding and providing workers compensation information to the insurer and, instead, place that burden on the employer.
Instead, the worker reports the injury to the employer and the employer deals with the insurer to begin the claim process. If the employer believes the claim is not compensable, the employer is usually allowed to inform the employee that no claim will be filed and that the employee has the right to file directly with the state workers compensation board.
Reasons that an employer might give when refusing to commence a claim include:
- Unrelated to work: When an injury is sustained but work was not the cause, workers compensation is not available. For example, if an employee was injured in a car accident on a work-related errand, the injury is covered by workers compensation. However, if the employee was injured in a car accident while on a personal errand, the injury is not covered, even if the accident occurred during working hours.
- Broken safety rules: If an employee is injured while breaking safety rules, the injury is not covered by workers compensation. If a worker received a back injury in a fall, the injury is covered. But if the worker fell because the worker failed to wear a safety harness, the injury is probably not covered.
- Horseplay: When an injury results from workplace horseplay, the injury is not covered. This is true even if other workers also participated in the horseplay. However, if the injured worker was the victim of horseplay instigated by co-workers, so that the injured worker could be viewed as an unwilling participant, workers compensation can still be obtained.
In any of these circumstances, the injured worker can go around the employer by filing a claim directly by providing accident and compensation information to the state workers compensation board. In many states, if the employer has refused to report the workplace injury in bad faith, the employer could be ordered to pay the workers compensation attorneys fees for the injured worker.
When the insurer evaluates workers compensation information from the employer, all work-related injuries are eligible for compensation including:
- Acute injuries: Injuries such as broken bones, sprains, soft tissue injuries, and neurological injuries that are caused by an employee’s work duties are eligible for workers compensation.
- Repetitive stress injuries: Injuries that are caused over time, such as carpal tunnel or stress fractures, are also eligible for workers compensation if the worker’s duties led to the injury.
- Toxic exposure: Injuries resulting from toxic exposure while at work qualify for workers compensation. For example, a worker at an auto body shop who suffers lung disability due to exposure to paint and other chemicals may be eligible for workers compensation.
The last two categories, repetitive stress and toxic exposure, may require evidence to be submitted to the workers compensation insurer to convince the insurer to pay the claim. In many cases, a workers comp attorney can put together the evidence needed to support the injury claim.
An insurer usually must accept or deny a workers compensation claim within a prescribed time limit, such as 30 days after receiving the workers compensation information from the employer. When an insurer denies a claim, it can base the denial on many grounds including that the injury is unrelated to work, was caused by horseplay, or resulted from broken safety rules.
An insurer can also deny a claim based on the injury itself. For example, ineligible injuries include:
- Pre-existing injuries: Injuries that were not caused by work but existed before the worker was hired are ineligible for workers compensation. However, an pre-existing injury that was aggravated or worsened by the worker’s employment may be eligible for workers compensation.
- Exaggerated injuries: If your medical records do not match up with the accident report, the insurer can deny the claim.
- Questionable causation: Even if the insurer accepts the timing of your injury, the insurer can question whether your work caused your injury. For example, if you were injured exercising and blamed your work duties so you could claim workers compensation, the injury is ineligible.
Again, insurers can make mistakes when interpreting workers compensation information from the employer. If your claim is erroneously denied, work injury attorneys can appeal the decision to the state workers compensation board.
Benefits for Injured Workers
When the insurer grants a claim, the benefits include:
- Medical compensation: The insurer will pay for medical treatment associated with the work-related injury. If you have health insurance, workers compensation will cover any out-of-pocket costs including copays.
- Wage replacement: If your injury forces you to miss work, the workers comp insurer will pay a portion of your lost wages according to your wage compensation information. Wage replacement benefits usually equal two-thirds of the worker’s wage, up to a statutory maximum. This ensures that claims from high paid employees do not deplete the fund.
The wage replacement benefit is calculated by using the worker’s wage records from the employer. The insurer includes overtime hours you worked before the accident to determine your wage replacement benefit. For example, if you work for a 24 hour garage door repair business, your wage replacement should be calculated based on your actual gross wages taking into account your overtime pay.
Receiving Workers Compensation and Filing a Lawsuit
Workers compensation is paid regardless of whose fault caused the injury. Thus, an employee will receive workers compensation benefits whether fault for the injury lies with the employee, a co-worker, or the employer, or the injury was the result of a freak accident. In the case of simple negligence, the co-worker and employer are immune from being sued by the injured worker.
Although the workers compensation act excludes workers from suing their employers, a worker might be able to receive workers compensation and maintain a lawsuit simultaneously under some circumstances.
Specifically, workers compensation laws usually allow an accident lawyer to file a third party lawsuit against someone besides the worker’s employer. Some examples include:
- Manufacturer: If equipment that injured the employee was defective, the employee can sue the equipment manufacturer. For example, if the worker’s safety equipment malfunctioned, resulting in an injury, the worker can receive workers compensation and sue the equipment manufacturer. Likewise, workers injured by exposure to asbestos can sue the companies that sold asbestos without warnings about the dangers while still receiving workers compensation.
- Responsible parties: A worker who is injured while on the job due to another’s fault can sue the person at fault. For example, a delivery driver who is hit by a drunk driver can receive workers compensation and sue the drunk driver.
- Premises liability: If a worker is injured while visiting a customer’s or vendor’s premises, the worker may be eligible for worker’s compensation and may be entitled to sue the owner of the premises. For example, a construction worker who is injured while picking up a load of bricks from the brick vendor can receive workers compensation and may be entitled to sue the brick vendor for negligence.
When an employee files a third party lawsuit, the employee is not allowed to double-dip. That is, generally speaking, an injured worker must disclose the workers compensation information to the judge or jury, which deducts the value of the workers compensation benefits from the damages award. Thus, if a jury finds that the worker had $1,000,000 in damages and received $100,000 in workers compensation benefits, the damages award would be reduced to $900,000.
Long-Term Workers Compensation Benefits
Workers compensation is supposed to provide benefits for as long as the worker is unable to resume job duties. For most injuries, workers compensation lasts a few weeks to a few months. However, for some injures, the worker may need long-term benefits.
For example, if a worker is exposed to toxic chemicals when cleaning air compressor parts, the worker could develop chronic lung problems that prevent the worker from returning to work.
In this example, the worker might be able to draw on workers compensation benefits that cover the worker’s medical treatment and long term disability benefits intended to compensate the worker for lost wages. However, at some point, the worker might provide workers compensation information about the incurability of the injury and receive compensation for lost future earnings for the rest of the worker’s life.
Similarly, a worker can collect both workers compensation benefits and social security disability benefits. Because these are different programs with different criteria, a worker can generally qualify for both with a single disabling injury. However, social security disability benefits are capped so that the total of the social security benefits plus the workers compensation benefits does not exceed 80% of the worker’s former income.
Workers Compensation Benefits and Divorce
Approximately 827,000 divorces occur in the U.S. every year and at least some of these divorces include a spouse who is receiving workers compensation benefits. When you divorce while receiving workers compensation benefits, the benefits may be included in the marital estate and divided between the spouses.
Although this might seem like an unfair outcome, the benefits were shared during the marriage so the theory is that the benefits should be shared in divorce. This theory, however, is limited in two respects.
- The only benefits that are divided up are benefits for lost wages and past medical expenses because those were shared during the marriage.
- Benefits to replace future earnings or future medical treatment are directed to future events after the divorce and, thus, are usually not divided up in the divorce but remain with the injured spouse.
Thus, if a worker is in an accident while moving an electric forklift for sale and suffers a ruptured intervertebral disc, the injury might keep the worker from ever working again. As a result, the worker might draw workers compensation for work missed during the marriage and medical expenses incurred during the marriage. This compensation would be divided up in the divorce. However, any workers compensation for future earnings and medical expenses would be treated as separate property that will be allocated to the injured spouse.
Workers compensation is an essential system for managing risk to employees and employers. Just keep in mind that it is essentially an insurance program that requires workers to prove entitlement to benefits.