Workers' Compensation Law Basics

Workers' compensation is designed to provide benefits and medical care for workers injured on the job. Since its inception in the early 20th century, workers' compensation laws have expanded to not only cover workplace injuries, but also illnesses caused by workplace conditions, usually known as occupational diseases.

Here's what you need to know about the workers' comp system, including:

• how workers' comp works
• who must carry workers' comp insurance
• which employees are covered by the workers' comp system, and
• what types of benefits are available.

Overview of the Workers' Compensation System

Workers' compensation provides benefits such as recovery of lost wages, medical treatment, and compensation for permanent disability. Many states workers' compensation programs also provide other benefits to injured workers, including vocational retraining and return-to-work programs.

Dependents of workers who are killed on the job or die due to an occupational disease usually receive monetary benefits, depending on the state laws involved.

In exchange for the guarantee of insurance coverage and benefits for workers who have a valid workers' compensation claim, workers cannot sue the employer in court for negligence. An injured worker can file a lawsuit against the employer only if the employer intentionally caused the worker's injuries. As a result, punitive damages, pain and suffering damages, and other tort damages are not available through a workers' compensation claim.

Who Must Carry Workers' Compensation Insurance Coverage?

The vast majority of states require employers to have workers' compensation insurance, typically through one of three options: by purchasing a policy through a commercial insurance carrier, by paying into a state-run workers' compensation insurance program, or by meeting the criteria to be self-insured.

Texas and Oklahoma are the only states that allow employers to opt out the state's workers' compensation system. In Oklahoma, employers must set up an alternative benefit plan that provides injured workers with at least the same benefits as the state workers' comp system. In Texas, employers that opt out of the workers' comp system can remain uninsured, but they can be sued by injured workers in court.

How your employer is insured does not change your eligibility for workers' compensation benefits. The only differences in whether your employer has purchased insurance or is self-insured is who will pay your bills and who will be the claims manager administering your claim.

Workers Who Are Not Covered by Workers' Comp

Volunteers, independent contractors, domestic workers, and some agricultural workers are frequent examples of workers who are not covered by workers' compensation laws in most states. Independent contractors and volunteers are not considered employees, so they are not covered. Domestic workers, agricultural workers, and other workers (such as business owners) are frequently excluded from workers' compensation by state law.

In addition, railroad workers, longshoremen, maritime workers, and federal workers are all covered under different federal laws.

However, just because you are a covered employee doesn't mean your type of injury will be covered.

Federal Laws Covering Other Workers

The Federal Employment Compensation Act (FECA) covers federal employees, such as postal workers. The federal workers' compensation system includes virtually all federal employees, with the main exception being military personnel. FECA provides for medical costs, job retraining, lost wage reimbursement, and compensation for permanent disability.

The Federal Employment Liability Act (FELA) covers railroad employees for injuries sustained on the job. For maritime workers, the Merchant Marine Act (MMA) provides benefits for injured workers. Similarly, longshoremen and harbor workers have workers' compensation benefits under the Longshore and Harbor Workers' Compensation Act (LHWCA).

Types of Workers' Comp Benefits

Workers' compensation provides temporary disability benefits while you're off work, payment for medical treatment, and compensation for permanent disability.

Medical Benefits

Workers' compensation will allow you to receive proper and necessary medical treatment for your work-related injury or occupational disease at no cost to you. Your state, your employer, or your employer's insurance company will pay for your treatment.

Medical treatment includes doctor visits, physical therapy, prescriptions, surgery, and other treatment necessary for your recovery from your workplace injury or illness. Alternative treatments, such as acupuncture, may not be covered.

Lost Wages

If you cannot work for a period of time due to your injury or illness, you likely will be eligible to receive compensation for your lost wages. These temporary disability benefits, or lost wage benefits, are usually a percentage of your wages at the time of injury, typically around two-thirds of your weekly wages, depending on your state's laws.

Permanent Disability Benefits

All states will pay compensation when you are left with a permanent impairment from your work-related injury. Most states distinguish between permanent partial disability and permanent total disability.

Permanent total disability is typically available to workers that will never be able to return to work as a result of their workplace injury or occupational disease. In some states, however, the ability to work is not considered if a worker has become paralyzed, blind, or has lost both hands (those workers are automatically considered permanently and totally disabled). These workers will receive regular monetary payments in an amount based upon their wages at the time of the injury. Permanent total disability is often referred to as a lifetime pension.

Permanent partial disability is permanent physical impairment due to your work-related injury or occupational disease that affects one or more parts of your body, but does not prohibit you from returning to some form of employment. Your doctor (or a workers' comp doctor) will assess the severity of your permanent impairment and give you a permanent impairment rating. That rating will then be used to determine the amount of your permanent impairment award. The award is a monetary payment, paid either over time or in lump sum, to compensate you for your permanent impairment.

Vocational Benefits

Once you have obtained all available curative medical treatment, if you cannot return to your prior job due to permanent physical restrictions, you may be eligible for vocational retraining or services. Many states will pay for injured workers to receive vocational retraining necessary for them to return to the workforce.

Filing a Claim

If you are injured on the job or believe you have an occupational disease, report this to your employer immediately. You could lose your right to file a workers' compensation claim, and thus forgo your workers' compensation benefits, if you do not meet the requirements in your state for timely reporting an injury or illness.

Your Rights Against Retaliation

You should not fear retaliation from your employer for reporting an injury or illness. It is illegal for employers to discriminate against employees for filing a workers' compensation claim. Termination of employment, or refusal to hire, are considered unlawful discrimination if they are done solely because the individual filed a workers' compensation claim. Read more about your employee rights while out on workers' compensation.

Consider Hiring an Attorney

Workers' compensation laws can be complex, and your employer or its insurance company may try to fight payment of your workers' compensation benefits. A workers' comp attorney experienced in workers' compensation claims can be an effective advocate to ensure you receive the benefits you deserve. State law caps workers' comp attorney fees, and workers' comp attorneys usually take cases on a contingency fee basis (meaning that if you don't win a permanent disability award, you don't have to pay the lawyer). Read more in our article to help you determine whether or not you need a workers' comp lawyer.