An Intro to Workers’ Compensation

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Updated: 13 June 2023
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Insuranceopedia Staff
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Key Takeaways

  • Most employees who suffer a work-related injury are entitled to worker’s compensation benefits.

Have you been injured on the job or know someone who has been? In general, if an injury is serious enough to cause you to miss work (as opposed to receiving minor first aid and then immediately returning to work), you are probably eligible to receive workers’ compensation benefits.

Workers’ compensation systems are enacted and run by both state and federal governments. While benefits and legal requirements vary significantly across states, there are nevertheless similarities to the various systems. This article gives an overview of workers' compensation, including compensable injuries, benefits, employer obligations, and more. If you're an employer, be sure to scroll down to the last section.

Workers’ Compensation

Typically, if a third party injures you—say a driver collides with your vehicle—you can sue that party in tort, meaning that you file an action in a court to recover for your damages (see Insurance and Lawsuits to learn more). This is a fault-based system, which means that you will be given compensation only if the other party is found to be at fault.

Unlike these typical injury cases, workers’ compensation systems are no-fault systems. So if you're injured on the job, you are, in almost all cases, eligible to receive compensation regardless of who caused the accident—even if you're the one who caused it. The downside is that the amount of compensation that you recover will be less than what you would recover in a tort action, assuming the other person was found to be at fault. So, recovery is permitted more than 99% of the time, but the amount recovered is smaller.

Compensable Injuries

Various types of injuries are covered under workers’ compensation, including:

  • Sudden injuries caused by accidents such as falls, equipment malfunction, cuts, and burns
  • Physical conditions aggravated by work conditions (e.g., allergies or emphysema made worse by dust or airborne chemicals in the workplace)
  • Work-related injuries that occur outside the workplace (e.g., suffering an injury during a business meeting held at a restaurant)
  • Repetitive stress injuries caused by repetitive motion in the course of work (e.g. carpal tunnel syndrome)
  • Hearing loss due to long-term exposure to noise
  • In some states, emotional stress, whether caused by a single event (e.g., a firefighter seeing a person gruesomely injured) or gradually as the result high-pressure work conditions
  • Occupational illnesses (e.g., asbestosis caused by exposure to asbestos over a period of years)

Injuries suffered during lunch breaks are usually not covered, but they might be for injuries that occur in a company-owned cafeteria.

Injuries that occur at company events, such as a 4th of July party held at a state park, are usually covered.

Injuries suffered during your usual commute to work are not typically covered, but injuries suffered on business trips usually are.

Injuries that are caused by your misconduct, such as a violation of company safety rules, are usually covered. There are, however, exceptions. If the conduct is deemed to have been an intentional attempt to injure yourself or others, you may be denied compensation. Likewise if it was the result of alcohol consumption or the use of other drugs.

The law is complex. If your claim is denied on the basis that it is not work-related, contact a lawyer who specializes in plaintiff workers’ compensation law (you are the plaintiff; the defendant would either be your employer or your employer’s insurer).

What Are the Benefits?

Workers' compensation provides four types of benefits:

  • Medical care: all generally acceptable medical treatment will be paid for in full
  • Rehabilitation: therapeutic care, such as physical therapy, will be covered along with retraining if the injury prevents you from returning to your former employment
  • Disability payments: to compensate your for lost wages (find out Why You Need Disability Insurance)
  • Death benefits: paid out to the immediate family members of workers who die in work-related accidents.

Compensable disabilities are classified according to four categories:

  • Temporary total disabilitytotal disability: the worker is unable to work for a limited period of time
  • Temporary partial disability: the worker can return to work but cannot perform all of their former duties for a limited period of time
  • Permanent total disability: the worker is permanently incapable of returning to their former line of work
  • Permanent partial disability: the work can return to their former line of work but are permanently unable to perform all of their former duties

It varies from state to state, but payments for lost wages will typically be two thirds of what you were earning at the time of injury. But the benefits are not taxed, so the net payments will be close to what you were earning before.

Additional Factors

Reckless or Intentional Act by Employer

If your injury is the result of conduct by your employer that rises to the level of a reckless or intentional act, you might be able to sue your employer in court (in a tort action). If you suspect that your employer has been reckless or committed an intentional act that injured you, contact a lawyer who specializes in plaintiff workers’ compensation law.

Employer or Insurer Disputes Claim

If you suffer an injury at work and your claim is denied entirely or in part on the basis that it is not a covered injury, contact a lawyer who specializes in plaintiff workers’ compensation law. Understand that lawyers can be costly and that you don’t necessarily need to contact one immediately if you have been injured on the job. But if your employer or their insurer disputes your claim, you would do well to get a lawyer on your side.

Employer Doesn’t Have Insurance

If you live in a state where employers are required to have workers’ compensation insurance (currently, Texas is the only state that doesn't require it) and your employer doesn’t have it and you are injured, there are legal remedies available to you. Contact a lawyer who specializes in plaintiff workers’ compensation law to discuss your options.

You Are the Employer

Last but not least, don’t mess with the law when it comes to workers’ compensation insurance. If one of your employees is injured and you don't have workers’ compensation insurance, you can be subject to fines, penalties, and civil suits (court actions in tort). Your business could conceivably be bankrupted as a result.

In Texas, if you don't provide your employees with insurance, you must prominently post notice; in all other states, you must provide insurance that conforms with the law.

Follow the law! And if you have questions about the law and how to adhere to it, consult a lawyer who specializes in workers' compensation defense.

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