Workers' compensation laws ensure that an employee who is injured as a result of an accident on the job or who contracts a disease as a result of performing their job will receive compensation and medical benefits. This ensures that the needs of an injured or ill employee will be met.
Overview of Workers' Compensation Insurance
Benefits are usually paid by a private insurance company that was hired by the employer or a state-run workers’ compensation fund. If you’re injured on the job while employed by a private company, you need to contact your state-run workers' compensation fund. Workers' compensation insurance also provides benefits to dependents if a person dies as a result of a job-related injury.
Every state requires that employers purchase workers' compensation insurance to ensure that employees and their dependents are protected against significant hardships in case of injury, illness, or death.
In addition to paying medical expenses, workers' compensation has traditionally supplied disability payments to the injured employee while they were unable to work. This most frequently covered up to two-thirds of a worker's normal compensation.
Workers' compensation is provided regardless of who was at fault in a work-related injury. Even if the injury occurred as a result of the worker's own actions, they are covered.
Basis of Workers' Compensation
Workers' compensation was created to protect both the employer and the employee from the costs and hardships of employee injury and illness. It is a social contract or "compact," where the employee receives compensation and medical benefits, and in turn, signs off on the right to sue their employer.
The employer benefits from immunity from lawsuits, for the most part. This compact has been the basis for the provision of workers' compensation since the dawn of the Industrial Age, according to Michael Grabell, of "ProPublica," and Howard Berkes, of "NPR" in "The Demolition of Workers' Comp."
However, in their 2015 article, the authors' research on worker's compensation found that it is difficult for employees to collect money to cover the treatments recommended by their doctors. The amount of money received, in many cases, did not cover their living expenses in addition to medical expenses.
The original intent of the workers' compensation was to cover both living and medical expenses. Grabell and Berkes state:
"Over the past decade, state after state has been dismantling America’s workers’ comp system with disastrous consequences for many of the hundreds of thousands of people who suffer serious injuries at work each year, a ProPublica and NPR investigation has found. The cutbacks have been so drastic in some places that they virtually guarantee injured workers will plummet into poverty."
Since 2003, legislators in 33 states have passed laws that reduce the amount of money an injured worker can collect. The authors use this example, "The maximum compensation for the loss of an eye is $27,280 in Alabama, but $261,525 in Pennsylvania." Check your state's worker's compensation division to understand the claims settlement process.
Workers' Compensation in the Gig Economy
People who are employed by organizations are covered by workers' compensation, but people who work for themselves generally have no coverage.
According to a 2016 report by the private-sector think tank McKinsey Global Institute, "Most of the estimated 54 million to 68 million independent workers in the U.S. do not receive employee benefits. Employers say that keeping their workers as independent contractors helps retain the flexibility of their business model."
Decreased Workers' Compensation Claims
Since 2017, workers' compensation claims appeared to be dropping and the claim severity has moderated in recent years.
According to Jeff Eddinger, Boca Raton, Florida-based senior division executive for the National Council on Compensation Insurance, "When claims are dropping by 6% each year, then you are definitely going to be seeing decreases in the overall [insurance] rates," which vary by state.
As for the reduction in more expensive claims, “it does seem like claim severity has moderated in recent years,” he said. “I don’t have any reason to expect that that will change any time soon.”
Workers' Compensation Process for Employers
Employers should make sure their employees, management staff, and human resources (HR) team understand that accident reports must be filled out when an employee is injured or claims a job-related illness. In addition, claims filing forms should be made available to all staff.
Companies should also work closely with their workers' compensation agent to ensure that both the employee's medical needs and the company's liability are covered. Employers should assist employees to make sure the claim form is easy, timely, and correctly filed. Your worker's compensation insurance company guidelines can help with this process.
Fraudulent Workers' Compensation Claims
Employers should also be aware of fraudulent claims. For example, in a workers' compensation claim situation at a manufacturing employer, an employee begged the HR staff to not file a claim for their on-the-job injury. HR filed the claim because that is the expectation based on their relationship with their worker compensation company.
They learned that the employee had filed claims at their last five employers, none of which were listed on the person's resume or job application. Though the employee was actually injured on the current job, and the employer had the incident videotaped, the employee knew that the claim would bring their history to the attention of the employer.
As most job applications state that any falsehood is grounds for termination, the employee knew they were in trouble. The employees' position was then terminated due to their false statements.
Workers' Compensation Company Services
In addition to compensation for employees, many workers' compensation companies offer occupational health and safety specialist services, in which they audit your workplace and make recommendations about employee safety and ergonomics. This process also educates employees about how to avoid injuries.
This service is helpful as is the training available from most companies about how to make accident reports and fill out workers' compensation claim forms. You can also contact your state workers' compensation office for assistance.
The Bottom Line
It's an employee's right to collect compensation when injured or ill as a result of their employment. Employers should, therefore, understand the provision of workers' compensation services for their employees and make sure assistance is available to help employees file claims. HR departments should be prepared to assist employees in filing and collecting on a claim from the employer's insurance company.
Disclaimer: Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.