Workers’ Compensation Summary

Workers’ Compensation is a type of business insurance that protects workers’ and the
employer from the cost of workplace injuries. The purpose of the law is to ensure that
workers’, if injured, receive medical care and are able to get their wages replaced if
unable to return to work.

Why are Workers’ Compensation laws needed?

Before state Workers’ Compensation laws, injured workers had to sue their employer in
tort at common law to gain recovery for the cost of medical treatment and lost wages.
Employee’s had to prove that the employer was negligent in failing to exercise a
reasonable degree of care in the workplace. Also, employers could evoke the
Assumption of the Risk Doctrine that attempts to relive the employer by stating the
employee assumed the risk of injury in the workplace. Clearly, this system was not
efficient as it often took years of litigation to get a judgement against employers, if at
all.

It became clear, over time, that workplace injuries were inherent in the production of
goods and services and a better mechanism was needed to get the workers cared for and
sustain them in there time of disability. Furthermore, it became clear that the cost of
workplace injuries was a cost to be borne by the employer and eventually the consumer,
through hirer prices as workplace injuries are a cost of production.
While each state law has subtleties, in general, the laws are the same. The laws strike a
balance between what is due to the injured worker and the injured workers right to sue
the employer. Workers’ Compensation, by statutory language, is deemed to be the
Exclusive Remedy for injured workers’. That means the benefit mechanism laid out in
the state statutes will be the only right of recovery against the employer. The employee
gives up his/her right to sue the employer in tort and in exchange has a legally
prescribed benefit mechanism. The injured worker does not have to prove fault on the
part of the employer to collect benefits. The benefit of the compromise to the employee
is to reduce law suits as the law is no-fault. The employer gains by knowing that no suit
can be brought and the matter will be handled according to mandated statutory
procedures.

Who must have Workers’ Compensation Insurance?

In most states, if you have one employee an employer must provide Workers’
Compensation insurance. So, any employer that is licensed to do business in the state
must provide protection to inure against the possibility of workplace injuries. There are
a few exceptions in many statutes such as; Domestic Workers, Real Estate Agents and
Seasonal farm labor are sometimes not required to be covered by the Workers’
Compensation law.

What is covered under Workers’ Compensation?

Accidents that arise in the course and scope of one’s employment are covered. The
actual determination of course and scope has been the source of much litigation over
the years. The debate is from an attempt to define what activities are actually in
furtherance of the employer mission (job related task) and what activities are not part of
the employer mission nor the job of the employee. For example, litigation has been
brought by workers that were injured on their lunch hour, leaving it for the court to
decide if this was in the course and scope of employment. In general, lunch time is not
in the course and scope of employment. In addition, to workplace injuries being
covered, occupational disease is a covered event. Some examples of job related
poisoning are: Asbestosis, Silicosis, Dematosis and Pneumoconiosis. In some states
there is a waiting or elimination period, such as an employee must be on the job for 12
months to be compensated for an occupational disease. If the employee has not been on
the job the disease is deemed to be non-occupational.

The Workers’ Compensation law is deemed to be of such importance that no
agreements may be made to modify the intent, nor the actions of the law. Any such
attempt would be against Public Policy and would not hold up in court. Some statutes
state language such as; “no contract, rule, regulation or devise whatsoever shall operate
to relieve the employee, in whole or in part from any liability created by this chapter.”
This would override any contract that an employer may enter into with any employee to
waive or modify his rights of recovery for the care and cost of workplace injuries.

The Workers’ Compensation law has far reaching implications and can cut through
contractual agreements to deliver benefits to injured workers’ even when it seem none
may be due. For example, if a Principle Contractor, like a General Contractor, hires a
sub-contractor and if the sub-contractor does not have Workers’ Compensation
coverage the Stature makes the General Contractor the immediate employer for the
payment of benefits. The General Contractor assumes the liability and becomes the
Statutory Employer. In addition, all public, state and appointed individuals fall under
the provisions of the Workers’ Compensation statute, including police, fire personnel
and municipal employees.

What is not covered under Workers’ Compensation Laws?

If an employee deliberately causes injury to oneself then no benefits are due under the
Work Comp act. This includes intoxication and the failure to use proper protection
equipment, such as a hardhat. The burden of proof falls on the employer to prove the
employee met one of the exclusion conditions of the statute. Other occupations that are
not covered are employees of Railroads in interstate or foreign commerce. These
occupations would receive benefits from the provisions of laws from the United States
Congress.

Duties of the Employer.

An injured worker has the legal right to obtain medical care at the employer’s expense.
The employer has a duty to provide such care immediately after the Notice of Injury has
been given to the employer or Supervisor from the injured employee. If the employee
refuses to submit to a medical exam then benefits are not due until such time that the
employee does submit to the medical exam. The cost of Workers’ Compensation
Insurance as well as all treatment cost must be borne by the employer and it shall be
unlawful for the employer to try to attempt to collect for the cost of care from the
employee either directly and indirectly.

Benefits due under the Workers’ Compensation Act.

Bonafide injuries, incurred in the course and scope, sustained by employees of the
employer are entitled to prompt and competent medical care at the employer’s expense.
All medical cost are at the expense of the employer/insurer as is reasonable and
necessary for the appropriate care of the injured worker. This included Doctor visits,
prescriptions, prosthetic devices, X-rays, MRI’s etc. In addition, mileage is paid for the injured
worker to go back and forth to the doctor. If the injury is serious enough to warrant that
the injured worker not work then Lost Wages Benefits are payable by the
employer/insurer. Wages are not paid until the injured worker is doctor-ordered off for
as set number of calendar usually seven or so. The actual number of days depends on
your state law. After the wait period benefits are paid at a rate of 66 2/3 % of the
injured workers previous earnings, tax free, up to a state mandated maximum.

Conclusion

The Workers’ Compensation laws have evolved and developed over time. Like many
laws, the legislative intent is either vague or may not fit with unforeseen and changing
conditions and situations of the work environment. The Workers’ Compensation
Statutes have been modified and expanded due to court interpretation through case law.
Clarifications have been introduced to settle issues of dispute between employer,
employees and Insurance Company. The basic intent of the law is good for employees’
that are injured as it creates a certain safety net. The law is good for employers’ as it
establishes a statutory format that does not attempt to place blame nor fault but rather to
get the injured worker back to a productive life.



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