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Workers' Comp: An Overview

HRNext

Workers' compensation law is a compromise between business and labor, a compromise that has benefits for both. The system provides workers with prompt medical and disability/wage benefits. It sets standards for employer liability and requires financial reserves for such liability, thus cushioning the economic effect of work injury and illness for the employer. It delivers no-fault benefits, at least theoretically allowing for a straightforward administrative and litigation-free system.

Of course, there are drawbacks. In some cases, an individual worker may receive less than he or she would receive at common law - that is, if the worker went to court, alleged negligence, and won. On the other side, in some periods, employers are plagued by lawyers as well as sky-rocketing medical costs and spiking premiums. Nonetheless, the work accident insurance system has been a great boon to society, reducing worker-employer conflict, improving work safety, helping the survivors of fatal work accidents, and protecting the public coffers from the needs of destitute and disabled workers.

Federal workers' compensation programs

Most workers' compensation programs are established and governed by state law. However, there are a few federal programs:

• The Federal Employees Compensation Act (FECA) provides workers' compensation for nonmilitary, federal employees. Most of its provisions are similar to state workers' compensation programs.
• The Federal Employment Liability Act (FELA), while not a workers' compensation statute, provides that railroads engaged in interstate commerce are liable for injuries to their employees if they have been negligent. The Merchant Marine Act (the Jones Act) provides seamen with the same protection from employer negligence as FELA provides railroad workers.
• The Longshore and Harbor Workers' Compensation Act provides workers' compensation to specified employees of private maritime employers.
• The Black Lung Benefits Act provides compensation from mine operators or the Secretary of Labor for miners suffering from "black lung" (pneumoconiosis).

The Workers' Compensation section of the HRnext Library contains individual articles regarding the Longshore and Harbor Workers' Compensation Act and the The Black Lung Benefits Act.

State law controls

Workers' compensation is regulated at the state level. Except for federal employees and certain maritime and railroad workers, there is no national system for compensating people injured on the job. State laws define the types of injuries that are compensable, set the levels of cash benefits, establish waiting periods before benefits begin, and detail procedures for filing, contesting, and settling claims. While there are many common elements in terms of coverage, benefits, and administration, each state has its own system of insurance to cover employee claims arising from occupational injury and illness.

Workers' compensation coverage is compulsory in every state but Texas and New Jersey, and even these states have detailed procedures for electing not to be covered and strong incentives for employers to provide it. In all other states, employers that do not carry workers' compensation insurance are violating the law and will be hit with a variety of penalties, ranging from substantial fines to prison time or both. Beyond that, an employee who is hurt on the job and whose employer does not have workers' compensation insurance may sue at common law. If this happens, the typical defenses-assumption of risk, contributory negligence, reckless behavior, failure to use provided safety equipment or techniques-are closed to the employer. Also, the claims and awards at common law, such as negligent infliction of emotional distress and punitive damages, may go much beyond the benefits that workers' compensation provides.

For more on the laws of individual states, see another article in this section, "Workers' Compensation Laws by State."

The 'no-fault' concept

Workers' compensation is a no-fault system. This simply means that negligence or fault in the accident's cause is not at issue, and that in almost all cases, a covered employee who is hurt or diseased merely has to show that the injury arose as a result of the employment (in some states, partially as a result of the employment, or aggravated by the employment) and during work time. The official phrase for this is "out of and in the course of employment."

Exceptions to coverage

Who is not covered. Categories of covered employees differ from state to state. Generally, however, workers covered by federal workers' compensation laws are not covered by state law. In most (but not all) states, domestic workers, casual employees, farm workers, the clergy, and independent contractors are not covered.

What is not covered. In most (but not all) states, injuries resulting from a worker's intoxication, intention to harm himself or another, the worker's "coming and going" (i.e., commuting) injuries, and injuries resulting from recreational activities are not covered. Extraterritorial coverage

Most state workers' compensation laws are "extraterritorial." This means that an employee hired in one state, who is hurt while out of state, is eligible for workers' compensation under the hiring state's law. Some states limit the time the employee can have been out of state for coverage to apply; some states give the employee the option of claiming coverage under either state.

Source: HRNext