Workers’ compensation insurance protects at least 140 million employees in the United States. That’s 90% of the 152 million full- and part-time workers in the nation.
Much thanks to this insurance coverage, employees can work with greater peace of mind. After all, millions of injuries and illnesses befall workers in the US every year. In 2018 alone, 2.8 million nonfatal injuries and illnesses occurred in the nation.
The question now is, how does workers’ comp work and what benefits does it provide to employees? Are employees the only ones who get any use out of it?
We’ve rounded up crucial workers’ compensation facts in this post, so be sure to keep reading!
1. How Does Workers’ Comp Work and What Does It Cover?
Wisconsin was the first-ever state to have a comprehensive workers’ compensation law. It was back in 1911 when the state passed this law. Many other states soon did the same, although Mississippi was the last to pass such a law in 1948.
Since then, the workers’ comp claims process and its benefits have changed. Still, today’s workers’ compensation coverage remains true to its roots. Its main goal is still to aid workers in getting prompt medical services in case they get injured or ill at work.
If an employee’s injury, illness, or death is work-related, their workers’ comp should kick in. It should cover their medical, hospital, and rehabilitation expenses. It should also replace their lost wages in case their injury or disease renders them unable to go to work.
Workers’ comp also provides monetary benefits to both the injured and their families. In case the insured passes away, the beneficiary (such as the family) will receive the benefits.
2. Workers’ Comp Also Benefits Employers
Workers compensation insurance also protects employers from lawsuits. In exchange for these benefits, workers waive or “give up” their right to sue their employers. This is one of the key facts about workers’ comp that many employees tend to overlook.
Quality workers’ comp coverage is also key to employee retention. Employees not only want a safe work environment — they have every right to one. At the very least, it’s their right to receive guaranteed compensation if they get sick or injured.
As such, workers’ comp benefits employers as this helps them avoid losing people. Employee loss comes with high turnover costs that can be at least worth $3,500 per employee.
3. It’s Mandatory in All but One State
While workers’ comp is beneficial to employers, it’s also the law. It’s only in Texas where it’s not a legal requirement for private employers. In all other states, workers’ compensation insurance is mandatory for almost all employers.
Laws vary from state to state, but most require this insurance even if it’s a one-man team. Meaning, businesses that have even just a single employee already need this coverage. A few examples are Alaska, California, Illinois, Kansas, and Nevada.
4. Fines and Jail Time Await Employers Who Go Without Workers’ Comp
Seeing as it’s the law, going against it would result in penalties, including fines or jail time. In some cases, the state would even apply both.
Some states, like California and New York, have even more severe penalties than others. In The Golden State, for instance, not getting workers’ comp is a criminal offense. A fine of at least $10,000, 12 months of jail time, or both await offenders.
New York also considers failure to obtain workers’ compensation as a misdemeanor. Noncompliant employers with five or fewer employees will face a fine of $1,000 to $5,000. Businesses with more than five workers will face a penalty of between $5,000 and $50,000.
5. There Are Exceptions to the “Employer Immunity” Rule
Workers’ compensation benefits and protects both workers and work-providers. Employers become “immune” to lawsuits. Employees, on the other hand, receive the guarantee of compensation.
However, there are cases wherein workers can still sue their employers. One of these is if the employer brought intentional harm to the employee. In this case, the employee can sue them in civil court with an “intentional tort” lawsuit.
An example of intentional harm is “battery”, wherein a person hits and injures another. Assault is a threat or an attempt to commit a battery.
If an employer does any of these to an employee, the victim can file a lawsuit against them. Victims may also be able to sue their employers if they allowed a colleague to harm them. However, the victims need to prove that their boss indeed “permitted” a co-worker to injure them.
6. Workers’ Comp Covers Incidents Outside of the Physical Workplace
A lot of people think that workers’ comp is only for injuries or illnesses that occur in the workplace. This isn’t completely right, as workers’ comp covers all work-related health conditions.
Meaning, your injury doesn’t have to have happened at the office just so you can receive benefits. So long as your injury occurred while performing a task related to your work, you should get coverage.
Let’s say that your boss asked you to pick up office supplies from a nearby store. On the way to that establishment, you slipped and broke a few bones. You were outside the office, yes, but you were still doing something work-related.
In this case, your workers’ compensation coverage should kick in.
7. Employees Have a Limited Time to File a Claim
Employees should know about the deadlines for reporting workplace injuries and illnesses. Again, this varies from state to state, with some requiring a report within seven days from the day of the injury. In Colorado, this goes down to four days, otherwise, workers won’t get their full benefits.
Aside from incident reports, there’s also the “statute of limitations.” This refers to the length of time that a worker can file a workers’ compensation claim. In most states, the “deadline” is within two years from the time of the injury or the onset of the disease.
Workers’ Compensation Is a Win For Everyone
There you have it, all the facts that answer your question, “How does workers’ comp work?” As you can see, it’s a win-win situation for both workers and work-providers.
Also, now that you know what workers’ comp is, it’s best to check that you do have it if you’re an employee. If you’re an employer, be sure that you get the minimum state-required coverage for your people.
Ready for more guides and hacks like this to get your business booming? Then be sure to check out the rest of our posts filed under the Business section!
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