Workers' Compensation Legal Basics for Employees

The workers’ compensation program protects employees who are injured or become ill on the job. It also shields employers from costly lawsuits. Because every state has its own rules and procedures, understanding how the process works is crucial for injured employees to get the benefits they’re entitled to.

This guide explains what workers should know about workers’ compensation. It outlines key legal basics, including:

• Who qualifies for compensation
• Covered injuries
• The claim process
• How state laws govern workers’ compensation
• The insurance carrier’s role in claims
• And more

Navigating a workers’ comp claim while recovering from a workplace injury can be overwhelming and frustrating. Contact a workers’ compensation attorney near you for help managing your claim. While they pursue benefits, you can focus on your medical care.

Workers’ Compensation Rules Vary by State

Almost every state requires businesses to carry workers’ compensation coverage. The exception is Texas, which does not require private employers to have workers’ compensation insurance. Workers’ compensation laws vary by state and are governed by each state’s workers’ compensation act.

For example, some states don’t require certain small businesses to carry workers’ comp insurance. In others, it’s a must. Some states also have specific rules regarding which types of injuries are covered. For example, if a car accident happens while you’re working or a coworker causes a car accident, the rules about coverage could change depending on the state where you work.

Statutes in each state establish workers’ compensation rules. State laws and court decisions control the program in that state, and no two states have exactly the same laws and regulations. Each state dictates whether workers’ compensation insurance is provided by state-run agencies, private insurance companies, or by the state alone.

States also establish procedures for handling claims and resolving disputes. States also may devise strategies, such as limits on chiropractic care, to control costs.

In many places, the state agency that oversees this system is the Division of Workers’ Compensation (DWC). This is usually a part of the Department of Labor.

Workers’ Compensation: Basic Info Workers Should Know

Workers’ compensation is a type of insurance coverage that operates under state law. This coverage benefits workers who experience a work injury. It also covers employees who develop an occupational disease.

Essentially, workers’ comp insurance is a deal between workers and their employers. Workers’ compensation steps in if a worker gets hurt on the job or becomes sick due to their work. An insurance company (insurance carrier) usually provides this insurance.

When a worker is injured, they can file a workers’ comp claim. This claim, if accepted, allows them to receive benefits that help cover the cost of medical treatment. This can include doctor visits and physical therapy. It also helps cover part of their lost wages if they need to take time off work.

Workers’ Compensation Also Protects Businesses

Workers’ comp insurance is not just about protecting employees—it also protects businesses. Workers’ compensation is considered the exclusive remedy for workplace injuries. This means employees generally cannot sue their employers for work‑related injuries, as long as workers’ comp benefits are provided. By limiting personal injury lawsuits, workers’ comp helps businesses avoid costly litigation.

The system involves a trade-off: injured workers receive payments quickly, but these payments are capped. An employer is protected from lawsuits but must provide benefits to injured workers even if the employer is not at fault.

A claim for a serious employee injury could bankrupt many small businesses. Insurance, through paying premiums for workers’ compensation coverage, provides a predictable cost for handling this risk.

Covered Workers Under Workers’ Compensation

Generally, workers’ comp coverage only applies to employees. It does not apply to independent contractors.

The definition of employee can vary. In general, anyone who performs work for a business in exchange for wages or other forms of compensation is an employee. Both full-time and part-time workers are considered employees under workers’ compensation laws. Whether you work 40 hours a week or just a few, if you’re hurt on the job, you’re typically entitled to workers’ compensation benefits.

Many states recognize migrant workers and seasonal workers as employees for workers’ compensation purposes. This means that if these workers are injured on the job, they are eligible for benefits. Importantly, a worker’s legal status generally does not affect their ability to receive workers’ compensation benefits. If you’re injured while working, you have the right to seek compensation, regardless of your immigration status.

However, there are some exceptions:

• Family Members: In some states, business owners’ immediate family members (such as their parents, spouse, and children) who work for them may not be required to be counted as employees when determining whether they must have workers’ compensation insurance. These exceptions usually do not apply to other family members, such as sisters, brothers, or in-laws.

• Contractors: Under some laws, freelancers and independent contractors are not considered employees. However, some states’ workers’ comp laws treat uninsured contractors/subcontractors or employees of an uninsured subcontractor as employees. This means employers may be liable if they sustain workplace injuries while working for them.

Temporary workers, such as those hired through a staffing agency, are typically considered employees of the staffing agency and not the company where they perform work. As such, the staffing agency would usually be responsible for carrying workers’ compensation insurance.

Laws and regulations vary by state and situation. If you’re unsure about whether you’re considered an employee for workers’ compensation purposes, it’s best to consult with a workers’ compensation attorney. They can help you understand your rights and guide you through the process.

Starting a Workers’ Compensation Claim

The process starts with reporting the workplace injury to the employer. The employer, or a co-worker, can then contact the insurance carrier to start the claim. Sometimes the employer might be self-insured, which means they’ll handle the workers’ comp benefits themselves.

If a worker has a job injury, it is essential for them to get medical treatment. Examples of covered injuries include:

• A broken bone
• An injury from a car accident while on the job
• An illness from exposure to harmful substances at work

Medical benefits from workers’ comp insurance can cover these medical bills.

Set Payment Amounts

Workers’ compensation benefits are typically capped by law. The payment amount decreases over time as the employee recovers and resumes their job duties.

Types of Covered Injuries

Common workplace injuries covered under workers’ comp include:

• Back injuries from falling or lifting heavy objects
• Burns or respiratory ailments related to the use of chemicals
• Work-related traffic accident injuries
• Injuries sustained from repetitive motions (for example, a wrist injury caused by typing)
• Some stress-related injuries

Workers’ compensation generally covers all injuries incurred during job duties. This includes injuries that occur at an off-site location. For example, this can also include business travel. However, injuries caused by employee misconduct, injuries outside the scope of work, and injuries caused by “acts of God” are not covered.

Workers’ Compensation Benefits

Workers’ compensation benefits cover the costs associated with medical care, lost wages, and retraining or vocational rehabilitation if the injury forces you to seek a new position or line of work. Workers’ compensation payments do not account for any pain and suffering the injured employee might experience.

It may also include disability benefits if a worker is unable to work due to an injury or disease. These benefits can be for:

• Temporary disability
• Permanent disability
• Total disability
• Death benefits (for dependents if the worker dies from a work-related injury)

The amount of these benefits often depends on the worker’s average weekly wage before their injury.

Workers’ Compensation vs. Civil Lawsuit

Suppose the injury is caused by the employer’s purposeful disregard for employee safety. In that case, the injured worker can usually file a lawsuit instead of proceeding with a workers’ compensation claim.

If the employee is successful in the lawsuit, they might recover more money than through a workers’ compensation claim. They may also be able to seek attorney fees and punitive damages. Punitive damages are financial awards meant to punish wrongful conduct and deter similar future behavior.

Who Owns Workers’ Compensation Insurance Carriers?

Workers’ compensation insurance companies can either be privately owned or publicly owned through a government fund. This means they could either be owned by private individuals or business entities or be part of a state-run program.

Whether an insurance company is privately owned or a public fund can influence the claims process. Private insurers might be more focused on controlling costs as they aim to make a profit. They might scrutinize claims more closely or be more likely to dispute certain costs. 

Public funds, on the other hand, might be more focused on ensuring coverage for as many workers as possible. They might be less likely to dispute claims. However, they might have stricter guidelines on what types of injuries are covered. State laws regulate both types of insurers. Both are required to pay legitimate claims.

The cost of the insurance carrier can vary. This depends on how risky the business’ work is and how many employees they have. Each state has its own rules about where employers may buy workers’ comp insurance. Five states and two U.S. territories require employers to get coverage exclusively through state-operated funds:

• North Dakota
• Ohio
• Puerto Rico
• U.S. Virgin Islands
• Washington
• West Virginia
• Wyoming

In many other states, insurance may be purchased from the state fund or from private insurers. In the states that have them, state funds may serve as an insurer of last resort for businesses that cannot find coverage from a private insurer. A workers’ compensation attorney can help businesses understand their insurance needs and their state laws.

How Insurers Handle Workers’ Comp Claims

When a workers’ compensation claim is filed, the insurance carrier takes on the role of reviewing and processing the claim. A workers’ compensation insurer is a business. This means they have an interest in managing costs. They might do this if they believe claims are invalid or too expensive.

The insurer will review the claim. They will look at all relevant details, including:

• The details of the accident
• The nature of the work-related injury
• The medical treatment received

This review process helps them determine whether their workers’ compensation policy covers the claim. The insurer will also evaluate medical expenses. They check to see if the costs are reasonable and necessary based on the injury. They might dispute certain costs.

Remember, these insurers are regulated by state laws. These laws require them to act in good faith, meaning they must deal fairly and honestly with claimants. If an insurer unjustly denies a claim, they can face legal consequences.

How an Attorney Can Help With Your Workers’ Comp Claim

Not all injury cases are treated similarly under the workers’ compensation system. Understanding these basics can help you navigate what can be a complex and overwhelming process. If you need help, contact a workers’ compensation lawyer for help. They can guide you through the process and ensure you meet all filing deadlines. They can also help gather medical evidence and other documentation to support your claim.

Getting legal help is especially critical if your employer’s insurance company has denied your claim. An attorney can help you appeal your claim and better your chances at ultimately collecting benefits for your workplace accident. They can also assess if workers’ compensation is the best path forward, or if you should pursue a personal injury case.

Because state law is relevant, your legal advisor should be licensed in the state where you work. FindLaw’s directory of workers’ comp attorneys can get you started. Select your state or city to review contact and ratings information for local experts. Then, reach out for expert legal advice and peace of mind.