Is this your first work-related injury? If so, you may have a lot of questions about what workers’ compensation is, how it differs from lawsuits in court, what benefits you might be entitled to, and how to get them. This article provides a general overview of the worker’s compensation and how it works.
What Is Workers’ Compensation?
Worker’s compensation is a state-mandated insurance program that compensates employees for work-related injuries. Private employers are required to have workers’ compensation coverage in all states, except Texas and Oklahoma (where worker’s comp coverage is optional). Most employers meet this requirement by purchasing a policy through an insurance company, which then administers and pays out claims. Larger employers may qualify to become self-insured, however, and handle claims administration and benefit payouts themselves.
An injured worker must go through the workers’ compensation system in order to receive compensation. In other words, the worker cannot file a lawsuit against the employer in court. Of course, there are some exceptions to this rule. In most states, a worker can file a lawsuit if the employer failed to get workers’ comp insurance (or chose not to, in Texas or Oklahoma). And most states allow a worker to sue if the employer intentionally caused the injury.
The workers’ comp system has advantages and disadvantages. On one hand, workers are eligible to receive certain automatic benefits, without having to prove that their employers were at fault for their injuries. On the other hand, workers’ compensation limits the type and amount of compensation that workers can recover. For example, while employees can get wage loss benefits if they need time off work, the amount is only a portion of their usual wages (typically two-thirds, although some states pay a slightly higher or lower percentage). And, unlike lawsuits, workers’ comp does not allow awards for “pain and suffering”: the emotional upset, physical discomfort, and decrease in enjoyment of life caused by the injuries.
Who Is Covered By Workers’ Comp?
Most states require all private employers, even those with only one employee, to carry workers’ compensation insurance. However, in a minority of states, employers are required to carry insurance only if they have a minimum number of employees. For example, in Alabama, employers are required to carry workers’ comp insurance only if they have five or more employees.
While the vast majority of employees are covered by workers’ comp, many states exclude a few types of workers from coverage. The rules vary from state to state, but often exclude farm workers, domestic workers, certain transportation workers, and seasonal or casual employees. Independent contractors are also not eligible for worker’s compensation. (However, just because your employer calls you an independent contractor doesn’t necessarily mean that you are one under workers’ compensation laws). State workers’ comp systems also do not cover employees of the federal government; they are covered by a separate system. (For more information, see Federal Workers’ Comp Coverage.)
Workers’ comp benefits are available only for work-related injuries. This means that, at the time of the injury, the employee was performing job duties, running a work-related errand, or doing some other task for the benefit of the employer. Injuries that happen on a worker's own time, such as a commute to work or while getting lunch during a meal break, typically aren’t covered. And, some worker misconduct will result in a disqualification of benefits. For example, if you suffered an injury because you were intoxicated or started a fight with a coworker, your injury probably won’t be covered.
How Do I Get Benefits?
While each state has its own workers’ compensation system with its own rules, the basic framework for recovering benefits is the same. The process starts with notifying your employer of your injury. In many states, including California, the time limit is 30 days. However, some states have shorter timelines; for example, in New Mexico, a worker has only 15 days to report an injury.
Once you notify your employer, you may be asked to fill out an official claim form. Your employer will then notify its insurance company of your injury. The insurance company will review your claim and then either accept or deny your claim. If your claim is accepted, your medical treatment will be covered and you will begin to receive temporary disability benefits while you’re off work during your recovery. You will continue to treat until your doctor declares that your condition is as good as it’s going to get (this is called “maximum medical improvement”). If you still have any permanent impairments by that time, your doctor will assign you a disability rating, which translates into a dollar award. (See Workers' Comp Benefits FAQ for more information.)
If your claim is denied, you will need to appeal the decision with your state’s workers’ compensation agency. This is an administrative process, which culminates in a workers’ compensation hearing before an administrative law judge (ALJ). Both you and the insurance company will have an opportunity to present your cases to the judge, by making legal arguments and presenting evidence that you’ve gathered in the months leading up to the hearing. The judge will ultimately decide whether you are entitled to benefits and how much.