Workmen’s Compensation 101: How The System Actually Works

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Paper man under an umbrella with Workers Compensation note underneath -- on the job injury concept

The workmen’s compensation system requires employers to buy insurance to provide coverage for employees in case of  illnesses or injuries incurred while the employee is working. Through the system, employees get coverage regardless of who between the employee and employer was at fault. On the other hand, employers are protected from lawsuits by affected employees.

Please note that workmen’s compensation is a state governed program. Many states have the same laws in terms of operation and structure. The only small difference is in details such as payment rates or procedural rules involved parties should abide by. To see the details of a specific state, kindly contact industrial relations or workmen’s compensation department for your particular state. You could also visit the website for your state’s department of labor.

Workmen’s compensation does not only cover illnesses or injuries happening at the place of work. The coverage applies as long as the worker gets hurt carrying out job-related tasks. Whether the injuries are as a result of sudden accidents, repetitive stress or continued exposure to chemicals, they are all covered.

Workmen’s compensation system does have some limitations. It does not cover some cases involving:

– Intoxication or drug abuse

– Employee fights

– Self-inflicted injuries

– Company policy violation-related injuries

– Felony-related injuries

– Off-the-job injuries

– After job termination injuries

– Independent contractor injuries

The workmen’s compensation system protects an employer from injury related lawsuits, but not from all types of lawsuits. This depends on your state laws. Some states allow the worker to sue an employer if the injury was as a result of the employer’s recklessness. The worker is paid for punitive damages. The employer will have to pay up if he has not yet secured a workmen’s compensation insurance policy.

An employee can also sue when the injury or illness is a third party’s fault or a result of a defective work equipment.

The system has several benefits such as:

– Off-work income for the employee

– Medical expenses payment

– Benefits for vocational rehabilitation

According to the specific state law, if the injured employee is temporarily not able to work as a result of the injury, he receives disability payments amounting to anything above two-thirds of his average-wage up to a certain amount fixed by the state law. In case the disability is permanent, the workman is eligible for long-term disability benefits. The system also compensates surviving dependents in-case of work-related death.  

An employer has a responsibility to adhere to the laws set in the compensation system. In case he fails to do so, he risks huge fines and lawsuits.

Businesses should have a workmen’s compensation system as a requirement by law. If none is available workers may sue the business in civil court.

A responsible employer should post notices advising workers of their rights. The post details should include: Workers’ compensation carrier’s name, self-insurance declaration, claims adjustment director, medical treatment statement and workers’ compensation benefits.

Upon receiving notice of work-related injury, responsible employers ought to provide a claim form within 24 hours together with a written pamphlet about the rights of the employee on the worker’s compensation system. This is to help the worker to be able to file a compensation claim.

If you are a small business owner who is planning for retirement and is in need of insurance of any kind, Mercado Insurance Services is available to help you with all of your insurance needs. Whether you are looking for personal, small business, or family insurance, we have the right plan for you. Give us a call today and let us help you find the perfect insurance plan to meet all of your needs.