How Does Workers Compensation Work? What Does it Cover?

Employees that are injured on the job, or as a result of their duties are entitled to receive medical treatment and have a portion of their wages replaced through the workers’ compensation program. Employers and employees both have specific responsibilities under the program.

How Does Workers’ Compensation Work?

State laws mandate workers’ comp and each state has different rules for when an employer must acquire such insurance. Injured employees receive medical care after sustaining an injury or illness that is work-related. Injured employees typically receive a certain percentage of their wages while they are off work, depending on state rules.

Because workers’ comp is a “no-fault” insurance program, the injured employee does not have to prove negligence and in exchange, the employee generally cannot sue the company for his or her injuries, though there are limited exceptions. Depending on the circumstance, employees may have the right to sue third parties, such as when an employee is injured due to a defective piece of equipment.

Most employees are covered by a company’s workers’ comp insurance. However, states commonly exclude independent contractors, business owners, volunteers, and federal employees. Most states prohibit employers from firing a worker who has filed a claim. If an employer does retaliate, they should be reported to the local workers’ compensation office.

Employers have the legal responsibility to post required notices in a location frequented by employees during working hours. These notices should contain information about the employees’ rights including the name of the workers’ comp carrier, details about workers’ comp benefits, who is responsible for claim adjustments, etc.

Employers must also provide injured workers with a worker’s comp claim form shortly after the notice of injury – usually within 24 hours.

What Does Workers’ Comp Cover?

A worker who becomes sick or injured as a result of their working environment and is eligible for benefits can generally expect to be covered for:

  • Payment for medical expenses and treatment, including initial emergency care, follow-up doctor visits, physical rehabilitation visits, and transportation expenses.
  • Payment for time off work for recovery which typically has a weekly benefit of 2/3rd of the employee’s average weekly earnings and does not last more than two years.
  • Payment for permanent injuries that affects the worker’s ability to do certain jobs. Even a minor injury can qualify for a small permanent disability payment.
  • Vocational rehabilitation services in cases where a worker needs to change industries – most states will pay for job retraining or re-education.
  • Payment of benefits in the event of a death. The dependents of the worker are entitled to burial expenses and a lump-sum payment in many states.