Workers' compensation insurance, often called "workers comp," is a state-mandated program consisting of payments required by law to be made to an employee who is injured or disabled in connection with work. The federal government does offer its own workers' compensation insurance for federal employees, but every individual state has its own workers' compensation insurance program. Be sure to check your own state's workers' compensation benefits laws by referring to the appropriate office in your state on the State Workers' Compensation official page of the U.S. Department of Labor's website.
In most situations, injured employees receive workers' compensation insurance, no matter who was at fault for the injury. Because these workers comp benefits act as a type of insurance, they preclude the employee from suing his or her employer for the injuries covered.
Workers' compensation insurance is designed to cover injuries that result from employees' or employers' carelessness. The range of injuries and situations covered is broad, but there are limits. States can impose drug and alcohol testing on the injured employee, and can deny the employee workers' compensation benefits if such tests show the employee was under the influence at the time of the injury. Compensation may also be denied if the injuries were self-inflicted; where the employee was violating a law or company policy; and where the employee was not on the job at the time of the injury.
Although the payments are usually modest, workers' compensation insurance covers
- medical care from the injury or illness
- replacement income
- costs for retraining
- compensation for any permanent injuries
- benefits to survivors of workers who are killed on the job
But remember that if a person collects workers' compensation benefits, he or she cannot sue the employer. And workers' compensation benefits do NOT cover pain and suffering.
Wage replacement is usually two/thirds of the worker's average wage, but there is a fixed maximum amount that the benefits will not go over. That may seem modest, but note that these benefits are not taxed. So, as long as the employee was making a fair wage, he or she should have no major problems. The eligibility for wage replacement begins immediately after a few days of work are missed because of a particular injury or illness.
Workers' compensation insurance is not limited to just incidental accidents. It also covers problems and illnesses that are developed over a long period of time of doing the same injurious activity--for example, carpal tunnel syndrome or back problems from some sort of repetitious movement.
Most types of employees are covered by workers' compensation insurance. That said, states commonly exclude some workers from coverage, such as:
- independent contractors
- business owners
- employees of private homes
- farmers and farmhands
- maritime employees
- railroad employees
- casual workers
Because employees of the federal government are covered under the federal workers' compensation insurance program, they are not covered by state workers' comp. Some states do not enforce the workers' compensation program on employers with fewer than 3 to 5 employees working for them. This varies from state to state.