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Workers Compensation - The Basics



Each state has its own workers' compensation laws. To find out what the laws are in your state, please visit the United States Department of Labor website.

The Basics

Workers' compensation exists to help injured workers cope with the financial burden of injuries sustained on the job. Employers carry workers' compensation insurance to help pay the costs of such injuries, and instead of having to sue an employer for the cost of an injury sustained on the job, the worker must file a workers' compensation claim and the insurance policy will pay. Business owners who carry this insurance include the coverage's costs in their normal operating expenses.

The basic idea is that of a compensation bargain or exclusive remedy. This means that an injured worker won't sue their employer for their injury because they will be paid a specific monetary amount. The employer's tradeoff is that they can't give a smaller award if the injury was the workers' fault.

Why Does It Exist

Workers' compensation is America's oldest form of insurance coverage. In the early nineteenth and twentieth centuries, workers hurt on the job had to sue their employers and hope to receive monetary compensation to help them deal with their injuries. This process proved to be ineffective, and workers' compensation laws began appearing in the mid twentieth century in the United States. Today's compensation is much more effective because the process is easier and faster.

What It Pays

Most workers' compensation plans are run by the state and usually pay medical expenses directly connected to the injury, lost wages and vocational rehabilitation if necessary. In the event that the injured worker dies, the benefits go to his or her family. In these cases, workers' compensation usually pays funeral costs and some sort of wage replacement.

Workers' compensation works for employees because it helps them if they are hurt or killed at work. Each state's laws are different, but the basic concept is the same throughout the country. It protects both the employer and the employee and is a wise insurance product to purchase, in addition to a knowledgeable workers' compensation lawyer.

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