Workers’ compensation, also called workers’ comp, workmans comp and work comp, is the system put in place to compensate employees for injuries or illnesses they sustain at work that require medical care or missed work.
Workers’ compensation protects both employee and employer. Employers are responsible for maintaining a safe workplace and training employees on safety procedures. But accidents happen.
A workplace injury or contracted illness could be devastating to both employee and employer. Workers’ compensation was created to navigate these situations.
Workers’ compensation covers medical expenses and lost wages for employees when they’re injured on the job. In the United States, each state government regulates its own workers’ compensation system, and is responsible for rules, regulations and enforcement.
Workers’ compensation would apply when an employee is injured, killed or contracts an illness while conducting the duties of their job. Scenarios that would be covered:
By law, workers’ compensation would require the employer or insurance company to pay for any medical care the employee needs to treat the injury, and to compensate the employee for a portion of wages they lose, if unable to return to work for a period of time.
While not mandated, the employer could also be found liable for other damages in court. The employee would need to show that the employer was negligent and created an unsafe workplace that resulted in injury. This is called Employer’s Liability.
Depending on individual state regulations, these costs might be paid out by the employer’s workers’ compensation insurance policy, or out of the employer’s own pocket.
Workers’ compensation kicks in when an employee is injured on the job. The reverse helps illustrate what is not covered:
A workers’ compensation claim submitted to the state work comp division is similar to an insurance claim. The details of the situation are filed and reviewed. If accepted, the employer is required to pay for certain expenses and/or lost wages based on set rates. If the employer’s work comp policy applies, the insurance carrier would handle the claim and payment to the injured worker.
Each state has its own workers’ compensation laws that outline work comp requirements. These include:
States often have one or several main agencies that oversee and administer workers’ comp:
All branches of the state government also play a role in writing and interpreting the laws that govern the workers’ compensation system. They may also set limits on claims or take other measures to control costs, resolve disputes and determine how medical care is administered.
Any employer can be held liable for medical bills or other damages if an employee is injured. In most states employers are legally required to file a workers’ compensation claim within a certain period of time after the worker reports an injury.
Most employers are also required by state law to carry a current workers’ compensation policy, which provides coverage to their payroll.
If you have employees, state law may require you to carry workers’ compensation insurance. For example, all employees in California must be covered by a policy, while in Florida, employee limits depend on the employer's industry.
See your state’s specific requirements and reevaluate your policy annually to reflect your current business operations and payroll.
Unlike other small business policies, workers’ compensation is regulated at the state level, so rates and coverage requirements also differ from state to state. A small business workers’ compensation policy varies in cost based on business size, location, industry and claims history.
Workers’ compensation insurance costs are based on industry, state, payroll and past claims. Employers can control costs by shopping around for a competitive quote, and avoiding workplace injuries. Also look for discounts, such as workplace safety programs and payment plans.
For more on workers' comp cost:
There is no limit to workers' compensation coverage, and your workers' compensation policy will have two parts:
Typical limits for workers compensation insurance coverage.are often represented as three numbers; common limits are:
100 / 500 / 100 ($100,000 / $500,000 / $100,000)
500 / 500 / 500 ($500,000 / $500,000 / $500,000)
1,000 / 1,000 / 1,000 ($1 million / $1 million / $1 million)
As shown above, amounts are in U.S. dollars and 100x the number shown on the policy. The first number is the amount paid out per accident; the second, the maximum per disease per policy year; and the third, the amount paid out per employee.
If the employer reaches any of these limits, the additional expense would fall on another policy (such as umbrella policy) or would be an out-of-pocket expense.
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Workers’ compensation protects employees by compensating them for workplace injuries, and incentivizing employers to provide safe working conditions.
If you have been injured on the job, please notify your employer immediately and seek medical attention.
Injured or ill workers may be eligible for the following benefits:
If you are injured on the job, seek medical attention immediately and notify your employer, so they can submit a workers’ compensation claim.
Return-to-work programs are important for both employer and employee. Returning an injured employee to work as soon as possible can improve recovery times, increase company productivity, boost morale and protect the employee's earning power.
A return-to-work program might focus on scheduling flexibility, such as working part-time until full-time duties can be resumed, telecommuting or working a modified schedule. Or, the employee might need to adjust the type of work they perform, temporarily or permanently. In this case, a return to work might include modified work responsibilities or offering reasonable accommodations to the employee, to help them perform at their best.
Constant communication and transitional responsibilities can gradually reintegrate the worker while healing. Your insurance carrier, state work comp authority and other organizations offer resources on return-to-work programs.