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Summary: Workers’ compensation, also known as workers’ comp, is designed to support workers who have been injured, hurt, or made ill while working for their employer.
Workers' Compensation
Workers’ compensation is an insurance program that supports workers injured while working. It usually pays the worker partial wage replacement for time missed from work as well as medical bills and rehabilitation related to these injuries and illnesses.
Some compensation programs can include funeral costs. When an injured employee receives workers’ compensation benefits, they waive their right to sue their employer for damages.
What types of injuries or illnesses does it cover?
Workers’ compensation, also known as workers’ comp, is designed to support workers who have been injured, hurt, or made ill while working for their employer. The rights to compensation are normally mandated by a country or specific state and can differ widely. However, compensation is normally provided for:
- Physical injuries caused by workplace accidents (cuts, broken bones, damaged organs, etc.)
- Disabilities caused by workplace accidents or conditions (blindness, hearing loss, amputations, spinal damage, etc.)
- Physical injury due to repetitive use or strain (nerve compression syndromes, carpal tunnel syndrome, stress fractures, etc.)
- Occupational illnesses (dermatitis, respiratory conditions, asbestosis, cancer, musculoskeletal disorders, etc.)
Some jurisdictions may also allow compensation claims for stress-related damages or illnesses such as post-traumatic stress disorder (PTSD) or heart attack. In these instances, claimants need to prove that workplace stress was the predominant cause of their conditions.
What is the workers' compensation claim process?
In most jurisdictions, workers have a statutory period within which they must report an injury or illness in order to receive compensation. For employees to receive necessary coverage, it’s important to file claims promptly, and the process normally follows these six steps:
- The employee seeks or is given medical attention for a work-related injury.
If the worker believes they have a work-related illness, they consult a doctor for an assessment and treatment.
- The employee reports the injury or illness formally to their employer.
This report should be in writing and should give any relevant information, such as the date and time of the injury, details on how the injury occurred, and what damage was sustained. They can also provide the names of witnesses to the incident.
- The employer makes a formal report to their workers’ compensation carrier.
This report should include the employee’s personal and job information, the employer’s information, details of the injury or illness and how it occurred, and details of any medical treatment already provided. The employer also files an official claim form with the insurance carrier.
- The workers’ compensation carrier investigates the claim.
The carrier will normally visit the site of the workplace accident or illness, interview witnesses, and make its own assessment as to how and why the worker was hurt. This is done to weed out illegitimate or fraudulent claims.
- The carrier accepts or denies the claim.
After its assessment, the carrier will announce this to the employer and contact the employee. If the claim is denied, the employee may request that the carrier reconsider or file an appeal through a governmental compensation board.
- The carrier works out payment and a return-to-work plan with the employee.
The employee may accept the carrier’s insurance payments for treatment and lost wages or negotiate for a lump sum payment. The employer, employee, and carrier, in consultation with a doctor, develop a plan for the employee to return to work at first a partial and then full capacity.
What are the employer's responsibilities in providing workers' compensation insurance?
In most jurisdictions, worker’s compensation coverage is mandatory for employers. In the US, for example, only Texas does not require employers to take out workers’ compensation insurance. Premiums for this insurance are, therefore, paid by the employer and not deducted from the employee’s salary. If employers don’t provide this insurance for their employees, they can face fines, lawsuits, and even criminal charges.
Some countries and states waive the requirement for workers’ compensation for certain types of workers. These can include contractors, freelancers, farmhands, insurance and real estate agents, business owners, and casual workers. If injured or made ill, these workers would have to make legal claims against their employers.
How does workers' compensation impact employee rights and employer liability?
Workers’ compensation schemes are designed to protect workers by ensuring they are compensated for physical and financial loss stemming from workplace accidents or conditions. However, this insurance also protects employers who could otherwise be bankrupted by lawsuits against them. In most cases, workers who receive compensation waive the right to take legal action against their employers for the same illnesses or injuries.
Andrew (Drew) joined the Remote People team in 2020 and is currently Director, Regulatory Affairs. For the past 13 years, he has been a trusted advisor to C-Suite executives and government ministers on international compliance and regulatory issues. Drew holds a law degree from the University of Otago, a PhD from the University of Sydney, and is an enrolled Barrister and Solicitor of the High Court of New Zealand.
