Workers’ compensation is a no-fault benefit system established by state governments to provide coverage for employees injured at work. It ensures that employers offer required compensation coverage to their employees. The system's fundamental test for work-related claims is whether the injury occurred at work and because of the job.
Key Features of Workers’ Compensation
- Coverage Scope
- Provides both indemnity benefits, which replace lost wages, and medical benefits, covering necessary medical care due to the work injury.
- Indemnity benefits are tax-free and typically calculated as a percentage of the injured worker’s average weekly wage.
- Medical benefits extend to hospital, doctor, pharmacy, and related expenses.
- Employee Eligibility
- Exclusively applies to employees; independent contractors and sub-contractors are not covered.
- State Specifications
- Each state’s workers’ compensation system has unique requirements, which are accessible via its respective website.
Special Provisions for Occupational Diseases
Initially designed for injury events, the system now includes provisions for injuries due to harmful exposures, such as chemicals, through Occupational Disease Acts. This legislative extension protects workers from hazards like black lung or asbestos exposure.
Historical Background of Workers' Compensation
During the early 1900s, workers injured on the job had limited recourse, often suing employers or co-workers for compensation. The lack of employer insurance often rendered judgments ineffective, risking business bankruptcy and causing strained relations. The modern no-fault system traces its roots to Germany's early 20th-century ideas. Wisconsin enacted the first U.S. Workers’ Compensation Act in 1911, prompting other states to follow. Mississippi was the last state to make it mandatory, with Texas remaining the only state where coverage is optional, although most employers choose to participate.
For more information, you can consult your state's workers' compensation website to understand specific state requirements and provisions.
