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What is workers’ compensation?

Workers’ compensation is a no-fault benefit system put in place by your state government covering employees who are injured at work. Every state system is unique, but all employers are required to provide workers’ compensation coverage for their employees. The original test for whether a claim was work related was whether the injury “arose out of” the employment, occurred “in the course of” the employment and happened “by accident”. In the mid-1970s, most states removed the by accident test.  So, today the test in simple terms requires the injury happened at work and because of the work.  This coverage also applies only to those who have an employer-employee relationship. It does not cover independent contractors, sub-contractors, or other similar work arrangements. It is a no-fault system meaning, fault or negligence are not considerations.

Generally, an employee claiming workers’ compensation is entitled to two distinct benefits. They receive indemnity benefits that replace lost wages. These benefits are tax free and are usually calculated as a percentage of an injured workers’ average weekly wage at the time of injury. Medical benefits are also provided. These cover the cost of the medical care that are necessary as a result of the injury. They usually cover hospital, doctor, pharmacy, and other medical expenses related to the injury. Some states provide other benefits.  Because workers’ compensation is state mandated, individual states have different requirements. These can be found at a state’s workers’ compensation web site.

After workers’ compensation was well established for work injuries caused by events, questions began to arise concerning injurious exposures, or situations where an employee may have received an injury due to harmful exposures, such as a dangerous chemical exposure at work. These inquiries evolved into the adoption of an adjunct to state Workers’ Compensation Acts—Occupational Disease Acts. These are now part of the legislation designed to protect workers injured by harmful exposures while working. Examples of the kinds of claims covered range from black lung claims to asbestos exposure.

For historical context, in the early 1900s during the second industrial revolution, if you were injured at work, your remedy was to sue your employer, or in some instances, your co-worker. Employers usually did not have insurance coverage for these claims and if a claim were successful, it was difficult to collect on a final judgement. If collection were successful, it put the employer at risk for financial ruin. These cases were contentious; they caused ill-will and were not seen as a good way to make the injured worker whole. It is generally believed that the concept of developing a no-fault work-related injury system had its origin in Germany. In 1911 in the United States, the state of Wisconsin enacted the first comprehensive Workers’ Compensation Act. Several states followed soon thereafter. Mississippi was the last state to make workers’ compensation mandatory. Texas is currently the only state that does not require employers to have this coverage. Employers in Texas can elect to be covered and most do.

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