Workers Compensation Insurance Laws

Workers' compensation laws are rules of conduct or action prescribed and enforced by a controlling authority to govern employer-employee relations in handling occupational disabilities. All states, the District of Columbia and the U.S. territories have enacted workers compensation laws. Federal workers compensation laws apply to certain employments.

Workers' compensation laws were enacted to reduce the need for litigation, and to mitigate the requirement that injured workers prove their injuries were their employer's "fault". Every state has enacted some kind of workers' compensation program. Such schemes were originally known as "workman's compensation," but today, most jurisdictions have adopted the term "workers' compensation".

In the United States, most employees who are injured on the job have an absolute right to medical care for any injury, and in many cases, monetary payments to compensate for resulting temporary or permanent disabilities. Most employers are required to subscribe to insurance for workers' compensation, and an employer who does not may have financial penalties imposed. In many states, there are public uninsured employer funds to pay benefits to workers employed by companies who illegally fail to purchase insurance. Insurance policies are available to employers through commercial insurance companies. If the employer is deemed an excessive risk to insure by a standard market carrier, it can obtain coverage through an assigned-risk program or state pool.

In most states, workers' compensation is solely provided by private insurance companies. However, some states operate a state fund (which serves as a model to private insurers and often insures state employees).  There are a few states that operate a state-owned monopoly. To keep the state funds from directly competing with private insurers, they are generally required to act as assigned-risk programs or insurers of last resort, and they can only write workers' compensation policies.  In contrast, private insurance carriers can turn away the worst risks and can write comprehensive insurance packages covering general liability, auto, etc.

It is illegal in most states for an employer to terminate or refuse to hire an employee for having reported a workplace injury or filed a workers' compensation claim. However, it is often not easy to prove discrimination on the basis of the employee's claims history. To avoid discrimination of this type, some states have created a "subsequent injury trust fund" which will reimburse insurers for benefits paid to workers who suffer aggravation or recurrence of a compensable injury. It is also suggested that laws should be made to prohibit inclusion of claims history in databases or to make it anonymous.

Employees may not falsely claim benefits. There have been instances where videos recorded by private investigators show employees engaging in sports or other strenuous physical activities, although the employees allegedly suffered disability or injury. Such evidence may not be admissible at a trial, if it is found that the taping infringed on the employees' reasonable expectation of privacy.

Some employers vigorously contest employee claims for workers' compensation payments. In any contested case, or in any case involving serious injury, a lawyer with specific experience in handling workers' compensation claims on behalf of injured workers should be consulted. Laws in many states limit a claimant's legal expenses to a certain fraction of an award; such "contingency fees" are payable only if the recovery is successful. In some states this fee can be as high as 40% or as little as 11% of the monetary award recovered, if any.

In most states, original jurisdiction over workers' compensation disputes has been transferred by statute from the trial courts to special administrative agencies or court appointed judges. The disputes are usually handled informally by administrative law judges. Appeals may be taken to an appeals board and from there into the state court system. However, such appeals are difficult and are regarded skeptically by most state appellate courts, because the point of workers' compensation was to reduce litigation. A few states still allow the employee to initiate a lawsuit in a trial court against the employer.

See also: Workers' Compensation Claims for laws regarding claims procedures.

Click Here to learn more about Owners Election/Rejection of Workers' Compensation Coverage.

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