Workers’ compensation is a form of insurance that is widely used in the western world. It is a no fault insurance system that applies that pays for medical treatment, a portion of lost wages, and other benefits in exchange for relinquishing the employee’s right to sue his or her employer for any negligence.
In the United States, workers’ compensation coverage began in the mid nineteenth century. It started out in a very different form than it has today. Originally, employees were allowed to sue their employers for a negligent act or omission that caused their on the job injury.
In the early twentieth century, states began passing no fault workers’ compensation laws. This was done to reduce the need for litigation and eliminate the requirement that employees prove their injuries were the fault of an employer. In 1906, congress passed the first law covering federal employees’ workers’ compensation claims. By 1949, all states had passed no fault workers’ compensation laws.
Most employees who are injured on the job have a right to have medical treatment paid for under workers’ compensation laws. In many cases, employees also have the right to be paid for a portion of lost wages caused by their injuries and for any temporary or permanent disability from working in their occupation. They may also have the right to retraining if they are unable to work in their former occupation due to their injuries.
Employers are required to comply with state workers’ compensation laws and pay into the system. The workers’ compensation premiums depend on the level of statistical risk in the occupation. For example, a logging company would pay much higher premiums for their employees than a law firm. Employer premiums may rise following a workers compensation claim, similar to auto insurance policies.
Workers’ compensation claims are handled on a state-by-state basis. A state governing board oversees varying public/private combination of workers’ compensation systems. In the vast majority of states, employers obtain their workers’ compensation insurance from private insurers.
Other states have a hybrid system that combine private insurance coverage with public coverage while others, currently four states, North Dakota, Ohio, Washington and Wyoming, have an entirely public system. However, there are exceptions to state laws. For example in Washington State, if a company has sufficient resources to prove they can administer their own workers’ compensation claims, such as Boeing or Microsoft, they may self-insure their own employees and not have to pay into the public system.
The federal government has its own workers compensation program for its employees. Federal employees are covered under the Federal Employment Compensation Act (“FECA”). It provides no fault workers’ compensation coverage for federal employees who are injured on the job whom are not in the military. FECA is the basis for many state workers compensation laws.
Certain occupations are excluded from state workers’ compensation laws and have their own types of coverage. Employees working in nuclear energy, longshore, harbor workers, fishing, fish processing, railroad, coalminers, and military service members who are injured on active duty. Military service members include National Guard and Reserve members who were serving on active duty at the time of the disability or disease. These occupation types have separate laws that apply to their industries.
The Office of Workers’ Compensation Programs (“OWCP”), a division of the U.S. Department of Labor administers disability programs for federal employees, nuclear energy employees, coalminers, and longshore and harbor workers. Employee workers’ compensation claim benefits may include payment for medical treatment, wage replacement, vocational rehabilitation and other benefits to injured workers in these fields. In addition to injuries, occupational diseases such as or mesothelioma (asbestos caused) and black lung disease may also be covered under workers’ compensation laws.