How Workers' Comp Protects Employees and Employers

Learning how to comply with workers’ compensation laws may seem burdensome as a business owner. However, like many business tasks, it’s both critical and beneficial to you and your workers. Workers’ compensation benefits provide for injured workers. Workers’ comp insurance also limits how much workers can recover from their employer.

Workers’ comp laws vary by state. For legal advice about your state laws, talk to a local workers’ compensation lawyer.

What Is Workers’ Compensation Coverage?

Workers’ comp is a “no-fault” program that requires employers to carry workers’ compensation insurance coverage for work-related injuries or occupational diseases. Workers’ comp covers all employees no matter how many hours they work. For coverage, the injury must have arisen out of the scope and course of employment.

Primary workers’ compensation insurance covers medical expenses, regular payments for lost wages due to temporary or permanent disability, vocational rehabilitation, and potential death benefits. Workers’ comp is a wage replacement benefit. If an injured worker sustains permanent disability, they are also entitled to payment proportional to the percentage of permanent disability they have sustained.

“California is a no-fault workers’ compensation state,” explains Vivian Valdez Saldaña, an attorney at Valdez & Valdez in Fresno who has represented both workers and employers. “It means the employee does not have to prove their injury was caused by the fault or negligence of someone else or themselves.”

“The idea is: In exchange for limited liability for employers, employers and insurance companies are unable to bar or greatly reduce benefits to injured workers based on their own fault,” says Kelsey Paddock, a workers’ compensation attorney at AmTrust Financial Services. But when an employee’s conduct constitutes gross negligence, “things can get trickier,” she adds.

“If someone gets injured on the job—they could have tripped over their own feet and caused their own injury—they can still pursue lost wages and medical treatment,” says Bruce Lipsey, a disability and workers’ compensation attorney at Lipsey & Clifford in Hanover.

“If the employer is responsible, like leaving the banana peel on the floor and causing the employee to slip, the employer would be responsible for providing workers’ compensation, wages, and medical treatment, but would be insulated, in return, from any lawsuit brought by the employee.”

Preparing Workers’ Comp Coverage

Your preparation should start with finding a good insurance broker who can guide you to the right insurance policy. A workers’ comp attorney can also clarify confusing details about the workers’ compensation system.

“It’s about protecting the employee and the employer,” says Stephanie Bendeck, a personal injury defense attorney with Melick & Porter in Boston. “Insurance terms are full of a lot of gobbledygook. Sometimes people have questions about unique situations that perhaps an insurance agent or broker may not be able to answer. It can get a little sticky.”

And, she adds, “Reevaluate your coverage on a yearly basis. If you get more employees or open up new offices, make sure that your coverage is always up to date.”

Failing to pay workers’ compensation insurance premiums means an employee injured on-site can sue your business directly.

Once You Have a Workers’ Comp Policy: Make it Known

Once your policy is in place, Bendeck says to display the proof of coverage certificate in the break room or other common area. Advise your employees of their rights. (The U.S. Department of Labor offers free posters.) Keep a list of doctors who take workers’ comp patients—not every healthcare provider does—as well as blank claim forms.

One of the best ways to prevent injuries — and litigation related to them — is to be proactive. “Provide as much safety training as you can. Conduct regular safety meetings where you review any relevant safety policies and procedures,” says Paddock. “Safety training should not just be a one-time thing at the time of hire.”

“Workplace safety signage on equipment is also good,” adds Saldaña. Informal preventative measures, such as cracking down on horseplay and providing ergonomic work equipment, can help, too.

“Management and supervisory staff should be well-versed in the proper procedures regarding how to respond to an injury,” Paddock says. A proper response can help “mitigate long-term costs.”

What To Do if an Employee Experiences a Workplace Injury

If a worker gets hurt on the job, ensure they receive medical services immediately. Alert your insurance carrier and ask the employee to fill out a claim form within 24 hours, if possible. The insurance company will provide an attorney if necessary.

“Medical care should be obtained immediately to document injuries and have a treatment plan in place,” says Saldaña. Adherence to this plan aids both the employee and employer. Once again, a quick response is key.

Some employers, Lipsey says, muddle an already stressful situation by hiring their own claims reviewers. “The middlemen are trying to challenge a lot of things that really shouldn’t be challenged. The best claims are the ones that are handled in a professional way from the start.”

What’s more, the attorneys say, if it’s a close call about who was responsible for the employee’s injury, the employee will usually win. Save your money and stick with what you can control. Keep a designated folder with correspondence, witness statements if applicable, and any accident reports related to the worker’s injury. Include records of the employee’s wages and benefits.

Keep the Lines of Communication Open with the Injured Employee

One of the most important things you can do after an employee is injured is to keep the lines of communication open, Lipsey says.

“A lot of times, employers don’t call to see how the employee is doing in the hospital. A person could be working there for 25 years, and the employer is like, ‘I can’t talk to them because they’re the enemy now.’ That really disturbs a lot of people because a good chunk of these people were injured for no fault of their own. You may be able to salvage an employee [relationship] and limit liability if you’re just respectful to that employee after the injury and don’t treat them like they have committed a crime.”

Attorneys emphasize the importance of timely claim reporting. “When an employee is injured at work, they should immediately alert their employer,” Saldaña says. The injured employee is technically obligated to report their injury to the employer within a certain time period. Depending on the state, the reporting deadline is usually 5 to 30 days.

Find an Experienced Workers’ Compensation Attorney

If you are a small business owner facing a workers’ compensation claim or need guidance setting up your workers’ comp policy, use the Super Lawyers directory to find an experienced workers’ comp lawyer in your area.