Workers’ Compensation benefits, their availability, amounts, and durations vary among states for employees. Each state has a governing board overseeing the Workers’ Compensation system, often referred to as a “quasi-judicial agency” or a Workers’ Compensation commission, like the North Carolina Industrial Commission in North Carolina or the Workers’ Disability Compensation Agency in Michigan.
In most states, private insurance companies are the primary providers of Workers’ Compensation, while twelve states have state funds for private insurers and state employees. California, for instance, has the largest state compensation insurance fund. Some states operate state-owned monopoly insurance providers, which may act as an assigned-risk program or provide coverage for companies unable to obtain private insurance.
Underreporting of injuries is a significant issue within the Workers’ Compensation system. Fearful of employer retaliation, some employees may avoid reporting work-related injuries, opting for private treatment, paying out of pocket, or relying on medical insurance. This can lead to increased health insurance expenses.
Certain states offer exceptions to the rule of only covering work-related injuries, such as for traveling salespersons, work-related trips, or specific errands. Compensation may also be provided for injuries on the premises, even if not currently working. While it is illegal for employers to terminate or refuse employment for reporting a workplace injury in most states, proving discrimination can be challenging.
Workers’ Compensation statutes generally grant employers liability immunity, limiting liability to the provided amounts within the statutory framework. However, exceptions exist. In states like New Jersey, employers may be liable for larger amounts if employees can prove intentional harm. Pennsylvania and some other states offer employer immunity in all circumstances, though other entities, such as subcontractors or product manufacturers, may be held liable for causing injuries.
Appeals
In some cases, an injured worker has the option to appeal a denial, especially when there are issues such as incorrect reporting of the injury by the employee or employer, or if the insurance company disputes the claim. Administrative law judges or magistrates, acting as triers of fact, handle Workers’ Compensation claims.
In certain situations, the injured worker or their legal representative may opt to settle and redeem their Workers’ Compensation claim, accepting a lump sum as compensation for waiving further benefits. A study conducted in 2018 revealed that employees received payment for 70% of initially denied claims.
Challenges may arise when employees and insurance companies strongly contest Workers’ Compensation claim payments. Seeking assistance from state agencies or hiring a Workers’ Compensation lawyer can be beneficial for injured workers. Legal expenses, known as “contingency fees,” are payable only upon successful recovery, limiting the claimant’s costs to a specific percentage of the award, ranging from 11-40%.
The jurisdiction of Workers’ Compensation disputes typically shifts from trial courts to specialized administrative agencies by statute in most states. Administrative law judges handle disputes informally within these agencies.
Employees can escalate their appeals to the appeals board and then to the state court system, although the appeal process is challenging as state appellate courts are often skeptical, aiming to reduce litigation. Some states, such as Ohio, allow employees to initiate trial court lawsuits against employers.
Article XIV, section 4 of the California Constitution reflects the people’s intent to establish a Workers’ Compensation system.
Texas Unusually, Texas permits employers to opt out of the Workers’ Compensation system. Employers who do not carry Workers’ Compensation insurance are termed non-subscribers. However, non-subscribers face legal liability if an employee sustains an injury.
In Texas, the burden of proof falls on the employee, who must demonstrate the employer’s negligence as the cause of the injury. By not subscribing to Workers’ Compensation, employers lose their common law defenses, such as contributory negligence, risk assumption, and the fellow employee doctrine. Consequently, employees may recover total common law damages, which can be more generous than Workers’ Compensation benefits. In 1995, 44% of Texas employers were non-subscribers, decreasing to 35% in 2001.
The Texas Association of Business Non-subscription advocacy group argues that non-subscribing employers experience higher satisfaction ratings and lower expenses compared to those enrolled in a Workers’ Compensation system. However, a survey by the Texas Research and Oversight Council on Workers’ Compensation found that 68% of non-subscribing employers and 60% of subscribers were satisfied with the Workers’ Compensation system.
Furthermore, satisfaction among non-subscribers increases with the size of the company. However, more research is necessary to evaluate the adequacy of non-subscription compensation compared to subscription alternatives. The Texas Supreme Court limits employer duties related to maintaining employee safety and remedies for injured workers.
Privatization Recently, Workers’ Compensation programs in West Virginia and Nevada underwent privatization through mutualization to address underfunded liabilities. Only North Dakota, Ohio, Washington, and Wyoming fully rely on state-run programs for Workers’ Compensation, known as monopolistic states, where employers must obtain Workers’ Compensation through a government-operated fund. Other states maintain state-run funds but permit private insurance companies to provide coverage for employers and employees.
Federal Laws Federal employees adhere to requirements and statutory criteria established by the federal government, which fulfills its Workers’ Compensation obligations through regular appropriations.
Alternate Statutory Compensation The Federal Employers’ Liability Act (FELA), 45 U.S.C. section 51, holds common rail carriers liable to injured employees due to employer negligence. To enforce compensation rights, an employee can file in a United States district or state court. This remedy operates on tort principles of ordinary negligence and differs from Workers’ Compensation benefit schedules.
Similarly, the Jones Act, 46 U.S.C. App. 688, allows injured seafarers working on US vessels to sue their employers for negligence.
The Federal Longshore and Harbor Workers’ Compensation Act (US L&H) covers dockworkers and other maritime workers who are not seafarers on navigating vessels.
