Workers Compensation - a law which benefits both employee and employer

Every employer must be aware of and comply with the workers compensation laws (WC laws). This is an area where you can't afford not to comply.

WC laws were enacted as a humanitarian measure designed to protect injured persons and those dependent upon a deceased worker's income. The primary purpose of WC laws is to provide economic assistance to persons who suffer disability or death as a result of their employment.

This economic assistance is provided through some form of insurance. In most cases the insurance is afforded by private insurance companies which collect premiums from employers. The insurance is offered pursuant to and subject to laws passed by the legislature. Most WC laws define the benefits that are to be offered. They typically cover all out-of-pocket medical expenses arising out of the job related injury. Additionally, they cover short term and long term wage loss arising from the injury. Most laws allow the re-opening of a claim years after the date of the injury if it can be shown that additional medical expenses related to the injury have occurred or are likely to be incurred.

Some Workers Compensation laws allow certain large employers to be self-insured instead of contracting for workers compensation insurance from an insurance company. In order to qualify as a self-insurer, the employer must prove that it has adequate financial resources to protect the workers and it usually must also pay for Excess Insurance Coverage which covers all losses in excess of a certain catastrophic loss limit.

Most states also have a stop-gap fund which provides workers' compensation benefits to injured workers whose employers failed to provide the required coverage.

WC laws also benefit the employers. The principal benefit to the employer is that in exchange for the workers compensation benefits, by law the employee must relinquish his or her right to sue his or her employer for negligence. This waiver benefit usually also applies to fellow workers who cause injury through their negligence.

As an aside, it should be noted that the WC laws do not prohibit the employee from suing other parties than the employer. For example, if the employee is injured in an auto accident while on the job, the employee may sue the other driver for negligence.

If an employer fails to provide Workers Compensation insurance, it is subject to severe penalties. First, the defaulting employer loses its protection against lawsuits by the employee. Second, in many states the employer is guilty of a crime for failure to provide for the coverage. For example, in Nevada the employer may be guilty of a felony if his non-covered employee suffers substantial bodily harm or death as a result of a job related injury. See NRS 616D.200.

In summary the WC laws are designed to benefit both the employee and the employer. There is a huge body of law relating to workers' compensation. This is a business expense which the employer absolutely must pay. The consequences of failure to do so are too great. If the employer can't afford WC coverage, the employer shouldn't be in business.

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