How Does Workers' Compensation Work?

What Is Workers' Compensation?

Workers' compensation, also known as workers' comp, or workmen's compensation, is a type of monetary benefit afforded to workers who are injured or disabled on the job in order to prevent the worker from filing a lawsuit against their employer. Most commonly, this monetary benefit covers any medical expenses associated with the injury, as well as additional money for permanent injuries, and possibly for money lost while not being able to work.

The reason workers' compensation is so named is because workmen, such as factory workers or construction workers, are much more prone to severe injury because of their jobs than employees in other sectors.

Providing and Receiving Benefits

In the United States, workers' compensation is generally considered a required and automatic benefit when working at any job involving a high risk of physical injury. Employers in such jobs want to keep their workers from suing them for huge amounts of money, so they use the workers' comp program as a way to insure against large potential payouts.

Companies usually arrange their workers' compensation programs through insurance companies. The company pays monthly premiums and whenever there is an accident, the insurance pays for the benefit. This way the company does not get hit with sudden unexpected expenses. Usually the benefit for specific injuries is published for the employees to review when they take a job. Very specific injuries, such as losing an eye, finger, toe or arm, are listed with a specific amount of monetary compensation for each.

The difficulty of receiving benefits depends heavily on the employer; if it is obvious that a person was injured on the job and other people saw the injury happen, compensation is almost a given. If the injury was incurred alone, or is not easily discernible, such as internal injuries, it might be more difficult to get an employer to bestow benefits, and will probably require a doctor to certify that an injury exists.

Other Considerations

Workers' compensation is an important form of insurance both for workers and employers. While it may seem counterintuitive, because money flows from the employer to the worker, workers' comp may benefit employers more than employees. Workers' compensation is designed to cover medical expenses, and compensate for permanent injury, but nothing can appropriately compensate for the loss of a limb or blindness. If such an injury were the fault of the employer in some way, the amount of money an employee could gain through a lawsuit would likely be far greater than the amount granted by workers' comp.

Employees who take workers' compensation may have more difficulty finding another job. Sometimes job applications ask whether a person has received workers' compensation in the past, and although it is technically illegal to discriminate on such grounds, a history of workers' comp indicates to an employer that the applicant may not work as safely as others, and may require payouts in the future.

References

• Workers' Compensation

Resources

• Cornell University: Explanation of Workers' Compensation