Definition of Workman's Compensation

Many jobs involve physical labor or physical dangers that can result in injuries or illnesses that make a worker unable to continue working. Workman's compensation is a job benefit that provides money and services to employees that are injured or become sick on the job. Worker's comp helps injured and sick workers to survive financially as they recover from health problems.

Function

Employers buy workman's compensation insurance from insurance providers to pay for benefits, such as money for missed pay, medical treatment and death benefits to employees and their families. Worker's compensation also serves as a way to reduce the liability of employers; by accepting worker's compensation benefits, employees give up the right to sue an employer for damages. According to Cornell University School of Law, state statues establish workers' compensation laws for most employees, meaning laws will vary from state to state.

Benefits

Worker's comp helps injured, disabled and ill workers by providing them with income even when physical aliments prevent them from performing their normal job duties. This can keep families from facing financial ruin as a result of an accident or unexpected illness. For employers, worker's comp can cut down on the chances of becoming engaged in costly lawsuits with employees. Workers may also be entitled to continued benefits if they earn less income, after returning to work, as the result of an injury.

Drawbacks

While worker's compensation can be positive in many ways, it has several potential drawbacks. If a worker is harmed due to poor safety standards or other failings on the part of the employer, a successful lawsuit may provide greater compensation than accepting worker's comp. Workers that receive benefits may have less incentive to recover and get back to work than if they had not received benefits. It may also be difficult to determine whether the worker was injured or became ill as a result of the job or an activity outside of the workplace. For instance, a shoulder injury might be attributed to the repetitive stress of a factory job, even if it was caused by lifting furniture or engaging in recreational activities outside of the job.

Considerations

Federal and state workers do not receive worker's comp benefits. Instead, the Federal Employment Compensation Act provides worker's comp benefits to federal employees. Under the provisions of the act, federal workers are provided with medical care, death and disability benefits and pay equal to two-thirds of their normal monthly salary. State workers receive benefits through state governments.

References

• New York State Workers' Compensation Board: Introduction to the Workers' Compensation Law
• New York State Workers' Compensation Board: Who Is An Employee Under the Workers' Compensation Law?
• State of California Division of Workers' Compensation: Injured Worker Information
• Cornell University School of Law: Workers' Compensation -- An Overview