What Does Workers’ Compensation and What Does It Cover?
09.19.2022 | Employment Law
What is Workers’ Compensation and What Does It Cover?
Workers’ compensation laws can be a little tricky to understand. For example, in an unusual quirk in California law, roofing contractors must have workers’ compensation insurance, even if they have no employees. Workers’ compensation insurance is also mandatory for all employers in California.
Workers’ compensation might seem like a burden to businesses. But it provides substantial benefits to both workers and their employers.
Here are some things you need to know about the ways that workers’ compensation works and what it covers.
How Does Worker’s Compensation Work?
Businesses in California with at least one employee must purchase workers’ compensation insurance. Sole proprietorships have the option to buy workers’ compensation insurance, but the state does not require it in this circumstance.
In exchange for buying mandatory workers’ comp insurance, California grants businesses immunity from lawsuits by their employees for workplace accidents. So after an on-the-job accident, an injured worker has only one remedy — to file a workers’ comp claim.
This tradeoff benefits employers because they do not need to worry about a workplace accident bankrupting the business. It also benefits employees because they receive guaranteed compensation for workplace injuries, regardless of their employer’s financial status.
Buying Workers Compensation Insurance
The state of California provides employers with three options for securing workers’ compensation insurance:
- The State Compensation Insurance Fund
- Private workers’ compensation insurance
- Self-insurance
The State Compensation Insurance Fund was established by the state of California. The fund operates as a non-profit organization and sustains itself through its premiums, rather than direct state support. Because of its size, small businesses can often obtain better pricing through the state fund.
Many insurance companies sell private workers’ compensation insurance. These policies operate in the same way as policies that are issued through the state fund.
Employers may also choose to self-insure. Self-insurance permits an employer or a group of employers to create a fund to pay workers’ comp claims for workplace injuries. The employer or group must follow the same workers’ compensation rules as insurers do.
Injuries Covered by Workers Compensation
Worker’s compensation pays for all injuries that occur in the course of an employee’s duties. These injuries can result from a single event or multiple exposures.
Single Event
Workers’ compensation covers injuries caused by a fall, vehicle accident, fire, or other single events.
Repeated Events
Workers’ compensation also covers injuries that occur over time, such as:
- Exposure to toxins
- Repetitive stress injuries, like carpal tunnel syndrome or stress fractures
- Hearing loss that’s due to ongoing exposure to loud noises
Some injuries are not covered by workers’ compensation. Workers’ compensation might not cover injuries suffered while commuting to or from work, during breaks or time off, and when running personal errands during the workday.
While these determinations often require a close examination of the facts, employees cannot receive workers’ comp for injuries suffered on their own time.
Benefits Paid by Workers’ Compensation
Workers’ compensation pays many benefits to injured employees. These include:
Medical Benefits
Workers’ comp will pay an employee’s medical bills for diagnosis, treatment, therapy, and medication for an injury.
Wage Replacement
Workers’ compensation will temporarily replace two-thirds of an employee’s wages while they recover from their injuries.
Permanent Disability
Employees can receive disability payments if they cannot return to work.
Training Benefits
If an employee cannot return to the same job that they had previously, workers’ compensation will provide vouchers to train for a different job.
Death Benefits
Workers’ compensation will pay workers’ families in the event of a fatal work-related injury.
Filing a Workers’ Compensation Claim
Employers and workers must work together to file a workers’ compensation claim. Once the employer learns of the on-the-job injury, it must supply a claim form to the employee. The employee does not need to notify the employer of the accident. The employer can learn about the accident from other employees or from witnessing the accident.
The employee returns the claim form to the employer. The employer files the claim with the claims administrator. In most cases, the claims administrator works for the employer’s workers’ comp insurer.
The claims administrator will authorize the employee to receive medical treatment while they investigate the claim. If the administrator accepts the claim, the worker will receive the workers’ compensation benefits. If the administrator denies the claim, the worker will have the right to negotiate with or to ask for a hearing before a workers’ compensation judge.
Worker’s Compensation Issues in California
Workers’ compensation can raise complicated questions. Fortunately, lawyers who practice employment law can often advise businesses in the best ways to ensure compliance with California’s workers’ compensation laws.
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