By Janet Gordon, PP, PLS
The Workers’ Compensation Act (WCA) is based upon a covenant: The employer provides workers’ compensation coverage without regard to fault and, in turn, receives immunity from lawsuit. This “no fault” concept provides an employee with compensation for injury, regardless of fault, if the injury occurs “in the course of” and “arises out of” the covered employment.
Although benefits vary dramatically from state to state, the typical program covers payment of all related medical bills plus weekly compensation during the time that the injured worker is unable to work. A permanent, partial benefit is payable if the injury results in permanent disability. If a worker is totally and permanently removed from the workforce, a disability pension is paid.
Workers’ compensation laws are established by each state and vary considerably from state to state. Disputed issues are handled by the state workers’ compensation agency unique to each jurisdiction such as an industrial accident board or industrial commission.
In most states, the award rendered by the board or commission is directly appealable to a state trial court and is then handled in the same manner as other lawsuits.
The following concepts are generally shared by most Acts:
- To provide benefits to injured workers without regard to fault;
- To provide immunity to employers from lawsuits for injuries covered under the WCA;
- To protect workers from undue economic hardship until they are able to return to employment. If the worker is unable to return to employment, they are provided reasonable compensation to prevent the injured worker from becoming a burden on society;
- To protect both employers and employees in the majority of cases from having to become involved in lengthy and expensive litigation;
- To shift the loss caused by injury from the employee and the public at large to the industry and ultimately the consumer of the industry’s products;
- To encourage safer workplaces for employees; and
- To largely eliminate the adversarial process and to promote the employment relationship.
Workers’ compensation statutes that require employers to carry coverage also penalize employers if they fail to obtain that coverage. These penalties assume various forms—from addition of a certain percentage of benefits to requiring that the non-complying employer pay all benefits dollar-for-dollar. Such penalties are quite persuasive in obtaining a high level of cooperation with the laws by employers. Some states allow for an injured employee to sue an employer for damages if the employer fails to provide coverage. Criminal penalties are often imposed if the employer’s failure to provide coverage was willful.
Most states have a statutory provision that imposes the role of employer upon a person or entity contracting with a third party if the third party fails to provide coverage for its employees. In the event of such a failure, the statutory employer assumes the role of the non-compliant employer and is responsible for coverage.
Types of Benefits Paid:
- Temporary Total Disability
These benefits are paid to the injured employee for the purpose of meeting normal living expenses while recovering from the acute phase of an industrial accident. In order to receive this benefit, the employee must be unable to work. The employee usually receives a weekly benefit equal to a percentage of the average weekly wage. These benefits are paid until the employee returns to work or reaches maximum medical improvement. Depending upon the jurisdiction, there is usually a three to seven day waiting period between the last day worked and commencement of benefits.
- Temporary Partial Disability
These benefits are paid to the employee who is unable to return to work on a part-time basis or returns to a lower paying job. The benefits paid are a percentage of the difference between pre-and post-injury earnings. The purpose of these benefits is to maintain the employee’s earnings at approximately the pre-injury level. These benefits are generally payable until either the injured employee returns to work full-time or is paid the maximum amount provided by law.
- Permanent Partial Disability
These benefits provide compensation to the injured person for bodily injuries which are permanent in nature and result in medical impairment which limit the ability of the person to function. This impairment can relate to both physical and psychological limitations which prevents the person from functioning at pre-injury levels. The amount of compensation paid is based on a formula which differs from state to state. Generally the percentage of medical impairment determined by the medical experts, the life expectancy of the injured person, and disability factors such as age, education, and prior work experience are considered. Some states use a standard time rather than the worker’s life expectancy to calculate the amount of compensation due. Alternatively, compensation may be based upon projected lost earnings rather than medical impairment.
Once the dollar amount is determined, it is paid in weekly or monthly installments. In some states, the workers’ compensation agency may declare a lump sum payment allowing the employee to receive the benefits in one award. Typically, permanent partial awards are not calculated until the injured employee reaches maximum medical improvement.
- Permanent Total Disability
These benefits are paid to an injured person whose physical and psychological conditions after attaining maximum medical improvement are so restricted that the person remains unable to engage in any gainful employment. These benefits are usually payable for the lifetime of the injured person or until improvement allows return to employment. A few states have a limit on permanent total disability benefits through either a dollar or a time limitation. Some states have a total disability fund which undertakes the obligation of paying benefits to the worker once the employer (or the employer’s insurer) has expended the maximum amount required by statute.
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