Workers' Compensation

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Workers' Compensation

Workers' compensation is meant to protect employees from loss of income and to cover extra expenses associated with job-related injuries or illness. Accidents in which the employee does not lose time from work, accidents in which the employee loses time from work, temporary partial disability, permanent partial or total disability, death, occupational diseases, noncrippling physical impairments, such as deafness, impairments suffered at employer-sanctioned events, such as social events or during travel to organization business, and injuries or disabilities attributable to an employer's gross negligence are the types of injuries and illnesses most frequently covered by workers' compensation laws. Since 1955, several states have allowed workers' compensation payments for job-related cases of anxiety, depression, and certain mental disorders. Although some form of workers' compensation is available in all 50 states, specific requirements, payments, and procedures vary among states.

Certain features are common to virtually all programs: The laws generally provide for replacement of lost income, medical expense payments, rehabilitation of some sort, death benefits to survivors, and lump-sum disability payments. The employee does not have to sue the employer to get compensation. The compensation is normally paid through an insurance program financed through premiums paid by employers. Workers' compensation insurance premiums are based on the accident and illness record of the organization. Having a large number of paid claims results in higher premiums. Medical expenses are usually covered in full under workers' compensation laws. It is a no-fault system; all job-related injuries and illnesses are covered regardless of where the fault for the disability is placed.

Workers' compensation coverage is compulsory in all but a few states. In these states, it is elective for the employer. When it is elective, any employers who reject the coverage also give up certain legal protections. Benefits paid are generally provided for four types of disability: permanent partial disability, permanent total disability, temporary partial disability, and temporary total disability. Before any workers' compensation is reorganized, the disability must be shown to be work-related. This usually involves an evaluation of the claimant by an occupational physician. One major criticism of workers' compensation involves the extent of coverage provided by different states. The amounts paid, ease of collecting, and the likelihood of collecting all vary significantly from state to state.

After a decade of yearly double-digit increases in the cost of workers' compensation, in the early 1990s at least 35 states began to make changes in their workers' compensation laws. These changes included tighter eligibility standards, benefit cuts, improved workplace safety, and campaigns against fraud. Recent data indicate that these changes are paying off. The rates of increases in the cost of workers' compensation have slowed considerably, and in 1993 the cost actually declined. From 1993 through 1996, the cost of workers' compensation insurance continued to decrease.

State and federal workers' compensation insurance is based on the theory that the cost of industrial accidents should be considered as one of the costs of production and should ultimately be passed on to the consumer. Individual employees should neither be required to stand the expense of their treatment or loss of income nor be required to be subjected to complicated, delaying, and expensive legal procedures. In most states, workers' compensation insurance is compulsory. Only in New Jersey and Texas is it elective. When compulsory, every employer subject to it is required to comply with the law's provisions for the compensation of work injuries. The law is compulsory for the employee also. When elective, the employers have the option of either accepting or...
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