Workers compensation is a form of insurance that replaces lost wages and provides medical benefits for a worker who is hurt while working. This form of compensation replaces the employees right to sue the employer for negligence. There are generally no provisions for pain and suffering or for punitive damages for negligence. Companies are required to carry this form of insurance by law. Workers comp premiums are one of the largest expenses for most companies, sometimes only surpassed by labor costs.
Germany was the first country to enact a workers compensation law in 1864. Other countries soon followed, and now virtually all industrialized nations have a law of this kind. Workers comp is a no fault program. This means that the worker is covered for lost wages and medical treatment regardless of who was at fault. All that is required is that the worker was working when injured.
There are the occasions when an employee is injured at work by a third party. In this case, the worker can fill out workers compensation forms with the employer and with the third party. This gives the employee a second recourse should the employers insurance carrier deny the claim. Having this recourse is important, as being injured on the job can be devastating.
Sometimes the injuries sustained by the employee are so severe that they are not able to return to work. In this case, there are two options. One option is to receive periodic payments for a lifetime. Another option is a lump sum payment. When filling out workers compensation forms for such an injury, consider whether a lump sum will suffice, or if you will need to receive payments for the rest of your life instead.
Workers compensation law also covers employees who are killed at work. In this case, the insurance company will pay death benefits to the family of the deceased. These benefits will cover the cost of a funeral, and will also provide monetary support for the family left behind by the accident.
In the majority of situations, the worker is only temporarily unable to work, or is just injured and needs medical treatment. In cases where the employee cannot return to work for a period of time, the insurance company will pay out to the employee two thirds of their average wages. This payment is tax free, so the net amount is usually very close to how much the employee would have earned at work during that time.
These laws have proven to be beneficial to both employees and employers. For employees, they get the peace of mind of knowing that they can take time to recover from their injuries and still be able to pay their bills. And, of course, all medical expenses will be covered. For employers, they are able to avoid potentially devastating lawsuits for negligence that could put them out of business. Since the inception of these laws in the late nineteenth century, workers compensation has been a great benefit for employers and workers.