The question of whether workers compensation is mandatory in the USA has long been debated. Many people claim that workers comp was a necessary and vital social program enacted to help protect workers from being financially destroyed by work-related injuries, illnesses or fatalities (Fishback 2001).
Most states have established laws requiring employers to provide worker’s compensation insurance as part of their employee benefit package. These systems were designed to provide partial medical care and income protection to injured workers and to encourage employers to reduce the risk of workplace injury and illness through safety and health programs.
It is also believed that the introduction of workers’ compensation laws in the early 1900s was a turning point in America’s economic, legal and political history. These laws were hailed as the first instance of social insurance in the United States, and their adoption quickly spread throughout the country.
Almost all states require that businesses and other entities who employ workers to carry workers’ compensation coverage in the form of a private insurer or state-certified compensation insurance fund. These funds are regulated by their respective state departments of labor.
They monitor claims filed by workers and pay them the benefits they are entitled to under the law. They also review and approve rates to determine how much a policyholder will be required to pay for coverage.
There are a number of factors that affect the level of benefits that an injured worker receives, including the nature and severity of the injury or disease and the type of insurance plan that was purchased. In addition, there are a variety of statutory and regulatory requirements that can affect the amount of workers’ compensation an employer must pay.
These requirements vary widely from state to state and may be difficult for a business owner to understand without professional assistance. They include who is eligible for coverage, the minimum level of workers’ compensation benefits, how and when to report an injury, what benefits are available, how and when to make a claim, how a claim is denied, and what the consequences are if an employer or employee fails to follow proper procedures.
The rules governing workers’ compensation are extremely complex, and in order to obtain an accurate understanding of the laws in your jurisdiction, it is essential that you consult with an experienced attorney who is knowledgeable about workers’ compensation regulations.
In most jurisdictions, workers’ compensation payments cover lost wages and medical treatment for work-related injuries or diseases. Depending on the jurisdiction, these benefits range from 66 2/3 percent of an injured worker’s gross earnings to 80 percent of spendable earnings in some cases, and are subject to certain limitations.
Some states also provide a partial wage replacement benefit to compensate an injured worker for time off work. This is an important consideration for those who are part of the “gig economy” and who work as freelancers or contractors.
However, workers’ compensation policies are susceptible to insurance fraud. An employee may misrepresent the cause of an injury or exaggerate its severity. In other cases, an employee may invent an accident that occurred on the job.