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Workers’ compensation is essentially an insurance that provides workers with lump sum compensation, a wage replacement, and medical benefits if they incur injuries, or become ill as a result of performing their jobs.
The system is designed to both support workers financially, whilst limiting the liability of employers in the case of accidents and uncertainties in the workplace. It now forms a key component of labor law in the United States, with subtle differences and variations across different states.
The benefits, their administration, and the caps imposed on them by various states leave sizable impacts on the insurance and liability protection expenses of businesses, and as such, affect the overall cost of doing business.
Here are some ways in which workers’ compensation laws differ across the US,
Different Levels & Caps On Benefits
A key difference between workers compensation laws across state lines is the amount of benefits offered to workers. In some states, the compensation awarded can be fairly generous, at a percentage of a worker’s pre-injury wages, which can be quite substantial.
Although paid by an insurance company, such an approach to workers’ comp means businesses having to contend with massive premiums on a yearly basis, often depending on the nature of their business, and level of risks posed to workers.
On the other hand, there are states that impose a cap on an employer’s liability pertaining to workers’ compensation, on a per accident, per disease, and per employee basis. This helps provide much needed certainty for both employers and insurance companies alike, making it more suitable for business.
Compensation awarded further differs based on the level of injury, for example, in the case of total disability, a workers compensation claim in South Carolina can extend to two-thirds of the total average weekly wage, times 500 weeks, or 9.6 years.
Another key area of difference between states when it comes to workers compensation is how claims are handled and administered. In some states, injured workers are required to file claims with relevant state agencies in order to receive compensation, in others, the process is entirely handled by private insurers.
This makes a huge difference pertaining to the ease at which claims are handled, with claimants likely to face certain frictions while working with state agencies, while it is largely seamless when filing claims with private insurance companies.
On the other hand, state agencies are essential for protecting worker’s rights, and it is almost never in the interest of insurers to dispense funds, even though most private insurers will strive to maintain reasonable claim settlement rates and a reputation for fairness.
Types of Injuries
A major difference between states is the type of injuries that are covered under workers’ compensation laws.
While in general, most states do offer coverage for physical injuries and occupational illnesses incurred at the workplace or while carrying out official duties, many states refuse coverage for mental health illnesses, even if they are related to work.
This includes PTSD, depression, and more, that can be a result of a hostile work environment, or stress-induced owing to extensive periods of work. However, workers do have other avenues to claim compensation in this regard, even if they don’t come under the purview of workers comp.
Dispute Resolution & Return To Work
Many workers’ comp claims involve certain disputes between workers, employers, and possibly even other parties. How this dispute is dealt with and resolved is also specified in certain state laws, with some requiring the process to be handled via an administrative process.
Other states, however, allow workers to directly sue their employers, where the circumstances surrounding the injury or accident is reviewed, before arriving at a settlement.
There are even laws pertaining to how the worker has to be treated after returning to work, with no discrimination, or hostilities towards workers being tolerated in most states, even if they sue their employers.
A codified workers’ compensation law provides much needed certainty for businesses, workers, and insurers alike.
While the laws and rules pertaining to this vary greatly across different states, on a broad scale, most state laws do a great job in protecting the interests of both employers and employees when things go wrong.