What is workers’ compensation?  

Workers’ compensation in the United States is a primarily state-based system which provides cash benefits or medical care for workers who suffer an injury or become ill due to their workplace.  

Some form of workers’ compensation is typically compulsory for almost all employers in most states except for Texas as of 2018. 

The workers’ compensation system is administered on a state-by-state basis, with a state governing board overseeing varying public/private combinations of workers’ compensation systems. 

In a majority of states, workers’ compensation is solely provided by private insurance companies. The cost of this insurance is called a premium.  

The federal government does offer its own workers’ compensation insurance for federal employees. 

What types of benefits does workers’ compensation cover?  

• Medical treatment: This covers doctor visits, surgery, medication, medical care, and other treatments. 
• Disability benefits: If an injured worker can’t work, either temporarily or permanently, they may receive disability benefits. 
• Rehabilitation costs: workers’ compensation may cover the costs of rehabilitation if an injured worker needs it.  
• Death Benefits: If a worker dies as a result of a workplace injury, their dependents may receive death benefits. 

Wage replacement benefits typically amount to approximately two-thirds of the worker’s average weekly wage. Eligibility for these benefits begins immediately after a few days of absence from work due to a specific injury or illness. To qualify, you may need to be medically approved for time off by physicians sanctioned by the workers’ compensation system or your employer. 

Types of workers’ compensation 

Coverage A (Workers’ Compensation Insurance) 

• Coverage A is the primary component of a workers’ compensation policy. 
• It provides benefits to employees who suffer work-related injuries or illnesses. 
• Benefits typically include medical expenses, wage replacement (usually about two-thirds of the employee’s average weekly wage), vocational rehabilitation, and, in some cases, death benefits for dependents in the event of a fatal workplace injury. 
• Coverage A protects employers from potential lawsuits by injured employees, as employees generally waive their right to sue their employer for negligence in exchange for receiving workers’ compensation benefits. 

Coverage B (Employer’s Liability Insurance) 

• Coverage B is often bundled with Coverage A in a workers’ compensation policy. 
• It provides protection for employers against lawsuits filed by employees who claim that their injuries or illnesses resulted from the employer’s negligence or unsafe working conditions. 
• Unlike Coverage A, which provides benefits to employees regardless of fault, Coverage B comes into play when an employee files a lawsuit against the employer seeking damages beyond what is covered by workers’ compensation benefits. 
• Coverage B typically covers legal expenses, court costs, and settlements or judgments awarded to injured employees or their families in cases where the employer is found liable for negligence. 

Why is it important for recruitment companies to know workers’ compensation regulations? 

If you’re placing a candidate in an industry with a higher risk of injury, your premium may be higher, which adds to your costs. Since not all EORs will provide that coverage, as a recruiter, it’s recommended that you work with one that can – get in touch today.