6 Things to Know About Workers’ Compensation Insurance
Workers’ compensation coverage is an important type of insurance that covers the majority of American employees. But most people know very little about how workers’ comp works. Though there are a lot of commonalities, workers’ compensation laws and policies vary by state. Here are some interesting facts and quirks about workers’ compensation insurance in the United Sates.
Texas is the Only State that Doesn’t Require Workers’ Compensation
Unlike the other 49 states, Texas allows private employers to forgo workers’ compensation coverage. They can opt to have a private disability policy, which usually has more limited benefits than workers’ comp would, or no work-injury benefit. According to the Texas Tribune, Texas leads the country in worker deaths, and over 500,000 Texas workers have no coverage if they are injured or killed on the job.
You Can’t File a Workers’ Comp Claim and Sue Your Employer
Generally, if you are covered by workers’ compensation insurance and injured on the job, you can’t sue your employer in a personal injury lawsuit. For example, in Pennsylvania, the Workers’ Compensation Act is the exclusive solution for work related injuries and illnesses. In exchange for providing workers’ comp coverage, employers are protected from lawsuits.
A workers’ compensation attorney may be able to help with a wrongful claim denial. If a third party is at least partially responsible for the injury, it may be possible to make a third-party claim. Potentially liable third parties include a driver of another vehicle or a manufacturer of defective machinery.
35 States are NCCI States
NCCI is the National Council on Compensation Insurance. While many people think NCCI is an insurance carrier or regulatory agency, it is actually an independent, not-for-profit rating bureau that standardizes rules, details, and rates for workers’ compensation insurance. The states that partner with NCCI use its data and follow its rules. Other states are monopoly fund states, so the state agency handles everything and there isn’t a rating bureau.
California Has its Own Workers Comp System
The largest state by population and the largest market for workers comp insurance, California has its own rating bureau, the Workers Compensation Insurance Rating Bureau of California (WCIRB). Employers can choose from buying private insurance, state insurance, or self-insurance (if approved).
During the COVID-19 pandemic, California has started offering workers compensation benefits for onsite workers who test positive for coronavirus, if specific criteria are met. To reduce the spread of the disease, sick employees who most likely caught COVID-19 at work can stay home from work and receive the benefits. This policy was initially introduced as an Executive Order on May 6, 2020, then Governor Gavin Newsom signed SB 1159 on September 17. The law will apply through 2022.
Other States Have Acted to Apply Workers Comp to COVID-19
At the time of this writing, 14 states have taken action to extend workers’ comp coverage to include workplace-acquired COVID-19. Other than California, 6 additional states have an enacted legislation: Alaska, Minnesota, Utah, Wisconsin, Illinois, and Wyoming. While most limit the coverage to first responders and healthcare workers, Illinois includes all essential workers, and Wyoming includes all workers who are covered by workers compensation. The other states that have taken action have done so with executive authority or action. Many other states have bills or orders in progress, so it is likely that the number of states applying workers’ comp to COVID-19 will increase in the coming months.
Workers’ Compensation is for Employees
In most states, workers must be classified as W-2 employees in order to be covered by workers’ comp insurance. This means that independent contractors, sole proprietors, domestic workers, and temporary workers are often excluded. Solo proprietors and entrepreneurs may have the option of purchasing their own policies for themselves. The exact specifics of who must be covered by workers’ compensation varies by state. It is wise to research your state’s laws and whether you are covered before the time comes to make a claim.
