Workers’ compensation

What is workers’ compensation?

Workers’ compensation is a program that compensates employees who are injured while on the job at their place of work or develop health complications directly related to their employment. Workers’ compensation programs are organized on a state-by-state basis in the U.S., and pay wages and health expenses in exchange for employees agreeing not to sue their employers over injuries sustained at work.

Deeper definition

Workers’ compensation, also called workman’s compensation or workers’ comp, provides compensation for employees who suffer job-related injuries and illnesses, including conditions that develop over time, such as carpal tunnel syndrome. Every U.S. state has its own workers’ compensation insurance program with varying rules and regulations. The federal government offers its own program for federal employees.

The compensation pays out if the injury or illness is work-related and the employee is eligible. In some situations, the employer may contest the claim, in which case the insurance carrier withholds the benefits until the matter is resolved. During this time, the employee may be entitled to disability benefits, although any disability payments reduce the amount received from the workers’ compensation payout.

In some cases, employees may return to work in a different role, on lighter duties. If an injury or illness means the employee is unable to earn the same wages as before, he or she may be entitled to benefits to cover some of the difference in income.

Workers’ compensation example

Any employee suffering a work-related illness or injury is entitled to workers’ compensation, regardless of who is at fault. For example, an employee who falls due to personal carelessness has the same compensation rights as an employee who falls due to a lack of safety equipment provided by an employer. Strains or sprains are the most common sources of workers’ compensation cases, while cuts and punctures are the most common office-related injuries.

Need to refinance due to issues related to workplace injury? Check out our refinance calculator to see how much you could save.