Workers Compensation

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Prior to federal and state workers' compensation legislation in the United States, employees who were injured on the job had no formal system in place to compensate them for injuries sustained while working for an employer. The only recourse for the injured employee was to sue the employer under civil or tort law. Furthermore, the employee would have the burden of proving employer malice or negligence. Even though the employers potential liability was limitless, most courts in the U.S. typically ruled in favor of the employer. This left employees to cover their own expenses including lost wages, medical costs, and lost future earnings.

Originally, the federal government assumed that workers compensation laws should be left to individual states to enact. But in 1908 President Taft signed the first legislation requiring mandatory employer coverage for employees working in multi-state commerce. Over the next 40 years each state enacted their own state-specific programs and work compensation laws. Wisconsin was the first state to establish a formal workers comp program and Mississippi was the last state.

Texas Workers Compensation Insurance Agency

What is Workers Compensation?

Workers' compensation insurance, often called "workers comp," is a state-regulated insurance program consisting of payments required by law to be made to an employee who is injured or disabled in connection with work. Texas private employers can choose whether or not to provide workers’ compensation insurance coverage for their employees. In most cases, your employer is required to notify you whether or not they provide coverage.

The federal government does offer its own workers' compensation insurance for federal employees, but every individual state has its own workers' compensation insurance program. Be sure to check your own state's workers' compensation benefits laws by referring to the Texas Department of Insurance (TDI) official page or the U.S. Department of Labor's website.

In most situations, injured employees receive workers compensation insurance, no matter who was at fault for the injury. Because these workers comp benefits act as a type of insurance, they preclude the employee from suing his or her employer for the injuries covered.

Workers Compensation Insurance Coverage

What does Workers' Compensation insurance cover?

Workers' compensation insurance is designed to cover injuries that result from employees' or employers' carelessness. The range of injuries and situations covered is broad, but there are limits. States can impose drug and alcohol testing on the injured employee, and can deny the employee workers' compensation benefits if such tests show the employee was under the influence at the time of the injury. Compensation may also be denied if the injuries were self-inflicted; where the employee was violating a law or company policy; and where the employee was not on the job at the time of the injury.

Workers Compensation Insurance Providers

Although the payments are usually modest, workers' compensation insurance covers

  • Medical care from the injury or illness
  • Replacement income
  • Costs for retraining
  • Compensation for any permanent injuries
  • Benefits to survivors of workers who are killed on the job

But remember that if a person collects workers' compensation benefits, he or she cannot sue the employer. And workers' compensation benefits do NOT cover pain and suffering.

Wage replacement is usually two/thirds of the worker's average wage, but there is a fixed maximum amount that the benefits will not go over. That may seem modest, but note that these benefits are not taxed. So, as long as the employee was making a fair wage, he or she should have no major problems. The eligibility for wage replacement begins immediately after a few days of work are missed because of a particular injury or illness.

Are Long-term and Permanent injuries covered?

Yes. Workers' compensation insurance is not limited to just incidental accidents. It also covers problems and illnesses that are developed over a long period of time of doing the same injurious activity--for example, carpal tunnel syndrome or back problems from some sort of repetitious movement.

Who is covered by workers' compensation insurance?

Most types of employees are covered by workers' compensation insurance. That said, states commonly exclude some workers from coverage, such as:

  • Independent contractors
  • Business owners
  • Volunteers
  • Employees of private homes
  • Farmers and farmhands
  • Maritime employees
  • Railroad employees
  • Casual workers