How Does Workmans Comp Work?
Workmans comp is mandatory in every state, but the level of coverage may vary.
In the corporate world where most of the country’s labour works, work injuries are rather a common occurrence. Some professions require physical strength, thus it is common for employees to get hurt during work or at work premises.
When that happens, workmans comp insurance covers for their injuries, medical expenses and provides a couple more benefits.
Let’s get into details about what a workmans comp is and how it works.
What is Workers’ Compensation?
A worker’s insurance compensation in the USA is typically referred to as work comp cover, which is basically protection given to employees if they get injured or sick because of their job. Whatever the legal requirement and laws may be in your country, keeping those in mind the work comp covers employee sickness and health if it has been affected due to the nature of the work.
Naturally employees won’t be covered if they are injured or sick because of their own negligence such as alcohol consumption or drug intoxication. Moreover employee misconduct is also often not covered in this type of insurance, where an employee would knowingly violate the law or the policy.
How does Workmans Comp work?
Workman’s comp insurance policy is purchased by businesses and employers, aimed at providing protection to employees. Workmans comp works when employees report about the incident or their injury to their employer, and then the employer fills up formalities to see how it would cover the employee.
There are however certain exceptions as well, as to what a workmans comp will cover and what it will not cover as part of the policy plan.
Workers Compensation Insurance covers:
- Employee death: If an employee dies while on duty or their cause of death is the job, then the beneficiaries will receive monetary compensation under the insurance. This will also cover any funeral or burial costs.
- Injuries: Any injuries caused by the job are covered. Let’s say an employee is working in the copy room and is required to pull down files from the top cabinet. While doing so if he falls down the ladder and fractures his leg, he will be covered for the ambulance ride, treatment and required medications.
- Sickness: If the employee gets sick while on the job, let’s say the basement of the company is dusty and the employee is asthmatic. This has caused him an allergy because of the dust- the insurance will cover medicines till he gets better.
- Employee disability: An electrician while fixing the AC unit has it fall on himself, in turn has a shoulder displacement and is disabled for a while, his medicines and any treatment will be covered under the insurance.
- Missed wage replacement: Bringing forward the same example of an electrician, when he is disabled and can’t physically come to the job and work, the wages missed for weeks or even months will be covered by the insurance company. Because the work was missed due to work-related mishap, the employee will receive that certain amount of wage he would have otherwise earned.
- Additional medical benefits in hospitals: Under the insurance, employees are also covered for additional benefits in the hospital like follow-up treatments and routine checkups. Please note that these are only liable if the illness/injury has happened at work.
Worker’s Compensation Insurance DOES NOT cover these people:
- Business owners
- Independent contractors
- Federal employees
- Railroad employees
Workers Compensation Insurance Rates
This mathematical section of the article is actually very important for you to get an idea of what an average worker’s compensation rate looks like as per the nature and risk involved in the business.
The average cost of a worker’s compensation is around $40,000 with an average premium of $47 a month.
Here is a list of industries and the average premiums they have to pay annually.
|Industry||Average Premium Per Year|
|Administration & Facilities Support Services||$327|
|Agriculture, Forestry & Fishing||$1858|
|Arts, Entertainment & Recreation||$1436|
|Construction & Trade Contractors||$5331|
|Finance & Insurance||$1436|
|Healthcare & Social Services||$1009|
|Hotels or motels||$2058|
|Management of Companies & Enterprises||$2400|
|Manufacturing & Food Production||$2214|
|Personal Services & Miscellaneous Organizations||$383|
|Professional & Technical Services||$1833|
|Public Service & Public Administration||$445|
|Restaurants and Taverns||$818|
|Telecommunications & Information||$1598|
|Transportation & Warehousing||$4290|
|Utilities & Sanitation Services||$1004|
Note: Sample rates have been extracted online, courtesy of WorkCompLab.
As you can see in the table above, high risk businesses such as construction companies, warehousing, underground mining are the jobs with the highest amount of annual premiums because of the high risk of injuries or death involved.
Industries such as administration jobs and real estate have the lowest premiums because of low risk involved, as these jobs require desk work.
How does Workman’s Comp work for Employers?
Most states have made it mandatory for employers to provide workman’s comp insurance to their employees. Even if you have a small scale business and you have only a few employees working for you, you have to provide them protection through insurance.
While all states have made it mandatory, the amount of necessary coverage may vary. Some states demand full coverage, while some half coverage, and employers are supposed to abide by the rules.
If you do not carry workers’ compensation insurance for your business, employees or their families could sue in civil court for workplace injury or death. This situation could be financially devastating for business owners who are uninsured and could even open them up to a criminal investigation. Running a business can be fast-paced and stressful. Business owners need to reduce their risks of complicated legal problems whenever possible and investing in workers’ comp insurance is one important way to do this.
Although worker’s comp is issued to employees and it is for their own benefit, they aren’t supposed to pay for it. Employers pay for their employees coverage plans and employees are not supposed to contribute to paying premiums at all.
How does Workers’ Comp pay?
Typically, the workers’ comp system in most states offers 66% of your wages. Depending on the state, you may receive your salary benefits weekly, bi-weekly, or once a month. Your medical bills are sent directly to your employers and whatever coverage you’re eligible for is provided to you.
Workers’ Compensation Laws By State
Depending on which state you live in, workers comp laws will differ. This means that whatever your state is, you have to abide by the laws and provide protection to your employees that way.
According to FindLaw, here is a compilation of all the workmans laws by state:
|State||State Workers’ Comp Division||Workers’ Compensation Statute||Covered Employees||Persons Not Covered|
|Alabama||Alabama Department of Labor||Alabama Code §25-5-1 et seq.||Most employees are covered.||-Domestic servants
-Employees of business with less than five people
-Licensed real estate brokers
|Alaska||Department of Labor & Workforce Development||AS §23.30.005, et. seq||Most employees are covered including any person employed by the State or its political subdivision or a person
employing one or more persons in connection with a business or industry carried on in Alaska.
-Harvest and similar transient help
-Statutorily-defined taxi cab drivers
|Arizona||Industrial Commission of Arizona||Arizona Revised Statutes Annotated §§ 23-901, et seq||Every person in the
service of the state, any political subdivision, or any person in the service of any
an employer subject to the workers’ compensation provisions is considered to be an employee.
|-Casual employees or not in the usual course of a trade
|Arkansas||Arkansas Workers’ Compensation Commission||Arkansas Code Annotated § 11-9-101 et seq||Any person, including a minor, whether lawfully or unlawfully
employed under any contract of hire, written or oral, express or implied.
|-Agricultural farm laborers
|California||Department of Industrial Relations||California Labor Code Division 3, section 2700 through Division 4.7, section 6208||Every person in the service of an employer under any
appointment or contract of hire or apprenticeship, express or implied, oral or written,
whether lawfully or unlawfully employed.
|-Domestic employees employed by his or her parent, spouse, or child
-Deputy sheriffs or deputy
-Persons performing services in return for aid or sustenance only
-Any person performing voluntary services at or for a non-profit recreational camp
|Colorado||Department of Labor and Employment||Colorado Revised Statutes §
8-40-101, et seq
|Every person in the service of any person, association of persons, firm, or private
corporation, under any contract of hire, express or implied, including aliens and also
including minors, whether lawfully or unlawfully employed.
-Drivers under a lease
|Connecticut||Workers’ Compensation Commission||Connecticut General Statutes Sections 31-275 through 31-355a, et seq||Any person who has entered into or works under any contract of service
or apprenticeship with an employer.
|-Sole proprietor or business partners
|Delaware||Department of Labor||Delaware Code Annotated Title 19, §§ 2301-2397||Every person in service of any corporation, association, firm or
person under any contract of hire or performing services for a valuable consideration
and minor children of a farm employer if they are not named in an endorsement to the
farm employer’s contract of insurance-Casual employees-Any person to whom articles or materials are furnished or repaired, or adopted for
sale in the employee’s own home, or on the premises not under the control or
management of the employer
|District of Columbia||Department of Employment Services||District of Columbia Code Annotated §32-1501, et seq||Every person, including a minor, in the service of another under any
contract of hire or apprenticeship, written or implied,
|-An employee whose employer is an uninsured subcontractor can assert a claim against
the general contractor
|Florida||Department of Financial Services||Chapter 440, Florida Statutes, et seq.||Every person in the service of any person, association of persons, firm, or private
corporation, under any contract of hire, express or implied, including aliens and also
including minors, whether lawfully or unlawfully employed.
|-Independent contractor (excluding the construction industry)
-Licensed real estate brokers
-Bands, orchestras, and musical and theatrical performers, including disc jockeys
-Certain taxicab, limousine, or other passenger vehicle-for-hire drivers
-Some sports officials
|Georgia||Georgia State Board of Workers’ Compensation||Official Code of Georgia Annotated §§ 34-9-1, et seq||Employees of a business that employee three or more employees and some unpaid persons can be considered employees under limited circumstances.||-Rail
common carriers engaged in interstate or intrastate commerce-Farm laborers-Domestic
-Licensed real estate salespeople or associate brokers
|Hawaii||Department of Labor and Industrial Relations||Hawaii Revised Statutes, Chapter 386||Any
individual in the employment of another person.
|-Some exceptions for primary and secondary contractors|
|Idaho||Industrial Commission||Idaho Code § 72-101, et. seq.||Any person who has entered into
the employment or who works under a contract of service or apprenticeship with, an
-Real estate brokers and real estate
-Volunteer ski patrollers
-Officials of athletic contests involving secondary
|Illinois||Illinois Workers’ Compensation Commission||820 Illinois Compiled Statutes Annotated 305/1, et seq.||Every person under the service of another or under a contract for hire. Certain businesses are considered “extra-hazardous” with all employees covered
automatically by law.
|-Real estate brokers/salespeople on commission
|Indiana||Workers’ Compensation Board of Indiana||Ind. Code § 22-3-1-1 et seq.||Every person, including minors, contractors or
apprenticeship, written or implied, except one whose employment is both casual and not
in the course of trade, business, occupation, or profession of the employer.
|-Railroad engineers, firemen, conductors, brakemen, flagman, baggage men,
-Foremen in charge of yard engines,
-Employees of a fire or police department, of any municipality who
partake in a firefighters or police officer’s pension fund,
Farm or agricultural
|Iowa||Iowa Workforce Development||Iowa Code §85.1 et seq.||All employees not specifically excepted are covered.||-Household
employees earning less than $1,500 during 12 months prior to an injury-Casual
employees earning less than
$1,500 for 12 consecutive months prior to an injury-Agricultural employees where the
employer’s nonexempt cash payroll is less than $2,500 for the preceding calendar year
-Relatives of farm employer and employer’s spouse
-Officers of a family farm
-Some officers of a corporation
|Kansas||Department of Labor||Kansas Statutes Annotated §44-501 et seq||Any person who has entered into the
employment of or works under any contract of service or apprenticeship with an
|Kentucky||Kentucky Labor Cabinet||Kentucky Revised Statutes § 342.0011 et seq.; 803 Kentucky Administrative
Regulations. 25:009 et seq.
|All persons, including minors, lawfully or unlawfully
employed under any contract of hire; helpers, paid or not if hired with the knowledge of
the employer; corporate executive officers; volunteer fire, police, civil defense personnel or
trainees and members of the National Guard on active duty; newspaper sellers or
|-Domestic servants, if there are less than two
regularly employed in a private home for 40 hours or less per week-Maintenance, repair
and similar employees employed in a private home if the employer has no other
employees subject to Workers’ Comp
|Louisiana||Louisiana Workforce Commission||Louisiana Revised Statutes Annotated §23:1021 et seq.
Louisiana Revised Statutes Annotated §33:2581
|Most persons in an employment setting including all persons in the service of the state, or a political subdivision or of any incorporated
public board, or under any appointment or contract of hire.
|-Employees of private residential household
and private unincorporated farms-Musicians
and performers under contract
|Maine||Workers’ Compensation Board||Maine Revised
Statutes Annotated, title 39-A, or 39-A M.R.S.A. § 101 et seq.
|Every person in the service of another under any contract of
hire, express or implied, oral or written.”
-Persons engaged in maritime employment covered under admiralty law
-Certain agricultural employees
|Maryland||Workers’ Compensation Commission||Maryland Code Ann., Lab & Empl. §9-101 (2014) et seq.; Code of Maryland Regulations
(COMAR) Title 14, §09.01.01 et seq.
|Any regular payroll employee is a covered employee while in the service of an employer||-Independent contractors
-Various other persons employed
|Massachusetts||Executive Office of Labor and Workforce Development||Massachusetts General Laws, Chapter 152||Any person in the service of another under any contract of hire, express or implied, oral or written.
|-Masters of and seamen on vessels engaged in interstate or foreign commerce
-Persons employed to participate in organized professional athletics
-Real estate brokers and other salespeople working on commission only
-Persons employed by an employer engaged in interstate or foreign commerce but only so far as the laws of the United States provide for compensation
|Michigan||Department of Licensing and Regulatory Affairs||Michigan Compiled Laws Annotated 418.101-941||Any employee “in the service of another, under any contract of
|-Exclusions for smaller employers
-Some agricultural employees and domestic workers and real estate brokers/agents
|Minnesota||Department of Labor and Industry||Minnesota Statutes Annotated Ch. 175A and 176, et seq.||Any person who performs services for another for hire.||-Farmers or members of their family
who exchange work with other farmers in the same community-Other various exceptions
|Mississippi||Workers’ Compensation Commission||Section 71-3-1 et. seq., MISS. CODE ANN||Any person, including a minor, whether lawfully or unlawfully
employed in the service of an employer under any contract of hire or apprenticeship,
written or oral, express or implied.
-Other various exceptions
|Missouri||Department of Labor and Industrial Relations||Chapter 287 R.S.Mo. 2005||Any person in the service of an employer under a contract of hire, appointment or election,
including officers of corporations.
|-Owner/operators of leased trucks in
interstate commerce-Farm labor-Domestic servants
-Volunteers of tax exempt
|Montana||Department of Labor and Industry||Mont. Code Ann. § 39-71-101, et.seq||Most employed persons except for those listed in the statute.||-Domestic servants
-Dependent member of the employer’s family
-Certain sole proprietors
-Real estate brokers or salesmen
-Certain officials at athletic events
-Cosmetologist or barber services
-Petroleum land workers
-Persons working for enrolled tribal members who
|Nebraska||Workers’ Compensation Court||Nebraska Revised Statutes § 48-101 et. seq.||Employees of the state, every
government agency created by it, and every employer in Nebraska, including nonresident
employers performing work in the state employing one or more employees in the
regular trade, business, profession, or vocation of such employer
-Agricultural operations employees
-Employees of railroad companies
|Nevada||Department of Business & Industry||Nev. Rev. Stat. Chapters 616A-616D, Nev. Rev. Stat. Chapter 617||Every person in the service of an employer under any appointment or contract of hire or
apprenticeship, express or implied, oral or written, whether lawfully or unlawfully employed.
-Theatrical or stager performers
-Musicians whose services do not last more than two consecutive days
-Voluntary ski patrol
-Sports officials paid a nominal fee
-Any member of the clergy
-Real estate brokers
-Direct salespersons working on commission
|New Hampshire||Workers’ Compensation Division||New Hampshire Revised Statutes Annotated 281-A||Any person in the service
of an employer under any express or
implied, oral or written, contract of hire
|-Railroad employee engaged in
sellers-Real estate brokers, agents or appraisers
-People providing services as
|New Jersey||Department of Labor and Workforce Development||New Jersey Statutes Annotated 34:15-1 et seq.||Most employees are covered with some exceptions.||-Independent contractors
-An employee who is willfully negligent
|New Mexico||Workers’ Compensation Administration||New Mexico Workers’ Compensation Act, New Mexico Statutes Annotated §§52-1-1, et
|Most employees are covered.||-Farm employees
-Real estate agents
-Persons who file a written waiver with the State of New
|New York State||Workers’ Compensation Board||Workers’ Compensation Law of the State of New York||Most employees in the State of New York||-Domestic employees working less than 40 hours
per week-Clergymen-Employees of municipalities and other political subdivisions who
are not engaged in hazardous employment
-Uniformed sanitation workers, firefighters and
-Babysitters and minors over
-Longshoremen and harbor workers
-Anyone engaged in yard work or household chores or making
|North Carolina||Industrial Commission||N.C. Gen. Stat. §97||Any person engaged in employment under any employment or
contract of hire or apprenticeship, express or implied, oral or written, including aliens and
also including minors, whether lawfully or unlawfully employed.
|-Casual employees and those not in the course of the trade, business, profession
or occupation of his or her employer
|North Dakota||Workforce Safety and Insurance||North Dakota Century Code Title 65 (Chapters 65-01 through 65-10)||Every person who performs services for another
for pay including all elected and appointed officials of the state and its
political subdivisions, the legislative assembly, elective officials of the state’s counties, and
all elective peace officers of any city and aliens, county general assistance workers, and minors.
-Any person who is engaged in an illegal enterprise or occupation
-Spouse or child under
-Real estate broker or real estate salesperson
-Members of the board of directors of a business corporation
-Newspapers delivery persons
|Ohio||Bureau of Workers’ Compensation||Ohio Revised Code §4121.01 et. seq.
Ohio Administrative Code §4121-01 et. seq.
|Any person in the service of the state, or any county or municipal
corporation, and any person in the service of any person, firm, private, or public
corporation that employs one or more employees or operatives regularly in the same
business or in or about the same establishment under any contract of hire, express or
implied, oral or written
|Oklahoma||Workers’ Compensation Court||Okla. Stat. tit. 85, §§ 301-413||Any person engaged in the employment of an employer covered by the terms of the Workers’ Compensation Code including members of the Oklahoma National Guard and participants in a sheltered workshop program certified by the U.S. Department of Labor.||-Horticulture employees not employed in using motorized machines
-Licensed real estate brokers
-Employees providing services in medical care or social services program
-Anyone employed by an employer with less than five employees all related by blood or marriage
-Employees of youth sports leagues qualifying as tax-exempt
-Owner-operators who lease tractor-trailers or trucks for hire
-Domestic servants in private home
|Oregon||Workers’ Compensation Division||Workers’
Compensation Law. Or. Rev. Stat. § 656.001
|Any person, including a minor, whether lawfully or unlawfully
employed, who works for pay, including salaried, elected and appointed officials of the
state, state agencies, counties, cities, school districts, and other public corporations.
|-Inmate or ward of a state
|Pennsylvania||Bureau of Workers’ Compensation||Worker’s Compensation Act of June 24, 1996, P.L. 350, No. 57||All natural persons who perform services for another for a valuable
|Rhode Island||Department of Labor & Training||R.I. Gen. Laws. 27-7.1-1, et. seq.;||Any person who has entered into the employment of or works under the
contract of service or apprenticeship with any employer. Any person employed by the State of
|-Sworn employees employed by the State of Rhode Island
-Real estate brokers
|South Carolina||Workers’ Compensation Commission||S.C. Code Ann. § 42-1-110 et seq.||Every person engaged in
employment under any appointment, contract of hire or apprenticeship, express or implied,
oral or written including members of the State and National Guard
|South Dakota||Department of Labor and Regulation||SDCL Title 62||Every person, including a minor, in the services of another under
any contract of employment, express or implied.
-Domestic servants working less than 20 hours in any
|Tennessee||Department of Labor and Workforce Development||T.C.A. § 50-6-101, et seq
|Every person under a contract of hire or apprenticeship, written or
implied, including a paid corporate officer
|-Some undocumented workers|
|Texas||Department of Insurance||Texas Labor Code Annotated § 401.001 et. seq||Persons in the service of another under a contract of hire including anyone working in the usual course and scope of the employer’s business who is temporarily asked
to perform services outside the usual course and scope of the business and persons who are trainees under the Texans Work program.
-Other excluded persons
|Utah||Labor Commission||Utah Code Annotated §34A-2-101, et seq.||Employees include those engaged in government service, any express or implied contract
of hire, lessees of mining property, and owners of a partnership or sole proprietorship if
an election is made.
|-Real estate agents or brokers|
|Vermont||Department of Labor||Vermont Statutes Annotated title 21, § 601 et seq||Persons who are employed and work under a contract of service or apprenticeship with an employer||-Casual employees
-Persons engaged in amateur sports
-Persons engaged in farm or
-Members of an employer’s family dwelling in the employer’s house
-Sole proprietors or
-Real estate broker or real estate salespersons
-Certain members of a corporation or LLC
|Virginia||Workers’ Compensation Commission||Virginia Workers’ Compensation Act, Title 65.2 Code of Virginia 1950||Persons, including aliens and minors, in the service of another under any contract of hire or apprenticeship, written or
implied, whether lawfully or unlawfully employed
|-Persons whose employment is not within the usual course of the employer’s business|
|Washington||Department of Labor and Industries||RCW 51.04.010 to 51.98.080||Employees, and independent contractors, the essence of whose contract is his or her personal labor including all officers of the state, state agencies,
counties, municipal corporations, or other public corporations, or political subdivisions.
|-Certain workers for businesses registered within the Registration of Contractors or licensed Electricians and Electrical Installations
-Home gardening and
-Employees not in the course of the trade, business, or profession of
-Services performed in return for aid or sustenance
-Sole proprietors or
-Minor children employed by parents for agricultural activities on the
-Certain officers of a corporation
-Entertainers for specific
-Services performed by an insurance producer
-Services performed by a booth renter, and certain LLC activities.
|West Virginia||Offices of the Insurance Commission||W. Va. Code § 23-1-1 et seq.||All persons in
the service of employers and employed by them for the purpose of carrying on the industry, business, service or work in which they are engaged
-Employers of five or fewer full-time employees engaged in agricultural service
-Employees engaged in organized professional sports activities, including
-Volunteer rescue or police
|Wisconsin||Department of Workforce Development||Wis. Stat. §102.01-.89 (2011)||Most workers and contract workers||-Domestic servants
|Wyoming||Department of Workforce Services||Wyoming Statutes § 27-14-101, et seq||Any person engaged in any extra hazardous
employment under any appointment, contract of hire, or apprenticeship, express or implied, oral or written and includes legally employed minors, aliens authorized to work
by the United States DOJ.
-Officer of corporation
-An employee in a private home
-Federal government employees
-Members of LLCs
-Childcare workers who are paid by the Wyoming Dept. of Family Services
Note: Sample rates have been extracted online, courtesy of FindLaw.
It is important for businesses and employers to give fair compensation to their workers. Some nature of jobs require physical strength which also invites bodily injuries and health concerns. To compensate for this loss, many business owners proceed to an insurance company to have all these health measures checked: to get their employees insured under the worker’s compensation belt.
Workmans comp works when employers set protection plans for their employees to cover for their injuries and medical expenses that they may experience while on their job. Employees don’t pay their premiums or contribute to the policy in any way,employers are responsible for paying premiums to keep the policy in force.