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:
- Businessmen
- Business owners
- Longshoremen
- Volunteers
- 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 |
| Educational Services | $1322 |
| Finance & Insurance | $1436 |
| Healthcare & Social Services | $1009 |
| Hotels or motels | $2058 |
| Management of Companies & Enterprises | $2400 |
| Manufacturing & Food Production | $2214 |
| Underground Mining | $7312 |
| Personal Services & Miscellaneous Organizations | $383 |
| Professional & Technical Services | $1833 |
| Public Service & Public Administration | $445 |
| Real Estate | $332 |
| Restaurants and Taverns | $818 |
| Retail Trade | $1013 |
| Telecommunications & Information | $1598 |
| Transportation & Warehousing | $4290 |
| Utilities & Sanitation Services | $1004 |
| Wholesale Trade | $2338 |
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.
Understanding Workers’ Compensation for Employers
In most states, providing workers’ compensation insurance is mandatory for employers, regardless of business size. This coverage protects employees if they get injured or die due to work-related incidents.
Coverage requirements vary by state. Some require full coverage, while others demand only partial coverage. Employers must follow these state-specific regulations.
Failing to carry workers’ compensation insurance can lead to severe consequences. Employees or their families may sue for workplace injuries or deaths, which can be financially ruinous. Additionally, this oversight could expose you to criminal investigations. To avoid such legal complications, investing in workers’ comp insurance is crucial.
Workers’ compensation benefits employees, but they don’t pay for it. Employers are responsible for the cost of coverage and premiums. Employees should not contribute financially to their own workers’ compensation insurance.
Ensuring your business complies with workers’ compensation laws not only protects your employees but also shields your business from significant legal risks.
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
-Farm laborers -Casual employees -Employees of business with less than five people -Licensed real estate brokers -Product demonstrators |
| 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. |
-Part-time babysitters
-Domestic servants -Harvest and similar transient help -Contract entertainers -Statutorily-defined taxi cab drivers -Statutorily defined |
| 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
-Independent contractors |
| 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
-State employees -Casual employees -Inmates |
| 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 -Persons officiating -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. |
-Inmates
-Volunteers -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
-Independent contractors -Casual employees |
| 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 |
-A spouse 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 -Casual employees, -Volunteers (most) -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 servants-Licensed real estate salespeople or associate brokers -Independent |
| 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 employer. |
-Domestic servants
-Casual workers -Pilots of -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
-Farmers -Jurors |
| 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, -Casual laborers, Farm or agricultural employees, Household employees. |
| 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 employer. |
N/A |
| 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 distributors |
-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.” |
-Independent contractors
-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 -Casual employment |
| 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
hire.” |
-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. |
-Independent contractors
-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-Family chauffeurs and licensed real estate agents -Inmates -Volunteers of tax exempt -Sports officials, -Direct sellers |
| 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
-Casual employment -Dependent member of the employer’s family -Certain sole proprietors -Real estate brokers or salesmen -Direct sellers -Certain officials at athletic events -Freelance -Newspaper carriers -Cosmetologist or barber services -Petroleum land workers -Professionals; jockeys -Ordained ministers -Officer -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 |
-Domestic servants
-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. |
-Casual employees
-Theatrical or stager performers -Musicians whose services do not last more than two consecutive days -Domestic workers -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 interstate commerce-Direct sellers-Real estate brokers, agents or appraisers-People providing services as part of residential placement for individuals with developmental, acquired, or emotional disabilities |
| 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
-Domestic workers -An employee who is willfully negligent -Inmates -Casual employees |
| New Mexico | Workers’ Compensation Administration | New Mexico Workers’ Compensation Act, New Mexico Statutes Annotated §§52-1-1, et
seq |
Most employees are covered. | -Farm employees
-Domestic servants -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 police officers in the employment of the City of New York -Babysitters and minors over -Longshoremen and harbor workers -Railroad employees -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. |
-Independent contractors
-Casual employees -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.
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 |
N/A |
| 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 -Sole proprietors -Volunteers -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 institution-Casual employees |
| 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
consideration |
-Casual employees |
| 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 Rhode Island |
-Sworn employees employed by the State of Rhode Island
-Casual employees -Farmers -Nursery workers -Farm laborers -Real estate brokers -Salespersons |
| 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 |
-Casual employees |
| 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. |
-Volunteers
-Independent contractors -Domestic servants working less than 20 hours in any -Farm or |
| 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. |
-Independent contractors
-Federal employees -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 -Persons -Sole proprietors or -Real estate broker or real estate salespersons -Certain members of a corporation or LLC -Independent contractors -Assistant judges -Illegally |
| 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
-Domestic servants -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 -Jockeys -Certain officers of a corporation -Entertainers for specific -Newspaper delivery -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 |
-Domestic servants,
-Employers of five or fewer full-time employees engaged in agricultural service -Church workers -Casual employees -Employees engaged in organized professional sports activities, including -Volunteer rescue or police -Federal employees |
| Wisconsin | Department of Workforce Development | Wis. Stat. §102.01-.89 (2011) | Most workers and contract workers | -Domestic servants
-Most volunteers |
| 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. |
-Casual employees
-Sole proprietors -Officer of corporation -Independent contractors -Professional athletes -An employee in a private home -Federal government employees -Elected officials -Volunteers -Members of LLCs -Foster parents -Childcare workers who are paid by the Wyoming Dept. of Family Services |
Note: Sample rates have been extracted online, courtesy of FindLaw.
Conclusion
Businesses must ensure fair compensation for their workers. Jobs demanding physical strength often lead to injuries and health issues. To address these risks, many business owners turn to insurance companies to secure workers’ compensation.
Workers’ compensation provides essential protection when employers implement plans to cover employee injuries and medical expenses incurred on the job. Employees do not contribute to the premiums; employers are solely responsible for paying them to keep the policy active.
By investing in workers’ compensation, employers safeguard their workforce and manage the financial impact of work-related injuries. This not only fulfills a legal obligation but also promotes a safer, more supportive work environment.
