From an employee’s perspective, the most important elements of workers’ compensation laws likely concern the various benefits they are entitled to in case of a workplace injury. By way of contrast, employers are subject to a much wider array of obligations under these laws, encompassing everything from ensuring proper coverage to handling claims and preventing retaliation. In this guide, we will discuss who must be covered, what injuries and illnesses are covered, the benefits available to injured employees, and the employer's responsibilities in handling workplace injuries. We will also explore prohibited practices employers must avoid to comply with these laws. By understanding these essential elements, employers can ensure they are meeting their legal obligations and protecting the rights of their employees.

Who Must Be Covered? 

As an employer, one of your primary responsibilities under workers' compensation laws is to ensure that you provide appropriate coverage for your employees. This obligation is critical not only for legal compliance but also for safeguarding your business against potential claims and penalties.

With the exception of Texas, all states require that employers provide coverage for all full-time employees. However, the definition of "full-time" can vary by state, with some states setting specific minimum hours per week to qualify as full-time employment. In addition to full-time employees, many states have requirements for covering part-time and seasonal workers, though these can differ widely. For example, some states mandate coverage for part-time employees only if they work a minimum number of hours per week or have been employed for a specific duration.

Note that while independent contractors are typically not covered under workers' compensation laws, the classification of a worker as an independent contractor versus an employee is determined by state law, not merely by the contract terms between the parties. Furthermore, in certain high-risk industries, such as construction or trucking, even independent contractors may be required to be covered.

Exemptions: Certain categories of workers may be exempt from mandatory workers' compensation coverage depending on the state, including:

• Sole Proprietors and Partners: In many states, sole proprietors and business partners are not required to carry workers' compensation insurance for themselves, though they may choose to do so voluntarily.
• Family Members: States may exempt certain family members employed by a business, particularly in small, family-owned operations.
• Undocumented Workers: Coverage for undocumented workers varies significantly by state, with some states explicitly including them under workers' compensation laws, while others do not.
• Minors and Volunteers: While most states require coverage for employed minors, volunteers are often excluded from workers' compensation coverage unless explicitly included by state law or specific contractual agreements.

What Injuries and Illnesses Are Covered?

Workers’ compensation insurance is designed to provide benefits for employees who suffer from injuries or illnesses that arise out of, and during, the course of their employment. As an employer, understanding what types of injuries and illnesses are covered under workers’ compensation laws is critical for ensuring compliance and minimizing the risk of disputes or denied claims. This section will provide an overview of the categories of injuries and illnesses that are typically covered, as well as key considerations that may impact eligibility.

Work-Related Injuries: For an injury to be covered, it must arise out of and be in the course of the worker’s employment. The scope of work-related injuries can encompass a wide range of incidents, such as: 

• Accidental Injuries: The most common type of claim involves accidental injuries that occur in the workplace, such as slips, trips, falls, or equipment-related accidents. These injuries are generally covered regardless of fault, meaning that even if the employee was partially responsible for the incident, they are still entitled to benefits.
• Repetitive Stress Injuries (RSIs): Injuries that develop over time due to repetitive motions, such as carpal tunnel syndrome or tendonitis, may also be covered if they can be directly linked to the employee’s job responsibilities. These claims can be more complex to process, as it may be difficult to pinpoint the onset of the injury.
• Injuries Occurring Away from the Worksite: Employees who are injured while performing job duties offsite may still be covered, provided that they were acting in the course of their employment. For instance, a delivery driver injured in a car accident while making a delivery would typically be eligible for workers' compensation benefits.

Occupational Diseases and Illnesses: In addition to injuries, workers’ compensation covers illnesses that result from workplace conditions. These occupational diseases must be directly caused or aggravated by exposure to hazardous elements in the workplace. Common example include:

• Respiratory Conditions: Employees exposed to harmful chemicals, dust, or fumes may develop respiratory illnesses, such as asthma or chronic obstructive pulmonary disease (COPD). These conditions are compensable if they are proven to be work-related.
• Skin Conditions: Prolonged exposure to hazardous substances or chemicals may lead to skin conditions such as dermatitis or chemical burns. As with respiratory illnesses, the burden of proof lies with the employee to demonstrate a direct connection between the workplace and the condition.
• Occupational Diseases: Certain industries expose employees to specific risks of occupational diseases, such as mesothelioma (caused by asbestos exposure) or silicosis (caused by inhaling silica dust). These illnesses may develop over time and are typically covered if there is a clear causal link to the workplace environment.

It should be noted that workers' compensation can also cover the aggravation of pre-existing conditions if the aggravation occurs in the course of employment. For example, an employee with a prior back injury may be eligible for workers' compensation if their work duties exacerbate the condition. However, claims involving pre-existing conditions can be more contentious, as insurers may seek to minimize liability by attributing the condition to the employee’s prior medical history.

While workers’ compensation provides broad coverage for workplace injuries and illnesses, there are some exceptions where claims may be denied. These include:

• Injuries Sustained While Under the Influence: If an employee is found to have been under the influence of drugs or alcohol at the time of the injury, the claim may be denied, depending on the state’s laws.
• Self-Inflicted Injuries: Injuries that are intentionally self-inflicted or arise out of employee misconduct are typically not covered.
• Injuries Outside the Scope of Employment: If an employee is injured while engaging in activities that are not part of their job duties, such as during a personal errand or non-work-related trip, they may not be eligible for workers’ compensation benefits.

What Benefits Are Injured Workers Entitled To?

When an employee sustains a work-related injury or illness, they can be eligible for a range of benefits through the workers' compensation system. These benefits are designed to support the employee during their recovery, replace lost wages, and ensure access to necessary medical care. As an employer, it's important to understand what types of benefits your employees are entitled to and how these benefits are calculated.

• Medical Benefits: Injured employees are entitled to receive medical care necessary for treating their workplace injury or illness. This includes doctor’s visits, surgeries, physical therapy, prescription medications, and other necessary treatments. Workers’ compensation insurance typically covers all reasonable and necessary medical expenses, with no out-of-pocket costs for the employee.
• Temporary Total Disability (TTD): TTD benefits are awarded to employees who are completely unable to work due to a workplace injury or illness, but only for a temporary period while they recover. TTD benefits typically cover a percentage of the employee’s average weekly wages (usually around 66% or two-thirds), subject to state-imposed maximum and minimum limits. These benefits continue until the employee is medically cleared to return to work or their condition stabilizes.
• Temporary Partial Disability (TPD): If an employee can return to work but is unable to perform the full scope of their duties or must work reduced hours due to their injury, they may qualify for TPD benefits, which are meant to make up the difference between the employee’s pre-injury wages and their reduced earnings during their recovery period.
• Permanent Partial Disability (PPD): PPD benefits are awarded to employees who suffer a permanent injury that partially limits their ability to work, even if they are able to return to work in some capacity. Common injuries that result in PPD benefits include the loss of a limb, reduced function in a body part, or permanent hearing loss. These benefits are determined based on a rating system, which assigns a percentage of disability to the injured worker, which is then used to calculate the compensation the worker is entitled to receive, either as a lump sum or ongoing payments, depending on state laws and the nature of the injury.
• Permanent Total Disability (PTD): PTD benefits are reserved for employees who suffer injuries or illnesses so severe that they are permanently unable to return to any form of gainful employment. PTD benefits usually cover a percentage of the employee’s wages for the remainder of their life or until they reach retirement age, depending on state regulations.
• Vocational Rehabilitation: In cases where an employee cannot return to their pre-injury job due to permanent limitations, they may be eligible for vocational rehabilitation benefits. These benefits are designed to help the employee acquire new skills or training to find alternative employment, and may include job retraining, education, and career counseling.
• Death Benefits and Funeral Expenses: In the unfortunate event that a workplace injury results in the death of an employee, the worker’s dependents may be entitled to death benefits. These benefits typically provide ongoing financial support to the employee’s spouse, children, or other dependents. In addition, workers' compensation insurance may cover funeral and burial expenses, subject to state-specific limits.

Injury Response Procedures And Other Employer Responsibilities Following An Injury 

When a workplace injury occurs, it’s essential to have clear and efficient response procedures in place. As an employer, you are responsible for ensuring the injured employee receives appropriate care and that the incident is properly documented. Following a structured process not only protects the health and safety of your employees but also helps you meet legal requirements under workers' compensation laws.

The first priority after any injury is to ensure the employee receives prompt medical attention. Depending on the severity of the injury. For minor injuries, you should administer first aid or direct the employee to an on-site medical professional if available, and for more serious injuries you must contact emergency services immediately and ensure the employee is safely transported to a healthcare facility.

Next, it’s important to initiate the reporting process. The injured employee should fill out an injury report form, (often referred to as the "First Report of Injury," and abbreviated as “FROI”). This form must be completed and submitted to your workers' compensation insurance provider within the required time frame. As the employer, you’re responsible for ensuring the form is accurately filled out and promptly submitted. Delays in reporting can lead to complications with workers' compensation claims and potential fines.

After the immediate injury response, conduct a basic investigation to understand the circumstances surrounding the incident. This includes gathering statements from witnesses, reviewing any relevant safety procedures or equipment, and documenting the location and cause of the injury.

Once the injury report is submitted, it’s your responsibility to help the employee file a workers’ compensation claim if needed. Provide the injured employee with instructions on how to file the claim, including contact information for your insurance provider and any medical care networks. Make sure the employee understands deadlines for filing and what steps they need to follow to ensure timely processing.

Finally, be sure to document every step of the injury response process, from first aid and reporting to follow-up care and claim filings. Proper documentation not only supports your compliance with workers’ compensation regulations but also provides legal protection if there are disputes or questions about the injury later on.

Prohibited Practices

Now that we have covered the obligations of employers, we will discuss prohibited acts and conduct. For the sake of thoroughness, we will also address other laws that can be implicated and overlap with state workers’ compensation laws. This is especially important because some of the prohibitions discussed below might fall under the purview of certain federal laws even though, as mentioned above, workers’ compensation laws are generally solely governed by each individual state. That said, it should be noted that not all of the federal laws discussed below apply to all employers. For example, the Americans with Disabilities Act (ADA) generally only applies to employers with at least 15 employees, whereas Occupational Safety and Health Administration (OSHA) reporting requirements apply to all employers, regardless of the number of employees. 

• Retaliation for Filing Claims: Employers cannot retaliate against employees for filing workers' compensation claims. Prohibited actions include firing, demoting, or reducing an employee’s wages or hours. Retaliation can result in lawsuits for wrongful termination or discrimination, and employees are entitled to file claims without fear of reprisal.
• Misclassification of Employees: Employers are prohibited from misclassifying employees as independent contractors to avoid providing workers' compensation coverage. This practice, common in industries like construction, and often discovered during premium audits, is considered fraud and can lead to penalties such as fines or loss of business licenses. 
• Retaliation for Reporting Safety Violations: Under OSHA, employees have the right to report unsafe working conditions without facing retaliation. Furthermore, OSHA requires that employers report to them any injury that results in a fatality, hospitalization, amputation, or loss of an eye. Fatalities must be reported within 8 hours, and hospitalizations, amputations, or loss of an eye must be reported within 24 hours. 
• Discrimination Against Light-Duty Workers: It is generally illegal to discriminate against employees who are on light-duty or modified-duty assignments due to injury, and employers must offer reasonable accommodations and cannot deny promotions, reduce hours, or set unfair barriers for returning to full-time work.
• Failure to Accommodate Disabled Employees: Employers must provide reasonable accommodations for employees who develop disabilities from workplace injuries. Refusing accommodations, such as ergonomic adjustments or schedule changes, violates both workers' compensation laws and the ADA.
• Denying Job Reinstatement: Employers are required to reinstate employees to their previous or equivalent positions after they recover from a workers' compensation leave. Failing to do so may result in legal claims for wrongful termination or discrimination.

As you can see workers’ compensation laws require employers to manage a range of responsibilities, such as complying with coverage requirements, ensuring your injured workers receive the benefits they are entitled to, and avoiding prohibited conduct that could lead to significant fines and other penalties. Through AAL’s directory, you can access a number of skilled attorneys with extensive experience in practicing workers’ compensation law to assist you in handling the legal requirements while protecting both your business and your workforce.