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Workers Compensation: The Covered and the Exempt

Accidents can happen anywhere at any time, and the workplace is no exception. Fortunately, workers’ compensation insurance protects both businesses and employees from the medical expenses and lost wages that result from workplace injuries.

Sam E. worked as a forklift driver at a big-box supermarket warehouse when he was injured. He was loading a pallet filled to the brim with soda bottles when the forklift he was operating tipped over, pinning him beneath the equipment and shattering his left femur and collarbone.

Although he was wearing his seatbelt, Sam’s leg was so badly mangled that he had to undergo two surgeries to have metal rods put in place and dozens of physical therapy sessions to gain back mobility on his shoulder. All in all, Sam was out of work for six months, racking up more than $200,000 in medical and rehabilitation bills as he waited for his body to heal. During that time, he was so deep in debt and losing so much income that he worried about becoming homeless.

Unfortunately, Sam’s story is not unique. According to the U.S Bureau of Labor Statistics, approximately 2.7 million non-fatal workplace accidents took place in 2020 alone, a year in which nearly 35% of the American workforce was working remotely because of COVID-19.

Eventually, and after a lot of back and forth with his employers, Sam was able to receive workers' compensation benefits to cover his medical bills, make up for lost time at work, and get additional funds to pay for future medical care related to his accident. The workers’ comp settlement that Sam was entitled to keep him from losing everything and potentially ending up on the streets.

How Does Workers’ Comp Work?

Workers’ comp pays for medical care and rehabilitation, compensates for lost wages, and in the case of fatal workplace accidents, provides death benefits for the family of a deceased worker that sustained injuries or disease on the job. It also protects the business owner or owners against litigation, since employees that file a workers’ compensation claim waive their right to sue their employer for damages.

Without workers’ compensation insurance, companies would be responsible for paying the out-of-pocket costs of the injury or illness, risking irreparable financial harm for both the business and the worker.

Workers’ compensation is regulated at the state level, which means that each state has its benefits, requirements, and penalties. But nearly every state requires businesses, regardless of their size, to carry workers’ comp insurance as soon as they hire their first employee.

It’s important to note that employers are responsible for providing the appropriate information regarding workers’ compensation and its claims process. For example, in states like Florida, businesses are required to display posters containing information on the workers’ comp program to educate workers of their rights and responsibilities in case of a workplace accident.

Who Is and Isn’t Covered by Workers’ Comp?

Although workers’ comp insurance is mandatory for most businesses, not every employee is eligible for compensation. To receive benefits, the injured worker must meet these three requirements as well as any other requisites mandated by the state where they’re filing the claim:

1. The worker must qualify as an employee. Workers that may not qualify as employees include but are not limited to:

  • Independent contractors and freelancers

  • Seasonal workers

  • Agricultural employees

  • Domestic workers

  • Railroad employees

  • Volunteers

  • Farmers and farmhands

2. The injury or illness must have occurred at the workplace during business hours

3. The worker must meet the reporting deadlines, including notifying the accident to the employer within a specified time frame (which varies by state) and appropriate forms. In Florida, for example, employees must report the injury to their employer as soon as possible, no later than 30 days after the accident took place

Exempt Businesses

Certain businesses may qualify for workers’ comp exemption based on the nature of the work -- for example, real state workers are sometimes exempt from workers’ comp because of the low-risk character of the activity -- or if the company employs very few workers, but this also varies by state.

Freelancers and independent contractors are exempt from workers’ compensation. And sometimes, company owners like sole proprietors, stock-holding corporate employees, members of limited liability companies (LLCs), and partners may opt-out of the business’ workers’ comp insurance program.

But even when not required by law, workers’ comp insurance is a valuable asset for any company. Why? Because accidents can happen at any workplace. Don’t believe so? Just ask the retail company that had to pay workers’ comp for an employee that broke his hip while trying to help a co-worker shake loose a bag of Fritos stuck on an old vending machine at the workplace. While this extreme story is not the norm, it goes to show that workers’ comp benefits are never a one-size-fits-all type of situation.

Author- Farlyn Lucas

Farlyn Lucas is a freelance writer and content creator from South Florida. Her works vary from business writing to self-help topics, social and global health, providing readers with insight, helpful tips, updates, and information that may benefit them.

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