In 1908, The Federal Employers Liability Act was put into motion. Initially, this Act gave railroad workers a payout if they could prove the railway was responsible for their injuries by being negligent. Soon after, individual states began passing their own versions of the previous Act. By 1949, every state in the union had adopted the Workmen’s Compensation program that protected workers from lost wages if injured on the job.
So, what is workers’ compensation and how does it work? Coverage is still state-based today, with varying degrees of rights and compensation. There are a few slight differences, as explained below.
Privately Funded States
Through mutualization, West Virginia and Nevada decided to privatize their insurance as both states were found to underfund their liabilities. The states of North Dakota, Ohio, Washington, and Wyoming rely on state-run programs for workers’ compensation and must purchase their insurance from government-run funding. Other states only utilize state-run funds but allow private insurance companies to compete for contracts to insure employers and their employees.
Strictly Federal
Working for the federal government has its perks. The federal government supplies its workers with its own Worker’s Compensation program with specific parameters for government employees and pays out through money set aside for this particular purpose. Again, what is workers’ compensation and how does it work? Here are a few more examples.
Workers Comp Laws Differ By State
A few states differ significantly, such as Texas, which allows employers to opt out of the system and assign the name for these companies as non-subscribers. The catch to being a non-subscriber is that if your employee is injured on the job, you will be responsible for the bills directly.
Alternative Compensations
Depending on your occupation, a few alternative compensatory agencies provide payment in place of standard Worker’s Compensation. Railway employees can file under the Federal Employers’ Liability Act (FELA), which states that the employer or carrier pays out to the employee in case of injury due to negligence. If the employee has any trouble with their case, they can file with the United States district court or a state court for satisfaction. Seafarers, dock workers, and other maritime workers aboard navigating ships are covered by the Federal Longshore and Harbor Workers’ Compensation Act or USL&H.
A Word About Workers Comp Fraud
There is a debate about the amount of fraud that goes on with Workers’ Compensation cases, with supporters asserting that fraud is extremely rare. In contrast, The National Insurance Crime Bureau reports that fraud is a serious and ongoing issue. Often people ask, “what is workers’ compensation and how does it work?” In some cases, the fraud was unintentional due to ignorance of the law and its implications. Still, in most cases, the root of the problem is dishonesty, which carries significant consequences with possible jail time.
Benefits When You Need It
Workmen’s Compensation Insurance benefits the employer by protecting the company against covering damages out of pocket. The employees benefit by being covered in the event of accidental injury on the job, resulting in loss of wages. Of note, Workman’s Compensation was changed to Worker’s Compensation sometime in the 1970s as more women entered the workforce.
