What is Workers’ Compensation and How Does it Work?

BY: ON MONDAY, OCTOBER 09, 2017

Most employees are unaware of the costs that are associated with injuries incurred on the job. Estimates show that employers pay nearly $1 billion each week for direct workers’ compensation costs.

When an employee is injured at work there are many indirect costs such as lost wages, decreased productivity, increased rates for workers' compensation insurance, and money spent to train replacement employees. These costs have a significant impact on an employer’s bottom line. A small business will notice if just one employee suffers a work-related injury, which is why workers’ compensation insurance is so important. An on-the-job injury can cost more money than you would guess. The best way to evade this costly expense is to avert workplace injuries in the first place. Every new employee needs to learn about workplace injuries and undergo regular training that focuses on safety in the workplace.


Focus on Prevention

Preventing workplace injuries should be a major focus for both employees and employers alike. In the event an employee is injured at work or acquires an occupational disease, the worker or their dependents are eligible for wage replacement benefits, vocational rehabilitation, and medical treatment.

A recent study was done to identify the most common accidents and injuries at work. The awareness can help lessen risk factors for workplace accidents and injuries. The top five types of injuries include:

Handling Material — 32%

Slips, falls and trips — 16%

Struck by or crashing into an object — 10%

Accidents with tools — 7%

Collective trauma (injury by straining or overusing a body part over time) — 4%

There are countless important steps in setting up a business, from creating a robust business plan to integrating proper ways to train your employees. During the process, make sure you focus on how you can lessen the risk of workplace accidents and injuries. Take the necessary steps to prevent slip and fall injuries, exercise caution when using ladders, educate employees about ergonomics, create a culture that focus on safety, and stay up-to-date on new hazards.


No-Fault System

If you’ve been injured in a workplace accident, you may know how scary and confusing it can be. Workers' comp is a no-fault system, which means it doesn’t matter who is responsible for the accident. All that matters is that the employee was involved in an injury or suffered an occupational disease while in the workplace. Workers’ compensation laws protect people who are injured on the job no matter who was deemed responsible for the accident that caused the injuries. Each state handles workers’ compensation differently.

This system was designed for protection of both employees and employers. It’s meant to protect employers from time-consuming and costly lawsuits, and to shield employees by guaranteeing medical care and adequate time off benefits.


Treatment

Recovery is the reimbursement or money needed for medical treatment that the employee receives for an injury. The injured employee can’t file a lawsuit and can’t get disciplinary damages. The workers' compensation benefits may be considerable, based on the state the employee resides in.


Workers’ Compensation Benefits

The benefits of workers’ compensation include medical bill compensation, lost wages, as well as disability benefits. Workers' compensation benefits often include death benefits if an employee loses his or her life while in the workplace or on the job.


Lawsuits

Worker's compensation lawsuits can be complex; an injured employee should consult a lawyer with experience in workers’ compensation and job-related injuries to determine the best course of action for receiving the compensation the employee deserves.


As a small business owner, you probably hear a lot about all types of insurance that you need. One of the most important is workers’ compensation. It may be required in your state, but if not, it’s still a smart idea to carry this insurance to avoid paying these benefits out of pocket.



Image via Shutterstock

About the Author

Mariia Lvovych

Mariia Lvovych is a freelance writer, professional guest blogger and an expert both in SEO and in social media management. CEO and founder at GetReviewed platform, which aims to connect advertisers with authority bloggers.

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