Workers' compensation (colloquially known as workers' comp in North America or compo in Australia) a form of insurance that provides compensation medical care for employees who are injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence. The tradeoff between assured, limited coverage and lack of recourse outside the worker compensation system is known as "the compensation bargain." While plans differ between jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance), and benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance). General damages for pain and suffering, and punitive damages for employer negligence, are generally not available in worker compensation plans.
Employees' compensation laws are usually a feature of highly developed industrial societies, implemented after long and hard-fought struggles by trade unions. Supporters of such schemes believe they improve working conditions and provide an economic safety net for employees. Conversely, these schemes are often criticised for removing or restricting workers' common-law rights (such as suit in tort for negligence) in order to reduce governments' or insurance companies' financial liability. These laws were first enacted in Europe and Oceania, with the United States following shortly thereafter.
A related issue is that the same physical loss can have a markedly different impact on the earning capacity of individuals in different professions. For instance, the loss of a finger could have a moderate impact on a banker's ability to do his or her job, but the same injury would totally ruin a pianist.
In the United States, most employees who are injured on the job have an absolute right to medical care for that injury, and in many cases, monetary payments to compensate for resulting temporary or permanent disabilities. Most employers are required to subscribe to insurance for workers' compensation, and an employer who does not may have financial penalties imposed. In many states, there are public uninsured employer funds to pay benefits to workers employed by companies who illegally fail to purchase insurance. Insurance policies are available to employers through commercial insurance companies: if the employer is deemed an excessive risk to insure at market rates, it can obtain coverage through an assigned-risk program.
In the vast majority of states, workers' compensation is solely provided by private insurance companies. 12 states operate a state fund (which serves as a model to private insurers and insures state employees), and a handful have state-owned monopolies. To keep the state funds from crowding out private insurers, they are generally required to act as assigned-risk programs or insurers of last resort, and they can only write workers' compensation policies. In contrast, private insurers can turn away the worst risks and can write comprehensive insurance packages covering general liability, natural disasters, and so on. Of the 12 state funds, the largest is California's State Compensation Insurance Fund. The federal government pays its workers' compensation obligations for its own employees through regular appropriations.
It is illegal in most states for an employer to terminate or refuse to hire an employee for having reported a workplace injury or filed a workers' compensation claim. However, it is often not easy to prove discrimination on the basis of the employee's claims history. To abate discrimination of this type, some states have created a "subsequent injury trust fund" which will reimburse insurers for benefits paid to workers who suffer aggravation or recurrence of a compensable injury. It is also suggested that laws should be made to prohibit inclusion of claims history in databases or to make it anonymous. (See privacy laws.)
Employees may not falsely claim benefits. There have been instances where the sub rosa videos recorded by private investigators show employees engaging in sports or other strenuous physical activities, although the employees allegedly suffered disability or injury. . Such evidence may not be admissible at a trial, if it is found that the taping infringed on the employees' reasonable expectation of privacy.
Some employers vigorously contest employee claims for workers' compensation payments. In any contested case, or in any case involving serious injury, a lawyer with specific experience in handling workers' compensation claims on behalf of injured workers should be consulted. Laws in many states limit a claimant's legal expenses to a certain fraction of an award; such "contingency fees" are payable only if the recovery is successful. In some states this fee can be as high as 40% or as little as 11% of the monetary award recovered, if any.
In the vast majority of states, original jurisdiction over workers' compensation disputes has been transferred by statute from the trial courts to special administrative agencies. Within such agencies, disputes are usually handled informally by administrative law judges. Appeals may be taken to an appeals board and from there into the state court system. However, such appeals are difficult and are regarded skeptically by most state appellate courts, because the point of workers' compensation was to reduce litigation. A few states still allow the employee to initiate a lawsuit in a trial court against the employer. Washington State allows appeals to go before a jury.
Seafarers employed on United States vessels who are injured because of the owner's or the operator's negligence can sue their employers under the Jones Act, 46 U.S.C. App. 688., essentially a remedy very similar to the FELA one.
United States employers can also move some operations to other countries where employee entitlements are much lower than in the U.S., and where there may be no workers' compensation or other legal remedies at all for workers who are injured or who are exposed to hazardous substances while on the job. Such countries may also have weaker or no legal protections available for employees in areas such as job discrimination, social security, or the right to organize or to join a trade union. Some small business owners complain that the cost of workers’ compensation, which they pay in the form of insurance premiums, places a heavy burden on them.
Economists who favor the distributism system of economics cite workers' compensation as an example of how far the modern capitalist economic system approaches what they call the "servile state" or "slavery worker" system. They say that in past times, when ownership of the means of production were more widely distributed, it would not be natural to hold an employer responsible for a worker's injury, since the worker was freely choosing to work for that employer. Distributors assert that in modern times, with the vast majority of people dispossessed of the means of production, requiring employers to have workers compensation shows how much workers really are dependent on being employed and are essentially forced to work for someone else to survive. Some distributors who feel that capitalism is heading in the direction of a slavery system feel that this will come about by workers exchanging their personal freedom for economic benefits like workers' compensation.
This field of risk management is a specialized niche called "post loss cost containment," "injury management cost reduction," and several other names. The specialty centers around actions an employer can do to "manage" the processes in the workplace immediately after an injury occurs. There are four stages to the workers' comp cost containment process including: assessment & recommendations, design & development, implementation and rollout.
Employers should use a "holistic" approach to workers' compensation cost containment by looking at the total problem, rather than focusing only on one area such as reducing medical bills. By taking a "can do" approach, employers focus on controlling procedures within their control rather than the many things they cannot control. For example, employers cannot quickly or easily change the workers' comp laws or eliminate plaintiff's lawyers or the legal system, items that are frequently mentioned as "causes" of high workers' comp costs; however, an employer can implement a "post-injury response procedure" in their own workplace specifying what an employee must do if injured. Employers must "take charge" of those things within their control.
Some documents and policies to use are:
In many states today, Workers' Compensation represents a major cost of business for employers, and there is ongoing political maneuvering by both business and labor groups to shift the compromise balance struck by Workers' Compensation statutes (for an example see California's Senate Bill (SB) 899). In general, business groups seek to limit the cost of Workers' Compensation coverage, while labor groups seek to increase benefits paid to workers.
For the commercial insurance market, Workers' Compensation represents a major line of business, although one that is sometimes problematic for the insurance industry. Premiums are large, but many insurers find it difficult to turn a profit in many states, as benefit costs sometimes exceed premiums. This line of insurance is regulated fairly closely by most states, although in recent years many states have allowed insurance companies greater flexibility in pricing this line of coverage. The hope has been that by encouraging price competition among insurers for Workers' Compensation insurance, employers would benefit by being able to obtain lower overall premiums. However, the introduction of competitive pricing for Workers' Compensation insurance has also led to significant swings in cost, as the insurance market moves between 'hard' and 'soft' markets. Employers often benefit from lower premiums in 'soft' insurance markets, only to see their premiums increase exponentially during 'hard' insurance markets.
Injured Workers sometimes complain that insurance companies do not treat them fairly or in compliance with the law, while employers often complain about their costs of insurance being driven up by exaggerated or fraudulent claims. Thus, the field engenders a considerable amount of controversy and litigation. These disputed areas include both claims and premium computations.
The statute of limitations for filing a compensation claim for an accidental injury varies from state to state.
The Welfare is the social insurance for the person who contributes. It is a public institution that aims to recognize and grant rights to its policyholders. The amount transferred by the Welfare is used to replace the income of the worker taxpayer, when he loses the ability to work, by sickness, disability, age, death, involuntary unemployment, or even maternity and imprisonment.
The Brazilian Welfare went through several conceptual and structural changes, involving the degree of coverage, the list of benefits and how the system is financed.
If one cannot work, his employer pays for the first 15 days and the Welfare pays from the 16th day on, while he is unable to work.
In the other hand, if worker intends to receive a compensation from his former employer, there is a time limit for filling a claim (2 years), which must be legally supported. Workers’ compensation laws are the same in the whole country and tend to be protective.