While some industries are more dangerous than others, injuries can happen in any workplace. The U.S. Bureau of Labor Statistics says that private industry employers reported 2.7 million nonfatal workplace injuries in 2020. That’s about 2.7 cases per 100 full-time equivalent workers. Each work injury can result in medical costs and lost wages. Workers’ compensation insurance provides coverage for these costs, but how does workers’ compensation work? The answer largely depends on the state.
Workers’ Compensation Benefits
Workers’ compensation is a type of insurance coverage that employers can purchase. Workers’ compensation benefits, or work comp benefits, are typically provided when an employee experiences an injury or illness in the course of work.
Work comp benefits can cover medical treatment for the injury, including both immediate care and long-term health care, as well as the financial impact of the injury, such as lost wages and loss of function. If a worker dies, the worker’s dependents may qualify for death benefits.
Work Comp Claims
The work comp system is a no-fault system, meaning that an injury or illness will typically be covered regardless of who is at fault. However, injuries that are the result of gross negligence or misconduct on the part of the employee may not be covered. For example, if a worker is intoxicated and this intoxication is the direct cause of injury, the injury may not be covered under the work comp rules in the state.
In Texas, workers compensation benefits are not available for injuries that are the result of the injured employee’s horseplay, willful criminal acts or self-injury, intoxication from drugs or alcohol, voluntary participation in off-duty recreational activities, acts of God and third-party criminal acts that are directed against the employee for personal reasons.
Worker injuries are typically managed through the work comp system. This means that employees may not be able to sue their employers for injuries. However, there may be some exceptions depending on the details of the situation and the state’s laws.
Workers’ Compensation Laws
Workers’ compensation requirements are determined at the state level, so there is a lot of variation.
In some states, workers’ compensation coverage is provided by private workers comp insurance companies. Self-insurance is another option in some states, although employers may need to obtain approval first. In other states, employers must purchase work comp coverage from a state fund, a system known as a monopolistic fund. According to IRMI, North Dakota, Ohio, Washington, Wyoming, Puerto Rico and the U.S. Virgin Islands have monopolistic funds.
Workers’ Compensation Insurance Requirements
In some states, all employers are required to carry workers’ compensation. In other states, only employers with a minimum number of employees are required to carry coverage. Independent contractors and sole proprietors may be exempt from workers’ compensation requirements. There may also be special restrictions for certain industries.
Despite the many variations among state rules, the vast majority of states require workers’ compensation for most employers. There is only one exception. According to Investopedia, Texas is the only state that does not require workers’ compensation.
Workers Comp Benefits in Texas
According to the National Federation of Independent Business, employers in Texas can purchase workers’ compensation from a workers comp insurance company or the Texas state-administered fund. They can also seek approval to self-insure. Additionally, they have the option to opt out of workers’ compensation entirely, a choice that employers in other states do not have.
However, before Texas employers decide to opt out of workers’ compensation, they should consider the risks carefully. The Texas Workforce Commission warns that going without coverage leaves employers open to personal injury lawsuits and that the damages and attorney’s fees are nearly unlimited. Furthermore, many defenses that defendants utilize in personal injury lawsuits, such as assumption of risk and contributory negligence, are not available in workplace injury cases. By subscribing to workers’ compensation insurance, employers can limit the type of compensation and amount of compensation that injured workers can receive.
If Texas employers still decide to forgo work comp insurance, they must notify each new hire of this fact. Likewise, employers that have coverage must also notify employees. If an employer decides to discontinue coverage, the employees must be notified as soon as possible. And, per the Texas Workers Compensation Act, the employer also needs to notify the Workers’ Compensation Division of the Texas Department of Insurance.
What does Workers’ Comp cover?
Injuries and illnesses are typically covered if they are sustained during work-related activities. This can include work-related travel, but it typically excludes normal commutes. Mental illnesses, including depression, anxiety and PTSD, may be covered under workers’ compensation. However, these claims can be complicated, and state law will determine whether a claim is allowed.
Communicable diseases are another challenging type of claim. In many cases, it is difficult to prove whether an infection with a communicable disease is related to work, and, historically, these claims have not typically been eligible for workers’ compensation. However, during the COVID-19 pandemic, many states created presumptions for coverage if a worker contracts COVID, and some of these rules may apply to other types of viruses as well. However, according to the Texas Department of Insurance, the COVID-19 presumption has expired unless an employee works in a declared disaster area, and both federal and state-level disaster declarations have expired as of June 2023.
Reporting an Injury and Filing a Workers Compensation Claim
Employees who experience work-related injuries or illness need to report this to their employers, and the employer needs to notify the insurer. This must be done in a timely manner.
In Texas, injured workers are required to file injury reports within 30 days of the injury. If the injured worker wants to appeal the first impairment rating, this must be done within 90 days of the issuance. Additionally, formal paperwork for the workers’ compensation claim needs to be filed within one year of the injury.
In some cases, a worker may not realize that an illness or injury is work-related immediately. In these cases, the clock starts when the employee should have known that their injury or illness was related to work.
Return to Work Program
An injury can impact a worker’s physical and mental health, and recovery support is an important part of any effective workers’ compensation program.
Many experts advocate for return-to-work programs. According to the CDC, research has shown that an injured employee’s odds of returning to work drop dramatically the longer they’re away from work. Even minor diagnoses can result in disability if the recovery and return-to-work process is not effectively managed.
In Texas, employees who refuse suitable light-duty work may forfeit future work comp benefits.
Want to learn more about Texas workers compensation insurance?
Texas employers have many workers’ compensation options, including self-insurance, participation in the state fund and private insurance. Texas business owners can opt out of workers’ compensation insurance, but this carries risks, so it’s smart to obtain Texas non-subscriber insurance coverage to limit liability. Chat with a member of our team and learn how Higginbotham can help protect your organization and your employees through workers’ compensation coverage.
