What employers and HR managers need to know about the workers’ compensation system.

Under the workers’ compensation system, employers are required to purchase insurance that provides benefits to employees who suffer work-related injuries and illnesses. The system strikes a compromise between employers and employees: Employees get benefits regardless of who was at fault. In return, employers get protection from lawsuits by injured employees seeking money damages for pain and suffering or mental anguish.

Workers’ compensation is governed by state law, and each state’s system differs slightly in the details. (There is a separate federal workers’ comp system for those working for the federal government, such as U.S. Post Office employees.) However, the structure and operation of the overall workers’ compensation system is very similar from state to state. The main differences are the rates paid to injured employees and the procedural rules employers, employees, and insurance companies must abide by.
To find out the details of your state’s law, contact your state department of industrial relations or workers’ compensation. You can also find information on state workers’ compensation laws at the U.S. Department of Labor’s website, www.dol.gov. From the home page, click “Audience,” then “Employers,” then “State Workers’ Compensation Laws” (listed under the “Workers Compensation” heading).