Key Takeaways
- Workers' compensation is a NO-FAULT system—employees receive benefits regardless of who caused the injury, in exchange for giving up the right to sue their employer
- The EXCLUSIVE REMEDY doctrine means workers cannot sue employers for workplace injuries (with limited exceptions like intentional harm)
- Every state has its own workers' compensation laws—requirements vary from 1 to 5+ employees depending on the state and industry
- Texas is the ONLY state where workers' compensation is completely optional for private employers (except government contractors)
- Workers' comp claim frequency decreased 5% in 2024, but average claim severity rose to $30,000 (6% increase from 2023)
Workers Compensation Overview
What is Workers' Compensation?
Workers' compensation is a state-mandated insurance program that provides benefits to employees who suffer work-related injuries or illnesses. It operates as a no-fault system, meaning employees receive benefits regardless of who caused the injury.
Quick Answer: Workers' compensation is no-fault insurance that pays medical expenses and lost wages to employees injured on the job. In exchange for guaranteed benefits, employees give up the right to sue their employers—this is called the exclusive remedy doctrine.
The No-Fault Concept
The workers' compensation system is built on a fundamental trade-off:
| What Employees Get | What Employers Get |
|---|---|
| Guaranteed benefits without proving fault | Protection from lawsuits |
| Quick payment of medical expenses | Predictable insurance costs |
| Wage replacement during recovery | No punitive damage exposure |
| No litigation required | Limited liability |
Key Point for Exam:
Workers receive benefits even if the injury was their own fault (with exceptions for intoxication, intentional self-harm, and horseplay).
The Exclusive Remedy Doctrine
Definition: Workers' compensation is the exclusive remedy for workplace injuries—employees cannot sue their employers in civil court even if the employer was negligent.
Exceptions to Exclusive Remedy:
| Exception | Description |
|---|---|
| Intentional Acts | Employer deliberately causes harm |
| Non-Compliance | Employer lacks required coverage |
| Third-Party Claims | Employee can sue third parties (equipment manufacturers, etc.) |
| Dual Capacity | Employer injures employee in another capacity (as product manufacturer) |
| Fraudulent Concealment | Employer hides that injury occurred at work |
State vs. Federal Systems
Most workers are covered by state workers' compensation systems, but certain employees are covered by federal programs:
| Federal Program | Covered Workers |
|---|---|
| FELA (Federal Employers Liability Act) | Railroad workers |
| Jones Act | Seamen and maritime workers |
| USL&H Act | Longshore and harbor workers |
| FECA (Federal Employees' Compensation Act) | Federal government employees |
Employer Requirements by State
Requirements vary significantly by state—based on number of employees, industry, and business type:
| Threshold | States |
|---|---|
| 1+ Employees | CO, CT, MA, MI, NY (and most states for construction) |
| 3+ Employees | NC, VA, NJ |
| 4+ Employees | SC, FL (non-construction), GA (non-construction) |
| 5+ Employees | MO (non-construction) |
| Optional | TX (only state—except government contractors) |
Penalties for Non-Compliance:
- California: Up to 1 year jail, $10,000-$100,000 fine
- New York: $1,000-$50,000 fine, plus $2,000 per 10 days without coverage
- Pennsylvania: 3rd degree felony, up to 7 years jail, $15,000 fine
Under the workers' compensation system, what is the "exclusive remedy doctrine"?
Which state is unique in making workers' compensation completely optional for private employers?
The workers' compensation system is described as "no-fault." This means:
10.2 Part One: Workers Compensation Insurance
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