How Do Workers’ Compensation Laws Operate?

Workers’ compensation laws are designed to allow employees who are injured at work to obtain a fixed amount of compensation, without having to sue their employer.  Workers’ compensation laws create an important “safety net” for employees who are injured at work or injured because of their job. 

Generally, workers’ compensation laws also provide some protection to employers and co-workers.  These laws may limit the amount of money that employees can obtain from their employers.  Injured employees may also be barred from suing their co-workers.  In this way, the workers’ compensation system is a “no-fault” system, where it doesn’t matter whose fault the injury was.  Negligence, whether of the employee, the employer, or a co-worker is not an issue.  The injured employee is simply compensated for his or her work-related injuries.
Workers’ compensation is an “exclusive remedy” with respect to work-related injuries.  The term “exclusive remedy” means that unless an employee can show that there was another a third party  responsible for his or her injury, workers’ compensation is the only benefit or monetary award that an employee can obtain.  A third party may be another company or manufacturer.  Employees are often injured by machinery or products that they use at work. 

Many employees successfully sue the manufacturers of these machines or products for compensation for their injuries.  A lawsuit against a third party generally takes place in civil court, as opposed to workers’ compensation claims, which are generally handled by a state or federal agency.  Employers generally aren’t involved in these lawsuits, but most states do have a method that allows an employer to recover their workers’ compensation payments from the compensation that an employee obtains from a third-party lawsuit.  In some states, the employer and the insurance company that provides the workers’ compensation insurance join in the lawsuit against the third party.  This joinder allows the employer and the insurance company to protect their right to be compensated for benefits that they have already paid to the injured employee. 

In other states, the employer is given a lien against any compensation that the employee may obtain.  The employer and the insurance company must wait until the employee actually receives their compensation award, then the employee must pay back any workers’ compensation benefits already received.  An experienced workers’ compensation lawyer will be able to advise you on the laws of your state if you think that a third party may be responsible for your on-the-job injury.