Workers’ Compensation State Laws

The availability of Workers’ Compensation, the amount, and the duration of the benefits vary between states for employees. A state governing board manages the public and private combinations of Workers’ Compensation systems. In addition, these governing boards, or “quasi-judicial agencies,” vary within states.

However, many are designated as “Workers’ Compensation commissions.” For example, in North Carolina, it is the North Carolina Industrial Commission. In addition, the Workers’ Disability Compensation Agency administers Michigan’s Workers’ Disability Compensation Act to provide benefits for medical expenses and lost wages for injured employees.

Private insurance companies in most states primarily provide workers’ Compensation. Twelve US states operate state funds for private insurers and insuring state employees. California contains the largest state compensation insurance fund. Some states occupy state-owned monopoly insurance providers.

State funds may act as an assigned-risk program or provide coverage to companies unable to obtain private insurance coverage to prevent state funds from loading private insurers. As a result, private insurers may choose not to accept the worst risks and write comprehensive insurance packages for general liability, natural disasters, and other insurance coverages.


A significant problem within the Workers’ Compensation system is underreporting of injuries. As a result, fearful employees of employer retaliation may avoid reporting a work-related injury, seek private treatment, pay out of pocket, or make a claim on their medical insurance, causing increasing health insurance expenses.

Some states offer exceptions to the rule of only covering work-related injuries, including positions of traveling salespersons, work-related trips, or particular errands. In addition, some employees who suffer an injury while on the premises but not currently working may receive compensation.

It is illegal for an employer to terminate or refuse employment for reporting a workplace injury or filing a claim in all states except Georgia and Mississippi. However, challenging to prove discrimination. As a result, some states created a “subsequent injury trust fund” that reimburses insurers for paid benefits to employees suffering aggravation or recurrence of compensable injuries. Suggestions of state laws should prohibit the inclusion of claims history to provide anonymity.

Employer Liability

Workers’ Compensation statutes provide liability immunity to the employer, such as negligence over the provided amount by the Workers’ Compensation statutory framework. However, there are exceptions. For example, in some states, such as New Jersey, the employer may be liable for more significant amounts if the employee can provide proof of intentional harm by the employer.

Pennsylvania and other states offer employer immunity in all circumstances. However, other entities responsible for causing the injury may be liable, including subcontractors or product manufacturers.


An injured worker may appeal the denial in some instances, such as if the employee or employer fails to correctly report the injury or the insurance company does not believe the claim. Administrative law judges or magistrates, acting in triers of fact, handle Workers’ Compensation claims.

The injured worker or their attorney may settle, redeem their Workers’ Compensation claim, and accept a lum monetary sum for the relinquishment to further benefits. Employees receive payment for 70% of initially-denied claims, according to a study conducted in 2018.

However, some employees and insurance companies vigorously challenge Workers’ Compensation claim payments. In addition, state agencies or the retainment of a Workers’ Compensation lawyer may help injured workers. “Contingency fees” are payable with successful recovery and limit a claimant’s legal expenses to a particular fraction of the award. These fees may range from 11-40% of a recovered monetary reward.

The original jurisdiction of Workers’ Compensation disputes transfers from the trial courts to special administrative agencies by statute in most states. Administrative law judges informally handle disputes within administrative agencies.

Employees may take their appeals to the appeals board, then the state court system. However, appeals are challenging since state appellate courts of skeptical because Workers’ Compensation should reduce litigation. Some states, such as Ohio, allow employees to initiate trial court lawsuits against the employer.

Article XIV, section 4 of the California Consitution, permits the people’s intention to establish a Workers’ Compensation system.


Texas unusually allows employers to opt-out of the Workers’ Compensation system. Those employers who do not purchase Workers’ Compensation Insurance are called non-subscribers. However, employers risk legal liability if an employee injury occurs.

The employee must prove the employer’s negligence as the cause of the injury. Without subscribing to Workers’ Compensation, the employer loses their common law defense of contributory negligence, risk assumption, and the fellow employee doctrine. Then, the employee may recover the total common law damages and are more generous than Workers’ Compensation benefits. 44% of Texas employers were non-subscribers in 1995 and lessened to 35% in 2001.

The Texas Association of Business Non-subscription advocacy group states that non-subscribing employers receive more outstanding satisfaction ratings and reduced expenses than employers enrolled in a Workers’ Compensation system. However, a Texas Research and Oversight Council on Workers’ Compensation research survey reported 68% of non-subscribing employers and 60% of subscribers were satisfied with the Workers’ Compensation system.

In addition, non-subscribing satisfaction increases with the company’s size. However, additional research is needed to determine non-subscription compensation to subscription adequacy. The Texas Supreme Court limits employer duties to maintain employee safety and remedies for injured workers.


West Virginia and Nevada Workers’ Compensation programs recently became privatized through mutualization to resolve situations with underfunded liabilities. Only North Dakota, Ohio, Washington, and Wyoming rely entirely on state-run programs for Workers’ Compensation, termed monopolistic states, requiring employers to purchase Workers’ Compensation through a government-operated fund. Other states maintain state-run funds but allow private insurance companies to insure employers and employees.

Federal Laws

Federal employees are subject to requirements and statutory criteria through the federal government by purchasing its Workers’ Compensation obligations through regular appropriations.

Alternate Statutory Compensation

The Federal Employers’ Liability Act (FELA), 45 U.S.C. section 51 provides common rail carriers employees liability to injured employees due to employer negligence. Enforcement of compensation rights, the employee may file in a United States district or state court. As a result, this remedy revolves around tort principles of ordinary negligence and differs from Workers’ Compensation benefit schedules.

Like FELA, the Jones Act, 46 U.S.C. App. 688, allows injured seafarers employed on US vessels to sue their employers due to the owner’s negligence.

The Federal Longshore and Harbor Workers’ Compensation Act (US L&H) covers dock workers and other maritime workers who are not seafarers working aboard the navigating vessels.


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