In most states, employers are required to purchase insurance for their employees from a workers' compensation insurance carrier. In some states, larger employers who are clearly solvent are allowed to self-insure, or act as their own insurance companies, while smaller companies (with fewer than three or four employees) are not required to carry workers' compensation insurance at all. When a worker is injured, his or her claim is filed with the insurance company, or self-insuring employer, who pays medical and disability benefits according to a state-approved formula.
Unless they fall within limited, exempt categories, employers without workers' compensation insurance are subject to fines, criminal prosecution, and civil liability.
Failure to provide workers' compensation insurance coverage can result in:
In addition to providing workers' compensation coverage, in most states, employers must perform some, if not all, of the following duties:
Employer's Duty Not to Retaliate
Employers often appear to frown on employees who file workers' compensation benefit claims, and some blatantly discriminate against such employees. To protect employees from employers who discriminate against, harass, or unjustly terminate injured employees, many states prohibit employers from punishing, discriminating against, or discharging employees who exercise their rights under workers' compensation laws, and allow employees to bring civil actions against their employers for the tort of "retaliatory discharge."
If an employee believes he or she has been discriminated against or discharged in retaliation for exercising rights under workers' compensation laws, he or she may have a claim against his or her employer for retaliatory discharge.
Besides termination, retaliation may take the form of more subtle types of discriminatory treatment, such as demotion or salary reduction. Injured employees are protected from discriminatory conduct immediately after an injury and before a formal workers' compensation claim is filed. An employee's cause of action may be successful even though all the employee did was give notice to the employer of a claim.
Important Next Steps: Get Legal Advice
If your business is involved in a workers' compensation claim, you'll want to speak to a business and commercial law attorney as soon as possible. A skilled lawyer will be able to advise your business on it's rights.