Workers' compensation insurance is not just the right way to do business but it's also the law. For most businesses, your state requires you to cover employees with workers' compensation insurance.
This article discusses how workers' compensation insurance works, who is covered and answers some common questions businesses and employees have about this type of insurance.
This article includes the following sections:
What is Workers Compensation Insurance?
Workers' compensation is a form of insurance providing wage replacement and medical benefits to employees injured while on the job. Eligibility and benefits are decided by local laws, so it does vary from state to state.
However, the benefits provided by workers' compensation insurance generally include:
Payment of medical expenses.
Paying a portion of wages lost while an employee is unable to work.
Paying for rehabilitation.
Workers who don’t have this coverage are at a serious financial disadvantage. However, depending on state law, they do have one benefit: They can sue their employer. The average worker injury lawsuit can take 12 to 18 months and can be a big financial drain on both the business and the worker. No one wins.
Workers compensation insurance provides a good balance between risk for employers and the need for immediate financial support for employees when they need it.
A Short History of Workers’ Compensation
During the Industrial Revolution, many employees worked in cramp, dangerous environments with work that made injuries commonplace. The courts were the only option for employees injured on the job, with complaints rarely resulting in compensation.
In the US, employers were protected by a series of laws that became known as the “unholy trinity of defenses”:
Contributory Negligence: Employers are never liable for employee injuries.
“Fellow Servant” Doctrine: Business isn’t liable for accidents caused by one of their employees.
Assumption of Risk: By working in a business, employees accepted all risk.
While the US became extremely anti-labor in the 19th Century, other countries didn’t. The leader on workers’ compensation insurance was Prussia with its “Sickness and Accident Laws”. These laws covered medical expenses for employees injured on the job while also protecting the employer from lawsuits.
England and other European countries followed with subsequent labor laws in the late 19th Century.
In the US, states begin adopting a model of laws that were like the Prussian laws starting in 1911. However, adoption was slow and piecemeal, and it wasn’t until 1948 when Mississippi finally enacted its workers’ compensation laws that all workers in the US were covered by insurance for on-the-job injuries.
Workers’ Compensation Insurance in Missouri
In most areas, workers' compensation is a mandatory insurance program that provides benefits to employees who are injured or become ill because of their job. Employers are required to provide coverage for their employees, either by purchasing a workers' compensation insurance policy or by being approved as a self-insured employer.
In Missouri, worker’s compensation is required for any business that has 5 or more employees. An employee can be any paid staff, whether full-time, part-time, or even family members. The law also covers all types of businesses, whether they’re an LLC, partnership, corporation or sole proprietorship.
The Missouri law does exempt employers from getting workers’ compensation insurance when the company has less than 5 employees or falls in an exempt category, like workers in certain federal jobs.
However, Missouri’s government does emphasize that even exempt employers get insurance to protect themselves from civil lawsuits.
If an employee is injured or becomes ill on the job, they may be eligible for benefits such as payment of medical expenses, a portion of lost wages, and rehabilitation expenses. To receive benefits, the employee must report the injury or illness to their employer and file a claim with the Missouri Division of Workers' Compensation. The employer or their insurance company may dispute the claim, in which case a hearing may be held to determine eligibility for benefits.
Missouri law for workers’ compensation insurance changes periodically. Employers should check with their insurance provider to see changes in state law.
Workers’ Compensation Insurance in Oklahoma
The rules for workers' compensation insurance in Oklahoma is very similar to Missouri; however, in Oklahoma, it’s a “no fault” system. This means that employees can qualify for workers’ compensation, regardless of who is at fault for the accident.
One important exception is if an employee is intoxicated. In Oklahoma, companies can deny employees compensation if the company can prove that employees drank during or just before their shift.
Another important difference is that even if workers’ compensation covers an employee, that employee can sue a coworker or third-party that caused the accident. In Missouri, state law forbids employees from suing coworkers, even if that coworker was intoxicated and caused an accident.
Oklahoma law for workers’ compensation insurance changes periodically. Employers should check with their insurance provider to see changes in state law.
Workers’ Compensation Insurance in Arkansas
Arkansas has very strong laws to cover workers in case of injury. Thus, nearly every worker in Arkansas is covered by state workers’ compensation laws.
Workers' Compensation insurance is mandatory for companies with three or more employees (most states don’t start coverage until a company has five or more employees). State laws cover nearly every worker in the state except for the military, railroad and maritime workers who are covered by federal laws.
The only requirement is that employees report accidents in a timely manner.
There are exceptions to Arkansas’ workers’ compensation laws. For instance, employers can deny claims if an accident occurs while an employee violates company policy, commits a crime, is intoxicated or wasn’t on the job.
Arkansas law for workers’ compensation insurance changes periodically. Employers should check with their insurance provider to see changes in state law.
Workers’ Compensation Insurance in Kansas
Of the four states where the Loomis Insurance Agency writes policies, Kanas was one of the earliest adopters of workers’ compensation laws. The first laws supporting workers’ compensation in Kansas was written in 1911.
Kansas workers’ compensation laws are also some of the most labor friendly laws in the US. For instance, where most states require companies to hire a minimum number of employees before being required to pay for workers’ compensation insurance, Kansas requires companies to cover all workers.
The only exceptions in Kansas for workers’ compensation insurance is for some agricultural work or for companies that have less than $20,000 in annual payroll.
Kansas is similar to other states in that they cap the number of weeks paid based on the injury. The maximum cap for the total payout is $130,000 (source), similar to other states that average $100,000 to $150,000.
Kansas law for workers’ compensation insurance changes periodically. Employers should check with their insurance provider to see changes in state law.
Should Organizations Purchase Workers' Compensation Insurance for Volunteers?
Whether you need to buy workers' compensation coverage for volunteers depends on your local and state laws. In some states, volunteers are not considered employees and are therefore not covered under the state's workers' compensation laws. Other states may consider some volunteers as employees, in terms of workers' comp insurance.
Regardless, you have the option to purchase worker's comp for your key volunteers. Providing workers' comp insurance for important volunteers reduces their risk and makes volunteering for your organization more enticing. If you choose to cover them, they will be covered for any related injuries during their volunteer time for your organization.
In the state of Missouri, volunteers may be considered employees for workers' compensation purposes, depending on factors such as the type of work they perform and the level of control the organization has over their work.
Does Workers’ Compensation Insurance Cover Heart Attacks?
Workers’ Compensation Insurance generally covers all injuries while on the job; however, health issues like heart attacks can be gray areas. Depending on the states, workers’ compensation insurance may not pay benefits for a heart attack unless there is some connection between the health issue and the workplace.
In some states, for instance, workers must show that there was some type of exposure that caused the health issue. This can include working around hazardous substances, having a heart attack after another accident, or working in a stressful environment could contribute to a pre-existing condition.
Benefits may be denied for people who have a pre-existing condition and who work in a company that has no contributing stressor. For instance, a person who has a heart issue and who works in a low-stress office setting may not be able to claim workers’ compensation benefits.
Need to Talk to An Insurance Expert?
Workers’ compensation laws change yearly. It’s very important that you talk to your insurance agent to review your insurance contract and understand how changes affect your insurance.
Contact the Loomis Insurance Agency anytime. As an insurance agency, we advocate for employers and help you get the best rates and advice. We’re on your side.