The workers’ compensation system is designed to ensure that employees who are injured or disabled on the job are provided with fixed monetary awards, eliminating the need for litigation.

Who is Covered

Most states have made workers’ compensation coverage mandatory, although in Texas and New Jersey it is voluntary. Most states require employers with at least one employee to carry workers’ compensation coverage, but some states exempt "very small" employers - although there is not total agreement about what constitutes a small employer. Some states exempt employers with fewer than five employees, some with fewer than four, some with fewer than three. Exempt employers may participate in the state workers’ compensation program if they wish.

Not all employees are covered by the workers’ compensation laws of all states. Business owners, independent contractors, real estate salespersons working solely on commission, professional athletes, domestic employees in private homes, farm workers, maritime workers, railroad employees, unpaid volunteers, operators of leased taxicabs, and some others are frequently excluded. Employers should be careful to monitor the status of such persons, especially independent contractors, to make sure they are properly classifying personnel to maintain proper coverage.

Basic Provisions/Requirements

Workers’ compensation provides a claim and benefit system for workers who become ill, are injured or who die on the job.

The workers’ compensation system is national, but is administered by the states. The laws and court decisions governing it follow a pattern throughout the county, but vary significantly from state to state on everything from eligibility for benefits to the proper process for filing claims. Please consult the State Law portion of our site to learn what are the individual state requirements for Workers’ Compensation.