What Is Workers’ Compensation & How Does It Work?

For most people, workers’ compensation isn't something you really think about until you need it. And when you do, there’s a lot to learn about. Every state sets its own workers’ comp laws, so the general process is the same but certain details differ from one area to the next.

We’ll explain the basics of workers’ comp so you know what to expect as you go through the process yourself.

What is workers’ comp?

Workers’ compensation is an insurance program that a business buys to cover an employee’s medical care and lost wages if they get sick or injured at work.

As an employee, you don’t have to pay into workers’ comp to get benefits from it. Workers’ comp is also a no fault system, so it doesn’t matter if a work injury was your fault or your employer’s.

In exchange for workers’ comp coverage, you give up your right to sue your employer for damages. However, the goal of suing is generally to get payment for missed work in medical bills, which is what your workers’ comp benefits offer.

Do all companies offer workers’ comp?

Employers are required to get workers’ comp insurance in every state except for South Dakota and Texas. Some areas have state-run workers' comp insurance that let employers be “self-insured,” which can change some steps of the process, but they still have to have coverage. Some companies also use a third-party to manage their workers' comp. As an example, Amazon worker's comp is handled by Sedgwick.

Which workers qualify for workers’ comp?

In general, full-time and part-time workers qualify for workers’ comp coverage. That includes all regular employees, whether you work all year or seasonally. However, independent contractors, freelancers, consultants, and other self-employed workers usually don’t qualify for workers’ compensation.

Here’s a good rule of thumb: If your employer pays some of your taxes by withholding them from your paychecks, you probably qualify for workers’ comp. If you have to pay all of your own taxes, you probably don’t qualify for workers’ comp.

What if my employer says I’m a contractor but I’m not?

Each state can set its own definition of who qualifies as an independent contractor and who qualifies as a regular employee. If your employer controls your schedule and what you can or can’t do as part of your job, but says you’re an independent contractor, they may have misclassified you.

To change your classification, first find your state's workers' comp board website to see if it has a clear definition for a contractor vs. an employee. If it does, you can ask your employer to correct their mistake or contact the board itself for help. If your state board doesn't offer a definition, contact a local workers’ comp attorney to discuss options for your situation.

Injuries that qualify for workers’ comp

Almost any injury or illness qualifies for workers’ comp as long as it happens while you’re doing your job and requires medical treatment or missed work time. Acute injuries — injuries that happen suddenly — and chronic conditions — ongoing health problems that develop gradually — both qualify for workers’ comp.

Some of the most common injuries that qualify for workers’ comp are:

• Cuts, punctures, and lacerations

• Sprains

• Broken bones

• Dislocations

• Repetitive-use injuries from doing the same motion over and over

• Crushed body parts

• Loss of a body part

• Exposure that leads to difficulty with daily functions, like breathing or hearing

• Cancer from exposure to certain substances at work

Do mental health conditions qualify for workers’ compensation?

Technically speaking, mental health conditions qualify for workers’ comp benefits. Unfortunately, it can be very hard to prove you have a work-related condition. It’s easier to qualify if you can point to a clear cause, like if you started experiencing PTSD after a robbery or shooting.

If you do experience a mental health condition related to your work, document when it started and every treatment or diagnosis you get. You can also consult with a workers’ comp lawyer for their opinion on your chances (your first consultation is always free).

Can I get workers’ comp for COVID-19?

It depends. The COVID-19 pandemic made exposure to illness one of the top causes of workplace injury in 2020. Today, some workers are experiencing long-term symptoms from the disease. Many states have provisions for workers to get workers’ comp coverage for COVID-19, but it can be hard to prove that you got the condition through your work. This is another situation where your best bet is to talk with a lawyer to understand your likelihood of winning a case.

Will I get fired if I file for workers’ comp?

Your employer can’t legally fire you for filing a workers’ comp claim. Getting benefits is your right and your company needs to comply with those rights. Your employer also can't fire you for talking with a lawyer, appealing a denied claim, or trying to get a second opinion on your diagnosis or treatment plan.

Protecting your rights isn't always easy because of at-will employment laws, but you can take legal action against your employer if they fire you as retaliation.

Even if you do leave your job, you can still receive workers’ comp after leaving your job.

The workers’ comp process in 5 steps

Workers’ compensation rules vary by state, but you can expect the same general process no matter where you live or work:

1. Get immediate medical care as needed.

2. Report the injury to your employer.

3. File a workers’ comp claim.

4. Receive medical care as you recover.

5. Reach maximum medical improvement (MMI)

Step 1: Get immediate medical care as needed.

After a workplace injury, you have two priorities: Get necessary medical care and let your employer know about the injury.

If you can’t get in touch with your employer right after you get hurt, pass the message on through another employee, get the necessary or emergency care, and then tell your employer about the injury as soon as you can.

Most states let you get emergency room care for your first visit under workers’ comp. Make sure to tell the doctor or staff that you have a work-related injury so they can bill it properly.

Step 2: Report the injury to your employer.

Whether or not you talked to your employer right after your injury, try to give your boss, supervisor, manager a written notice of your condition as soon as possible. Each state sets a reporting deadline and you usually have a few days but missing the deadline will disqualify you from getting workers’ comp.

We suggest that you report your injury in writing and keep a dated copy of your notice for your own records. That way you have proof that you notified your employer in case your employer or the insurance company denied your claim later on. Keep a dated copy of your notice for your own records on hand to prove that you reported your injury as soon as you could.

If you want more advice, here’s how to report a work injury or illness.

Step 3: File a workers’ comp claim.

In most states, your employer will file a workers’ comp claim for you after you notify them of your condition. You may need to fill out an additional form, but you usually don’t have to do anything else yourself. If your employer doesn’t want to file a claim or says you need to do it yourself, find your state’s time limit for filing a claim and make sure to do it yourself.

Atticus does have a state-by-state guide to filing a workers’ comp claim.

Step 4: Receive medical care as you recover.

After you file a claim, your employer’s insurance company will approve or deny your claim. Approval means the insurer will continue covering your medical care and you’ll get weekly payments once you pass your state’s workers’ comp waiting period.

You may or may not be able to choose your own doctor for workers’ comp treatment — it depends on your state. Some states offer full choice, others give you limited choice, and some have your employer choose for you.

You will most likely take part in a test (like a functional capacity evaluation) to determine your ability to work. From there your doctor, also called your treating physician, will create a plan for your recovery. That plan will outline how much work you can do (if any), what treatments you should receive, and how long your recovery could take.

Step 5: Reach maximum medical improvement (MMI)

You’ll eventually reach a point where medical treatment will no longer improve your ability to work. This stage is called maximum medical improvement (MMI). For many workers, this means they’re back to their pre-injury condition and can return to their normal job. But reaching MMI doesn’t always mean that you fully recovered. It’s only the point where you've recovered as much as possible.

What if my workers’ comp claim is denied?

Many workers’ comp cases go smoothly but unfortunately, not all do. If the insurer denies your claim or you stop getting benefits before you think you’re fully recovered, connect with a workers’ comp lawyer. A lawyer will help you fight for the benefits you’re entitled to, whether that’s more medical care, more payments, or both. Act quickly because you have to start the process before your state’s statute of limitations for claims runs out.

Learn more about what to do if your workers’ comp claim is denied.

What happens to medical bills when workers' comp is denied?

You may be on the hook for your medical bills if your workers’ comp claim is denied, so it’s important to appeal if it was indeed a work injury. Talking with a workers’ comp lawyer is the best thing you can do if you need to appeal a denial.

How much does workers’ compensation pay?

Most states pay up to two-thirds (66 ⅔%) of your average weekly wages. Each state sets its own workers’ comp payment rates, so you may get more or slightly less depending on where you file a claim.

How are my payments calculated?

First, your state will take your average weekly wage (AWW) and multiply it by their payment calculation. For example, if you live in Massachusetts, which pays 60% of AWW, and you earn an average of $1,000 per week, you’ll get $600 per week as your payment.

Some state's also have a minimum or maximum payment amount. These limits are usually based on the statewide average weekly wage (SAWW) — the average amount that someone earns in your state every week.

Will I pay taxes on workers’ comp?

No, your workers’ comp payments aren’t taxable. That includes weekly payments, lump-sum payments, and all settlements.

Do all workers' comp cases end with a settlement?

Not all workers' comp claims end with a settlement, but it's common in situations where you reach MMI and haven't fully recovered. Claims that are expected to last for years or include significant medical care could also lead to an offer.

How much you can get from a settlement also varies. Your state's labor laws may list how much certain injuries are worth. Certain types of treatments could also affect your payout. For example, surgery could increase your potential settlement sometimes but not in every case. Cases with lawyers also end with average higher settlements than cases where a worker negotiations themself.

Learn more about when workers' comp will offer a settlement.

How long do workers’ comp payments last?

Your workers’ comp benefits will usually last until you’re fully recovered from your injury. In some states there is a maximum length of time you can be on workers’ comp. That time limit could vary based on what your injury is and how severe it is. For more information, we have a state-by-state guide to how long workers’ comp payments last.

Can I work while receiving workers’ comp?

If you’re receiving workers’ compensation benefits, you should only work as much as your doctor or treating physician says you can work. Your doctor should have a treatment plan for you, which could include completely stopping work or doing light-duty and modified-duty work. Follow your doctor’s orders to ensure you recover as quickly as possible and to avoid losing benefits for doing too much work.

Learn more about how much you can work while on workers’ comp.

What if I never fully recover from my injury?

Some workplace injuries and illnesses lead to permanent disabilities that change your ability to work. In those situations, states offer long-term partial or permanent disability benefits. These are still workers’ comp benefits, but they last beyond MMI.

How long payments last will depend on your injury and how much it limits your ability to work. Your workers' comp doctor will give you a disability rating once you reach MMI. That rating helps determine your permanent benefit amount and length.

For example, you could receive lifetime benefits if you suffer a permanent disability, but maybe you’ll qualify for two years’ worth of payments if you lost 50% of the ability to use one of your hands.

In many cases, the insurance will offer a workers’ comp settlement at this point. You don’t need to accept one, but a lump-sum payment may be the right option for you.

If your condition will keep you out of work for at least another year, Atticus can also help you apply for Social Security disability benefits (a federal government program that pays monthly checks plus health insurance).

Do I need a workers’ comp lawyer?

A workers’ comp lawyer can help you get the full workers’ comp benefits you’re entitled to. They’re especially helpful when you have an issue with your claim or benefits. Some situations where a workers’ comp lawyer can help you include:

• Your employer fails to file your claim.

• Your employer denies that your injury happened at work.

• The insurance company denies your workers’ comp claim.

• The state calculates your weekly benefit amount incorrectly.

• The insurance refuses to cover your medical care.

• Your doctor says you can do more modified-duty or light-duty work than you think you can do.

• Your workers' comp doctor says you’re ready to return to work before you believe you’re ready.

• Your employer is pressuring you to return to work.

• Your employer offers a settlement.

Further reading: What Does a Workers’ Comp Lawyer Do That I Can’t?

Are a lawyer and an attorney the same thing?

The terms “workers’ comp lawyer” and “workers’ comp attorney” are the same in practice. It doesn’t make a difference if you search for one or the other as long as you work with someone who has passed the bar in your state. To help you get started, we've collected these signs of a good (or bad) disability lawyer.

How much does a workers’ comp lawyer cost?

Workers’ comp lawyers charge on contingency, meaning they’ll take a portion of the benefits they win you as their own payment. Depending on where you live, most workers’ comp lawyers charge between 15% and 30% of your winnings. But as long as you choose a good lawyer, your initial consultation is free, you won’t pay anything upfront, and you won’t pay anything at all unless they help you win benefits.

How to find a good workers’ comp lawyer

During the workers’ comp process, finding a good lawyer is as important as finding a good doctor or dentist because you need your benefits to support your well-being while you recover. Whether you have some leads or are starting from scratch, these strategies can help you find the right lawyer for your case:

• Look for a lawyer or firm that specializes in workers’ compensation cases.

• Read online reviews and try to understand if bad reviews are one-offs or if there are clear patterns that people mention in the bad reviews.

• Make sure your initial consultation is free and that there aren’t any upfront fees.

• Look in your city, but also consider lawyers throughout your state.

• Ask friends, family, and coworkers if they’ve worked with a lawyer they liked.

Atticus can simplify your search by connecting you with an experienced workers’ comp lawyer in your area. Start with our 3-minute workers' comp quiz. One of our team members will reach out to talk more about your situation and explain if a lawyer could help. This call is free and there are no upfront costs if you decide to work with our lawyer.