Workers’ compensation is regulated at the state level, with each state having its own set of laws. Every state enacted a program for this type of insurance by 1949. However, workers comp is mandatory in all states, except Texas, where it is optional for employers. The year when workers’ comp became mandatory in every state is yet to come.
A brief history
The first states to pass Employer Liability Acts were Georgia and Alabama in 1855. Unlike the modern version, the earlier insurances allowed workers to sue their employers for work-related harm. By 1949 every state had a form of workers compensation program in place.
However, at the beginning of the 20th century, these were all optional. The voluntary nature of the law was based on the 14th amendment, which asked for due process prior to depriving an entity of property.
In 1917 the famous case New York Central Railway Co. v. White led the United States Supreme Court to resolve the issue posed by the 14th amendment. They argued that making workers’ compensation mandatory did not impede in any way the due process. Since then, the states which already had a compensation program have implemented different threshold requirements.
What is workers’ compensation
This is a type of insurance that is obtained by employers for their employees. It is meant to offer compensation for any injuries and illnesses that are work-related.
However, since workers comp is insurance, employers are also protected from the employees suing them.
Still, in some cases, the employers could gain additional compensation through a third-party lawsuit. For example, the lawsuit could be targeting the manufacturer of faulty equipment or the person who was responsible for ensuring equipment safety. Source: https://www.sinklaw.com/areas-we-serve/south-carolina/workers-compensation-lawyer/
This is a state mandate program, meaning that each state has its own set of laws. The federal government only offers this kind of insurance to federal employees.
The laws vary by state. In the majority of states, employers need to obtain workers’ compensation even if they have one employer. However, in some states, there is a higher minimum number of employers for getting this type of insurance. In New Mexico, workers comp is required from three workers, while in Alabama, the number is five. Also, corporate executives are insured in many states.
The exception: Texas
Texas is the exception in this case since workers’ compensation is not mandatory in most cases. Those employers who do not opt for the insurance are known as non-subscribers.
There are, however, a few fields where the employer is required to cover this type of insurance:
- Companies with government contracts
- Public employers, like state agencies
- Construction and building contractors that work for any public employers
- State universities
- Motor carriers on public highways
- Motorbus companies
- People dealing with compressed natural gas and liquid propane
- People who employ inmates through work furlough programs
Even if workers’ compensation is not mandatory, some employers still opt to purchase it. The main reason behind this is that it offers them protection. Employees who get injured at work or suffer from a work-related injury can sue the employers if they are not covered by workers comp. However, employees who benefit from this kind of insurance cannot seek legal action against their employers.
Penalties for not having workers’ compensation insurance
In Texas, there are no penalties for not having workers’ compensation, since it is not mandatory. For the states, where the insurance is mandatory, the penalties for not covering it vary. For example, in California, fines can go up to $100,000. In some states like Pennsylvania, the punishment can also include jail time as high as seven years.
Workers’ compensation laws have been part of US history since the 19th century but have become implemented in every state only in the 20th century. Over the years, there have been numerous legislative changes. Currently, it is mandatory in all states for employers to purchase workers’ compensation. The only exception is Texas, where this is optional.
Author’s Bio Sarah Douglass – Sarah Douglass has been writing all her life. What started as a passion soon became her life goal. At such a young age, she has already faced and overcame many obstacles. The instinct she developed through her life experience is coupled with an in-depth knowledge of the legal field. Sarah sees writing as a means to connect to others and help them overcome hard times.