Workers’ Comp: Who and What is Covered?

Workers’ compensation (WC) is a state-mandated system for paying various medical and disability benefits to employees who suffer job-related injuries and illnesses, as well as cash payments to partially replace lost wages without regard to whether the employer or the employee was “at fault.”

Who’s Covered?
Workers’ compensation laws cover nearly all employees.

Common Exclusions From WC
Young businesswoman feeling pain in the back at the office• Farm workers
• Domestic workers
• Business owners
• Casual workers who work irregularly or sporadically
• Longshore workers, ship crews, railroad workers, and others covered under federal law
• Independent contractors

Loaned or Borrowed Employees
The “borrowed employee” doctrine holds that the employer of a borrowed employee, rather than the employee’s regular employer, is liable for the employee’s actions that occur while the employee is under the control of the temporary employer.

For a worker to qualify as a borrowed employee, Company A, the “general employer,” must loan him to Company B, the “special employer,” for a limited amount of time. In addition, a three-prong test must generally be satisfied:

  1. The loaned employee has a contract of hire, express or implied, with the special employer (Company B).
  2. The work being done is primarily that of the special employer (Company B).
  3. The special employer has the right to control the details of the work.

If an employee qualifies as a borrowed employee, he or she loses his or her common-law right to sue the special employer for negligence. In other words, the exclusive remedy doctrine vis-à-vis the special employer now covers him.

Disabled Businessman Working In OfficeAs a general rule, both the general and the special employer are responsible for WC benefits and can claim the protection of the exclusive remedy rule.

Employee Leasing Organizations
The issue of borrowed employees always comes up in the context of employee leasing services (generally known as “professional employer organizations” or PEOs). The employee is on the payroll of the PEO but actually does work for and is directed by the PEO’s client. State laws heavily regulate this area as to which employer must be responsible for WC.

Statutory Employer Laws
Businessman Falling on StaisMore than 40 states have some form of law called either a “contractor-under” or a “statutory employer” statute.
• General contractors are treated as a “secondary employer” of subcontractors’ employees.
• If the subcontractor fails to obtain WC coverage, the subcontractor’s employees may obtain compensation benefits from the general contractor.

The issue: general contractors argue that their status as “statutory employers” should allow them to benefit from the exclusive remedy rule and be immune from common-law negligence suits by the employees of subcontractors.

What’s Covered?

Work Relatedness
To be covered, injuries and illnesses must:
• Have resulted from an accidental occurrence
• Arise out of employment
• Arise in the course and scope of employment

Accidental Occurrence
The injury was unexpected and unforeseen by the claimant.

Work Place Safety GuidelinesThe more definite the time when the injury occurred, the easier it is to identify an event as having been accidental.

“Ordinary Diseases of Life”
Many states exclude from coverage “ordinary diseases of life” to which the general public is equally exposed.

An occupational disease is any disease that is proven to be due to causes and conditions that are characteristic of a particular occupation or employment and for which the exposure is greater than that of the general public.

Common Disease Claims
• Diseases like asbestosis and silicosis
• Occupational hearing loss and musculoskeletal disorders (MSDs) and repetitive stress injuries (RSIs)
• Psychological injuries are compensable if there is medical evidence that employment was a substantial contributing factor.

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