Workers' Compensation Definition In Simple Terms

Workers' Compensation Definition

Workers' compensation was adopted in the 1910s. The adoption was an important event in the legal, political, and economic history of the United States. The legislation was adopted from a range of perspectives. It represented the first occurrence of a prevalent social insurance program in USA. It set the stage for the afterward adoption of the federal government plans for health insurance, old-age pension, and unemployment insurance.


Workers' compensation is a system which pays monetary benefits to workers who get work-related injuries or disabilities. It is actually a type of insurance and publicly-sponsored system. It offers an employee's compensation for disabilities or injuries resulting from their employment. It also provides benefits to the dependants of those who die in their course of work.

Workers' compensation definition in simple terms

Workers' compensation definition is very simple. It is simply a system that contains a set of laws and regulations. These laws protect workers who sustain work-related injuries or disabilities. The laws provide workers who get injured with fix monetary awards. This is done in an attempt to eliminate any need for litigation.

These laws also extend to the dependants of workers. In case a worker dies due to work-related injuries, his or her dependants receive the monetary benefits. The death can be as a result of work-related illnesses or accidents. Workers' compensation laws provide clear guidelines on how to go about this. With these laws in place, there is no need for dependants to file a lawsuit.

Workers' compensation is a system that also protects employers. In other words, it contains laws that look at the interest of employers. These laws limit the amount that an injured or disabled worker can recover from the employer. The laws contained in the Workers' compensation system also protect fellow workers. This is achieved by getting rid of the liability of the co-workers in a good number of accidents. This also helps in protecting the employer.

State statutes in the United States establish Workers' compensation for most employment. You should note that federal laws are limited to the federal employees. Federal employees are those individuals who work in the important aspect of the interstate commerce.

Reasons for rapid enacted of the Workers' compensation

From the Workers' compensation definition, you can tell the reasons for its adoption. It was not the result of employers to get benefits at the expense of workers. And neither was it for the result of workers to benefit at the expense of workers. It was enacted across USA because various economic groups anticipated its benefits. These groups include:

  • Employer
  • Insurance companies
  • Workers

Federal laws related to Workers' compensation

There are both state laws and federal laws relating to Workers' compensation. Let us start by discussing about the federal laws related to Workers' compensation. The Federal Employment Compensation Act is in the interest of federal employees. These employees are non-military. Most of its provisions are classic of many of Workers' compensation laws. Typically, the awards are restricted to ‘death or disability' sustained while performing the duties of the employee.

The disability or death must not be caused by intoxication. On the same note, the death or disability should not be caused deliberately by the employee. The United States Department of Labor administers this act.

The Federal Employment Compensation Act (FELA) covers medical expenses due to the disabilities. It may also require the employee in question to undergo job retraining. As per the act, a disabled employee continues to receive two-thirds of their normal monthly salary. However, for permanent disability, the employee may receive more. Again, the employee receives more during the disability period if he has dependants. This act also provides compensation for those survivors of workers who get killed.

Of course, FELA is not actually a Workers' compensation statute. However, it provides any Railroad company is liable for injury to its employees. This provision applies to railroad companies that are engaged in interstate trade. They must compensate for injuries resulting from their negligence. The Merchant Marine Act also provides mariners with the same protection from company negligence.

The Black Lung Benefits Act also provides compensation for workers. The act provides compensation, specifically for miners suffering from pneumoconiosis (“black lung). The Act requires mine operators to provide disability payments. They are also required to establish a fund that the Secretary of Labor administers. The payments are provided to miners in cases where the operator is unable to pay or is unknown.

State Law related to Workers' compensation

As mentioned before, there are state laws that relate to worker's compensation. Title 8 of the California Code of Regulations provides a very good example of the complete state plan for Workers' compensation. In fact, it is applicable to a huge number of employers. The law limits the liability of both the employer and fellow workers. California also obliges employers to get insurance to cover possible worker's compensation claims.

Recent studies

The recent studies already covered a comprehensive Workers' compensation definition into detail. Now, let's look at some studies on worker's compensation. Recent studies have shown a significant drop of worker's compensation benefits in most states. Studies show that identical injuries sometimes receive completely different kinds of compensation. In most cases, it depends on where an employee resides. Due to these disparities, it's important that local compensation statutes should be examined.

Studies have also shown that unequal compensation is correlated closely with constant income equality. Since 2003, the legislators in more than 33 states have passed backward Workers' compensation laws. Some that have been passed reduce Workers' compensation benefits. Some of them make it more difficult for workers with certain injuries to qualify for compensation. Florida is a good example. It has cut benefits to workers with severe disabilities by 65% since 1994.

The margin at which the states have shrunk the payments is shocking. Many states have also cut off the payments after an arbitrary time limit. The payments are usually cut off even when workers have not recovered.

Various studies show that where an employee gets hurt matters a lot. This is because every state has established its own system. For example, an amputated leg can be worth even three times as much compared to another state. In Alabama, the highest compensation for losing an eye is $27,280. In Pennsylvania, the maximum compensation for the same is $261,525.

Terms related to worker's compensation definition

To understand the worker's compensation definition completely, you should know its terms. By its terms, I mean the terms and phrases related to it. Here are some of the related terms you should know.

  • Workers' Compensation Coverage A

Workers' Compensation Coverage A is an insurance policy. It protects workers. It provides medical care, disability, rehab and death for employees killed or injured on the job.

  • Workers' Compensation Coverage B

Workers' Compensation Coverage B is also an insurance policy. It covers medical care, rehabilitation cost, and lost income. It covers all these for workers injured on the job.

  • Longshore and Harbor Workers' Compensation Act

This is a federal law. It provides Workers' compensation to some maritime workers.


Understanding worker's compensation meaning should be taken as a beneficial primary knowledge by everyone. It is good to understand its statutes, origin, and importance. It is also important that you understand the terms and how it has changed overtime. We do hope that this post helps you understand the meaning of Workers' Compensation Definition better.

Workers' compensation prevents an employee from suing their employers for negligence. You should know what agreeing to receive the Workers' compensation mean. It means that you give up your right to sue your employer for negligence. Workers' compensation is aimed at protecting both employers and workers. - Sherlin Lindsay - author / writer - logo

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