UNDERSTANDING THE BASICS OF WORKER’S
COMPENSATION INSURANCE
In the U.S., employers are required to take reasonable measures to ensure that their workplaces are safe. Despite an employer’s best efforts, accidents will inevitably occur. This is especially true for the construction industry. In fact, some people might argue that construction sites are inherently dangerous. It is because of this “inherent danger” that worker’s compensation insurance requirements were made law in many states.
Worker's Compensation Insurance Overview
A worker’s compensation policy is a piece of insurance that covers injuries that occur in the workplace or on the job site. The purpose or workers’ compensation law is to reduce lawsuits against employers for work-related injuries and deaths. Workers’ compensation requirements vary from state-to-state and throughout different industries. Workers’ Compensation insurance is one of the only state-mandated insurance requirements for businesses. In fact, the construction industry, through state licensing boards, has made workers’ compensation a prerequisite for obtaining and maintaining contractor licenses.
Course and Scope of Employment
In general, workers’ compensation insurance covers injuries to employees that occur in the workplace, on the job site or anywhere else so long as the injury is sustained in the “course and scope” of employment. The “course and scope” analysis is an important one to understand.
Assume that a contractor is asked to drive from the worksite to a warehouse to pick up parts or pieces and while on route, is injured in a motor vehicle accident. His injuries should be covered under the workers’ compensation policy because the injuries occurred while he was in the course and scope of his employment.
However, assume that after picking up the parts from the warehouse the employee stopped at the bank and then drove to the dry cleaners to pick up some shirts and then was injured in a collision while heading out of the cleaner’s parking lot. Under this scenario workers’ compensation would likely not cover the injuries because by stopping at the bank and cleaners the employee had deviated from his course and scope of work.
The issue of deviation from course and scope is a commonly litigated issue. This is because deviation is a fact-specific issue. Many courts have held that minor deviations from the course and scope or work are acceptable. In the example above, had the employee merely stopped at the bank on his way back to the jobsite, a court might have held that coverage should be afforded because the deviation was “de minimis.”
What is the Worker’s Compensation Bar?
In most states an employer is barred from brining a lawsuit for injuries or death against his employer. This is because most state statutes make workers’ compensation the “exclusive remedy” for injured workers. While the bar covers the vast majority of on-the-job injuries, there are a few exclusions that allow an employee or the family of a deceased employee to sue the employer directly.
For example, the South Carolina Courts have held, "The Workers' Compensation Act is the exclusive remedy against an employer for an employee's work-related accident or injury." Edens v. Bellini, 359 S.C. 433, 441, 597 S.E.2d 863, 867 (Ct. App. 2004). "The exclusivity provision of the Act precludes an employee from maintaining a tort action against an employer where the employee sustains a work-related injury." Id. at 441-42, 597 S.E.2d 867.
While each state has it own exclusions, most involve situations where the employer has committed an intentional or deliberate harmful act or is grossly negligent. Other exclusions include employer violations of federal laws with respect to migrant workers; injuries caused by the negligence of a third-party; and where the injury is specifically excluded from coverage under the state’s worker’s compensation laws.
An example of an individual state exclusion can be seen in the South Carolina where the statute states that the “exclusive remedy” provision shall exclude all other rights and remedies that the employee or his family may have, “Provided, however, this limitation of actions shall not apply to injuries resulting from acts of a subcontractor of the employer or his employees or bar actions by an employee of one subcontractor against another subcontractor or his employees when both subcontractors are hired by a common employer.” S.C. Code Ann. § 42-1-540 (1985).
Employers Obligations
Aside from having proper coverage, what else must an employer do in order to comply with workers’ compensation laws? One of the most important requirements is to quickly report all injuries or claims to their insurance carrier and to the state’s workers’ compensation board. In fact, many states have reporting deadlines. For example, in Colorado an employer must report an injury to its carrier within 10 days, regardless of how small the injury is. OSHA has also implemented strict reporting deadlines.
Separate from state requirements or OSHA, delays in reporting injuries can have other negative repercussions for the employer. For example, late reporting can impede a carrier’s ability to investigate and identify fraudulent claims; impeded the ability to deny claims; and eliminate the possibility of directing initial treatment.
Conclusion
Workers’ compensation laws can help employers effectively deal with workplace injuries. It is important for contractors to make sure that their coverage is sufficient and current. It is equally important for contractors to understand the specific rules and regulations in their sates and to comply with all reporting deadlines. The failure to deal with worker’s compensation insurance and claims properly can have a disastrous effect on the construction company’s finances and ability to operate.
Navigating the complexities of workers’ compensation laws and insurance is critical for protecting your business and employees. Whether you need guidance on compliance, reporting deadlines, or understanding coverage requirements, the Law Offices of Peter J. Lamont is here to help.
Our firm specializes in advising businesses on how to meet their legal obligations and minimize risks related to workplace injuries. Do not leave your business vulnerable to penalties or lawsuits. Contact us today at 201-904-2211, email us at info@pjlesq.com, or visit our website at pjlesq.com to ensure your workers’ compensation policies and practices are on solid legal ground.
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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at info@pjlesq.com.
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About Peter J. Lamont, Esq.
Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.
Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magainze and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.
As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals.
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