Workers' Comp in the United States

Workers’ compensation in the United States is structured as an insurance system: injured and ill workers’ medical benefits and wage replacement payments are financed through insurance premiums paid by employers to insurers. This structure helps protect employers from financial risks and helps insurers make profits, but it puts employers’ and insurers’ financial motives in direct tension with workers’ fundamental human needs and human rights. Workers experience this conflict in a number of ways, with vulnerable workers—including low-wage workers, recent immigrants, older workers, temp workers, misclassified “independent contractors”, people with occupational illnesses, and people with disabilities—most affected. Problems include:

  • Groups of workers are excluded: Farm workers, domestic workers, employees of small businesses, and people who are self-employed are excluded from workers’ comp in many states; Texas and Oklahoma allow any employer to opt out of the system altogether; and a growing number of health conditions related are excluded from coverage across many states.

  • Workers are retaliated against: Workers who report injuries and file workers’ comp claims routinely face threats and retaliation by their employers, including the loss of their job, loss of hours, and deportation.

  • Many injuries aren’t reported: Because employers’ workers’ comp insurance premiums are tied to the rate of injuries and illnesses in a workplace, incentivizing them to keep reported rates down. Employers use intimidation, peer pressure, and social stigma to scare workers out of reporting injuries and filing for workers’ comp.

  • Claims are delayed and denied: Employers and insurers seeking to lower the costs of workers’ comp use every trick in the book to delay and deny workers’ claims, and use their power to push legislation that stacks the deck against workers. Workers with occupational diseases face especially high barriers to getting workers’ comp.

  • Choice of doctors is limited: Insurance and business lobbies have pressured legislatures to cut physicians’ payment, and, with few exceptions, states have failed to fund occupational health clinics and streamline paperwork and payments. All these factors drive physicians out of workers’ comp, while insurers and employers push laws that give them ever-greater control over doctors who serve as “gatekeepers” to workers’ comp.

  • “Benefits” don’t meet needs: The insurance industry and business lobbies have successfully lobbied to reduce the amount of workers’ replacement wages and arbitrarily cut off workers and their families after a period of time.

  • Not enough attention on rehabilitation: Workers’ comp roundly fails in what should be one of its foremost goals: to prioritize injured workers’ rehabilitation, return to function, and return to work.

  • Workers and the public bear the costs: Workplace injuries and illnesses carry both human and financial costs, but insurers and employers only pick up a fraction of the bill, shifting the rest to workers, their families, and the public. Data and evaluation is so lacking that the true costs of this shift are poorly understood.

  • Workers are treated like adversaries with no participation in governance: Workers are forced to navigate an exceedingly complex and adversarial system. Information is hard to find, hard to understand, and often inaccessible, especially to speakers of foreign languages and people with disabilities. Monitoring and evaluation of workers’ comp outcomes is lacking and generally excludes workers’ participation.

Read NESRI's briefs on national trends and developments in workers' comp concerning injured and ill workers' human rights, and the particular problem of retaliation and intimidation against injured and ill workers.