What is Worker's Compensation?
Generally speaking, when employees are injured, ill, or die in the course of their employment, they -- or their families or dependents -- are usually entitled to collect worker's compensation benefits. The entitlement is virtually automatic, as long as the worker qualifies as an employee and experiences an on-the-job injury.
Worker's compensation laws were enacted to reduce court delays, encourage safety, and to give injured employees a reliable source of income and benefits, regardless of who was at fault in causing the injury. All 50 states and the federal government now have some type of worker's compensation law in effect.
In the worker's compensation system, employees receive benefits without regard to who caused the accident. The issue of negligence -- whether on part of the employer or the worker -- plays no part in a worker's compensation matter. This means that the barn worker who was kicked in the head while trying to pasture a horse, even if his own negligence and inattentiveness helped cause the injury, could recover benefits.
What is Worker's Compensation Generally Designed to Cover?
If the "employee" suffers an injury, illness, or death on the job, then worker's compensation applies. Benefits, which vary depending on the severity of the injury and whether the injury is permanent, can include reimbursement for medical expenses, doctor bills, hospital stays, and rehabilitation costs. Benefits can also include reimbursement for a certain amount of the worker's lost income. Should a worker die, the laws provide certain benefits to his or her spouse and certain dependents (such as the worker's children).
Other losses, such as "pain and suffering," are generally not recoverable through worker's compensation. However, the injured worker might seek to recover them from others responsible for the injury (maybe, for example, a defective machine was at fault and could be sued separately).
Who Qualifies for Benefits?
Worker's compensation benefits are only available to "employees" (as defined in the applicable law) who suffer illnesses, injuries, or death arising "out of and in the course of employment." In the example at the beginning of this article, both the injured driver and stable worker would likely have claims. Those seeking worker's compensation benefits should notify the employer promptly after an injury and, where required, submit a claim form.
Must All Employers Have Worker's Compensation Insurance?
The answer depends on the applicable law. Many state laws require all employers to purchase worker's compensation insurance unless the employer falls within certain categories of exemptions. Some exemptions, for example, apply to farm workers (but read the law very carefully -- stables might not qualify here!). Other exemptions can include volunteers, family members who help others for free, and those who work for certain non-profit organizations. An exemption for which very large companies might qualify is "self-insured" employers; this classification must be approved in advance by the appropriate state entity.
The employer is solely responsible for paying for worker's compensation insurance, unless it is legally qualified as "self-insured." Employers cannot recoup the cost of insurance from their workers; consequently, payroll deductions to finance insurance premiums would be unlawful..
Are Worker's Compensation Disputes Handled Through the Court System?
No. Disputes or appeals involving the amount of worker's compensation benefits, or the denial of benefits, are usually directed to an administrative body, often called the worker's compensation appeals board. Decisions of that board can be appealed further.
What Happens With Uninsured Employers?
Employers who fail to purchase worker's compensation insurance, and do not legally qualify as "self-insured," usually can be sued through the court system. There, if the employer was found to be negligent, and if that negligence directly caused the worker's injury, then the employer would be liable for the injuries. State laws, which differ nationwide, might even impose penalties on uninsured employers.
Dispelling Common Misconceptions Regarding Worker's Compensation
Let's explore some common statements in the horse industry regarding worker's compensation in order to determine which are true and which are not:
"My workers are all independent contractors so I don't need to buy worker's compensation insurance."
True. Independent contractors cannot collect worker's compensation insurance. However, is the worker really an independent contractor? Many equine businesses wrongly assume that their workers are "independent contractors" when they are not. As this author explained in her book, Equine Law & Horse Sense, there are ways to determine whether a worker more likely qualifies as an "independent contractor" or "employee."
"While working one day, I just cut my finger a little, but I can make a worker's compensation claim and collect money for my "pain and suffering."
False. Worker's compensation laws are generally not designed to pay injured workers a special sum of money for "pain and suffering."
"Everybody in the horse industry should assume the risk of getting hurt while working around horses so I do not need worker's compensation insurance in case something happens."
False. With worker's compensation, the negligence of the employer or the employee becomes irrelevant. Even if the worker shares some of the blame for negligently failing to look out for his or her safety, such as the stable worker pasturing the horse at the beginning of this article, the worker may still be legally entitled to collect worker's compensation benefits.
"My stable's business liability insurance will cover any injured workers."
Not necessarily. In fact, most stable's commercial general liability policies exclude claims presented by employees who are hurt on the job. Unless your stable liability insurance policy expressly covers this, you will need to buy extra insurance for worker's compensation.
This article does not constitute legal advice. When questions arise based on specific situations, direct them to a knowledgeable attorney.
Julie I. Fershtman is an attorney with a law practice serving the horse industry. In her 15 years as a lawyer, she has achieved numerous courtroom victories and has drafted hundreds of contracts. An independent lawyer rating service gives her its highest rating for abilities.