Workers' Compensation and Employer's Liability
The grand bargain
Workers' compensation is a no-fault statutory system: the employee gives up the right to sue the employer for negligence, and the employer accepts liability for injuries arising out of and in the course of employment. Maine's system is administered by the Workers' Compensation Board, including an abuse-investigation unit that pursues premium fraud and claim fraud.
Benefit categories
- Medical - unlimited and lifetime in most jurisdictions.
- Indemnity - temporary total, temporary partial, permanent partial (scheduled and unscheduled), permanent total, and death benefits for dependents.
- Wage basis - generally the average weekly wage, subject to a statutory maximum and a minimum.
- Waiting period - a short initial period before indemnity begins, with retroactive payment if disability extends beyond the statutory threshold.
The policy
Part One (workers' compensation) has no dollar limit. Part Two (employer's liability) is written with three limits: each accident, disease each employee, and disease policy limit. Part Three covers other states. Premium is developed from payroll by classification and adjusted by the experience modification factor and a final audit.
Worked example
An employee injures a back lifting a box at the employer's loading dock during a scheduled shift. Arising out of employment (the lifting is a risk of the work) and in the course of employment (time and place) are both satisfied, so the claim is compensable. If the injury occurred while the employee was on a personal errand two miles from the site, the course-of-employment element fails and the adjuster should develop the deviation facts before accepting.
Traps
Treating the employer's liability limits as the workers' compensation limit; ignoring the third-party lien when the injury was caused by a contractor; missing retaliation exposure when a claim follows discipline.