Workers’ compensation provides cash and medical benefits to workers who are injured or become ill in the course of their employment and provides benefits to the survivors of workers killed on the job. Benefits are provided without regard to fault and are the exclusive remedy for workplace injuries, illnesses, and deaths. Nearly all workers in the United States are covered by workers’ compensation. With the exception of federal employees and some small groups of private-sector employees covered by federal law, workers compensation is provided by a network of state programs. In general, employers purchase insurance to provide for workers’ compensation benefits.
Workers’ compensation has been called a grand bargain between employers and workers that developed at the beginning of the 20th century in response to dissatisfaction with the tort system as a method of compensating workers for occupational injuries, illnesses, and deaths. Under this grant bargain, workers’ receive guaranteed, no-fault benefits for injuries, illnesses, and deaths, but forfeit their rights to sue their employers. Employers receive protection from lawsuits but must provide benefits regardless of fault.
Recently, concerns have been raised over what some allege are cuts to state workers’ compensation benefits or policy changes that make it harder for workers to receive the benefits they deserve. These cuts and policy changes may be shifting some of the costs associated with workplace injuries, illnesses, and deaths away from the employer and to the employee or social programs, such as Social Security Disability Insurance (SSDI) and Medicare.
There is no federal requirement that states have workers’ compensation systems and no minimum federal standards for state systems. The decentralized nature of workers’ compensation led to unsuccessful calls for minimum state standards in the early 1970s and has caused concerns over benefit equity among the states today.
In 2013, Oklahoma joined Texas in making its workers’ compensation system noncompulsory. Unlike in Texas, Oklahoma employers may opt-out of workers’ compensation by offering alternative benefits to employees and keep their protection from lawsuits, whereas Texas employers are exposed to legal liability in the event of employee injury when employers opt-out of worker’s compensation. The constitutionality of the Oklahoma system, as well as to what extent the federal Employee Retirement Income Security Act (ERISA) applies to these alternate benefit plans, are currently being adjudicated in the courts.