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Do States Differ on Workers' Comp Laws?

Workers in all U.S. states and territories are protected by workers compensation, which provides a financial safety net to aid those who become injured or ill on the job, in exchange for protecting employers from lawsuits. Since these programs are run at the state level, there are differences in how they are funded, administered, and what workers and their employers can expect should a workplace injury occur. Federal employees are covered by separate laws overseen by the Department of Labor.

It is wise for employees and employers alike to become familiar with local workers compensation laws. Business owners who employ workers in multiple states or territories should be aware of the laws in each area, as they apply to their situations. Depending on location, there may be differences in how workers compensation insurance is funded, choices injured workers have about their medical care, and more.

Workers Compensation Insurance by State

In most states, employers meet the requirement for workers compensation insurance by enrolling in private in plans, just as with health insurance, but there are some exceptions:

  • In North Dakota, Ohio, Puerto Rico, the U.S. Virgin Islands, Washington, West Virginia, and Wyoming, coverage is only available through government-run plans, sometimes called monopoly state funds.
  • Arizona, California, Colorado, Idaho, Maryland, Michigan, Minnesota, Montana, New York, Oklahoma, Oregon, Pennsylvania, and Utah all maintain state funds for workers compensation, as well, but they compete with private insurance plans.
  • Large employers have the option to self-fund insurance in most states, which means they pay a third party to administrate the insurance but bear the financial risk themselves.
  • In two states—Texas and New Jersey—employers technically can opt out of workers compensation insurance, but they are still liable for work-related accidents, injuries, and illnesses that affect their employees.

Each state has its own set of rules by which plans—whether state-funded, self-funded, or private—must adhere, and individual plans vary.

Medical Care for Sick or Injured Workers

When a person is injured on the job or develops a work-related illness, getting necessary medical care is usually the highest priority. Some states have specific guidelines about seeking care for ailments covered by workers compensation:

  • In California, for example, an employer initially elects the physician, but employees can select which doctor to see in certain situations.
  • In Alabama, the employer selects the physician.
  • Workers in South Dakota select which physician they want to see.
  • In North Carolina, the employer makes the initial selection of physician, but a state agency can change the selection.

These are just some examples to show why it is so important to familiarize yourself with how your workers compensation benefits work before a need for them should arise.

Workers compensation practices regarding claims processing and administration also vary from one state to another. For instance, the statute of limitations—the deadline for making a claim—is set by each state. The best place to find out about your state's workers compensation requirements is your state insurance department or department of labor or consulting with a workers compensation attorney.