What Is Workers’ Compensation and How Does It Work?

Workers' compensation is an insurance system that provides medical and wage benefits to most employees injured while at work. Washington State workers' compensation insurance is administered by the state's Labor and Industries (L&I) Department, and you may also see workers' compensation claims called L&I claims.

How does workmans comp work? After you suffer a work injury or illness while performing your job duties, you will file a workers' comp claim against your employer's workers' comp insurance policy. If your claim gets accepted, workers' compensation will pay your medical expenses and part of your lost wages.

But this simple explanation does not capture all the complications involved in workers' compensation insurance.

What Is Workers’ Comp?

Workers’ Compensation is a form of insurance for employers and, indirectly, for their employees. It works in the same way that any insurance policy does: if something happens that the insurance policy covers, then insurance benefits will at least partially cover the loss. Employers carry coverage for work-related injuries and illnesses through a Workers’ Compensation fund, which the state Department of Labor and Industries manages.

Understanding Workers’ Compensation History

To understand why Workers’ Compensation exists, let’s go back to 1910: the year before Washington passed its Workers’ Compensation law. If you were hurt on the job that year, you had two fundamental choices: accept your situation and try to adapt as best you could on your own, or sue your employer for compensation. Unfortunately, however, in practical terms, it wasn’t much of a choice. If you filed a lawsuit against the employer based on negligence, Washington courts followed a legal theory that when you hired on with your employer you “assumed the risk” of possible on-the-job injury. Overcoming this presumption would make your lawsuit an uphill battle that very few people could overcome: only one in ten injured workers bothered to file a lawsuit against the employer, and of those only one in ten won an award.

Although this arrangement heavily favored employers, it wasn’t perfect for them. Defending against worker’s legal actions still burdened companies in terms of paying for court costs, attorney fees, and higher private insurance premiums, and every time a worker suffered an injury or died as the result of a work-related accident and came away with nothing it contributed to bad public relations for employers. Moreover, by 1910 Washington courts were starting to move away from the old assumption-of-risk idea – and that meant that not only were the odds of employees winning in court improving but also the judgments they were winning were increasing in dollar amounts.

The purpose of workmen's compensation was to take these cases out of the courts. Instead of forcing injured employees to litigate, Washington's workers' comp program uses an insurance claims process that speeds up decisions and reduces costs.

Workers’ Comp Benefits Both for Employees and Employers

One of the driving reasons for the adoption of a Workers’ Compensation law in Washington is that it offers both employers and employees a better way to cope with on-the-job injuries and illnesses:

• How does workers' comp work for employers? It creates a collective system of state-sponsored insurance for employers that helps to make their costs of insurance more predictable and easier to manage;
• How does workers’ comp affect potential lawsuits? Except for limited situations, such as intentionally wrongful conduct on the part of the employer or its management, Workers’ Compensation precludes the possibility of an injured employee lawsuit against the company;
• How does workers' comp work for employees? Workers’ Compensation encourages better relations between workers and their employers by creating a more reliable way for workers to recover from workplace accidents and injuries;
• Workers' comp for employees also clears the state’s court system of the need to handle worker-vs-employer litigation.

In short, Workers’ Compensation benefits employers, employees, and the judicial system alike.

Who Is Eligible for Workers' Compensation?

If your employer has at least one employee – and chances are that if you are reading this because you were hurt in a work accident or are suffering from a work-related illness or disability, you are that employee – then unless a specific exception applies it must provide Workers’ Compensation coverage. Some of the exceptions include:

• Providing a self-insurance alternative to Workers’ Compensation. Washington is one of a handful of states that is “monopolistic” in its Workers’ Compensation insurance. This means that unlike in most states, the Department of Labor and Industries (“DLI”) administers the Washington Workers’ Compensation insurance fund directly. But if your employer can show the satisfaction of the DLI that it can manage its program to insure workers, then the company can remove itself from the state’s insurance program;
• Allowing some people to exclude themselves from Workers’ Compensation coverage (for example, officers of corporations, limited liability company managers, sole proprietors, and partners of partnerships);
• Some workers fall outside of Workers’ Compensation coverage (for example, real estate agents and brokers, children under 18 who work on a family farm, barbers, or beauticians who rent booth space).

Laws determine who qualifies for workers' comp and which workplace injuries qualify.

What Is Covered by a Workers' Comp Claim?

What Workers’ Compensation insurance will cover depends largely on the seriousness and duration of the injury or illness. The first hurdle you must clear is that the injury or illness must happen in connection with your work. You will need to obtain the opinion of a medical professional to support you in this regard.

Workers' compensation covers:

• Acute injuries from accidents;
• Chronic injuries from repetitive motions;
• Occupational diseases from toxic environments.

Most other work-related injuries or illnesses also qualify.

Injuries Not Covered by Worker’s Compensation

What does worker's compensation not cover? Workers’ comp excludes:

• Off-duty injuries;
• Accidents while intoxicated;
• Pre-existing conditions.

Workers' compensation may cover a pre-existing condition aggravated at work, however.

Types of Workers’ Compensation Coverage

Almost all employers in Washington must buy workers' compensation insurance. This insurance must meet state-mandated minimums for coverage of employee injuries. It can also include additional coverage in case the employer is ordered by a court to pay any benefits above and beyond the state-mandated minimums.

Coverage A

Coverage A provides the minimum benefits set by state law, including 100% of the employee's medical expenses and part of the employee's lost wages. It also provides death benefits if an employee gets killed while working.

Coverage B

Coverage B is supplemental to Coverage A. Employers cannot buy Coverage B without buying Coverage A. Coverage B is a form of liability insurance that pays an employee if a court finds the employer liable for the employee's injuries.

What Benefits Are Available?

If your injury or illness qualifies for Workers’ Compensation, then the following benefits are available:

• Medical expense reimbursement. Medical expenses must be approved by the DLI as being reasonably connected with treatment for the work-related injury or illness, but as long as they fall in line with DLI-approved fee schedules then there is no dollar limit on their reimbursement;
• Compensation for lost wages. These depend on whether your disability – your inability to return to work – is temporary or permanent, and if it is permanent whether the disability is partial or total;
• If you temporarily cannot return to work, Workers’ Compensation will compensate for at least some of what you used to make on the job. This generally amounts to about two-thirds to three-quarters of your gross wages, but the actual amount is subject to adjustments based on factors like whether you have a spouse or partner and how many dependents you have, combined with how this calculated amount compares to the state’s annual calculation of the “average monthly wage”;
• If you return to work within 14 days, then your temporary disability benefits calculation starts on the fourth day of the disability. Otherwise, you are entitled to temporary disability compensation for as long as your doctor certifies that you are unable to return to work;
• Permanent partial disability benefits depend on the nature of the disability. The state has percentage-based compensation schedules for things like lost limbs or partial loss of vision or hearing. This calculation becomes more complex if the disability is not covered by a schedule, and is subject to maximum dollar limits;
• Permanent total disability benefits are calculated in a way similar to permanent partial disability benefits but are subject to considerations like offsets for Social Security benefits that you may receive. These benefits last for the rest of your life, and are referred to in Workers’ Compensation as “pensions”;
• Vocational benefits. In some cases, particularly if you suffer from a permanent partial disability, it may be possible to retrain you for another type of work. Vocational benefits do not always apply. Their availability to you will depend on whether the state offers it (or if the employer is self-insured, whether the employer offers it);
• Death benefits. Sometimes a workplace injury or illness is one the victim does not recover from; in 2015, for example, 70 Washington workers died from work injuries or illnesses. Workers’ Compensation provides survivor benefits for deceased workers, including burial expense benefits and death benefits. These are subject to some limitations, such as when the spouse of the deceased worker remarries or when the worker’s children reach either 18 or 23 (the latter limit being for full-time students).

How does workers’ comp pay? Immediately, in most cases.

How Much Does Workers’ Compensation Insurance Cost?

Workers' compensation insurance does not cost employees anything. The employer must purchase this insurance under Washington law.

The Washington State Department of Labor and Industries is the sole workers' compensation insurance company in the state. The department customizes workers' compensation insurance premiums using three factors:

• Risk classifications based on the type of business;
• Base rates according to the company's risk classification, with an average price in 2023 of $0.6572 per hour worked;
• Experience based on the workers' comp payments paid to the company's employees.

Since employers pay more when workers file a claim for benefits, the employer has an incentive to promote occupational safety and reduce accidents.

How Does Workers' Comp Work: The Workers’ Comp Process

Workers' comp works like most other insurance policies. But the workers' compensation system also has many protections for employers that can complicate your workers' comp claim. The process for securing workers' compensation payments after an injury includes:

Step 1: You Get Injured on the Job

All work-related injuries fall under your employer's workers' comp coverage. The issue is whether an injury was truly related to your work. Some of the factors that determine whether injuries are eligible for workers' comp claims include:

• Where you were injured;
• When your injury occurred;
• How your injuries happened.

You can file a workers' comp claim for injuries that happen during the course and scope of your job. Injuries that happen outside of work hours, away from your workplace, or due to anything other than your job duties will not fall under your employer's workers' compensation insurance policy.

Step 2: Notify Your Employer

You must report your injury to your employer as soon as possible. Washington does not set deadlines for notifying your employer. But the sooner you report your accident, the sooner your employer can start the workers' compensation claims process.

You must file claims for injuries within one year of the injury and claims for occupational illnesses within two years of diagnosis.

You should generally inform your employer in writing. This creates a record for your workers' comp claim. Under some circumstances, your employer might have constructive notice without you providing notice. For example, you might not need to provide notice if your boss was present when you got hurt.

Step 3: Ask Your Doctor to Submit Your L&I Claim Application

Once the employee reports the accident, the employer is supposed to notify the workers' compensation insurance company or the company managing its self-insurance plan.

However, the easiest and most effective way to start your claim is to have a medical provider submit it for you. When you visit a medical provider after your initial injury let your provider know your injury or accident happened at work. This will prompt them to submit the necessary paperwork to L&I on your behalf. You can see ANY doctor for your initial appointment.

Once your claim is accepted you may begin receiving medical treatment with an L&I approved doctor, where the list of L&I providers can be found.

Step 4: Monitor Your Claim

What does workers' comp do after your claim gets filed? In many situations, the insurer accepts the claim and pays benefits without any dispute. Occasionally, the insurer denies workers' comp benefits. This can happen for any reason, but the most common reasons for claim denials include:

• Your job duties did not cause your injury;
• Your injury is not covered because you were intoxicated;
• You were not at work when you got injured.

If your claim gets denied, you can appeal to the state workers' compensation board. But you must decide quickly because you only have 60 days to appeal a claim or payment decision by your workers' compensation claim manager.

Contact an Experienced Seattle Workers' Compensation Attorney

You can file your own Workers’ Compensation claim; an attorney is not required. But it should be clear by now that not all such claims are equal. Serious injuries or claims arising from the actions of third parties, or complex situations involving later-developing injuries or illnesses can all affect which statutes of limitation apply to your case.

Having a Workers’ Compensation attorney as your advocate during the claim filing process is a good insurance policy against the possibility of you inadvertently missing a statute of the limitation-based cutoff date or failing to recognize other, complementary avenues for compensation.