Workers’ Compensation and Employers’ Liability

Who is an Employer?

Employer Liability Under Common Law

State WC Laws

Common Features

Types of Injuries

Illinois WC Benefits

Federal Compensation Laws

Who is an employer?

Characteristics of employers

Engages the services of individual

Fixes hours

Provides tools

Defines methods and means

Employer versus independent contractor

Proprietors and partners are not employees

Employer Liability Under Common LawEmployer’s Duty of Care

Provide a safe place to work

Provide an adequate number of competent fellow employees

Provide safe tools and equipment

Warn the employee of inherent dangers

Make and enforce rules for the safety of all employees

Common-Law Defenses

Assumption of risk

Contributory negligence

Negligence of fellow employee

State Workers’ Compensation LawsOriginally held unconstitutional

Maryland 1902 - unconstitutional

Federal law 1908 - provided new benefits

New York 1910 - unconstitutional

Wisconsin 1911 - upheld

New York 1913 - upheld

Principles of WC Laws

Prompt payment of determinable benefits

Elimination of delays and reduced costs

Guarantee of benefit payments through insurance

Promotion of safety

Common Features of Compensation LawsChoice of Law

Employee chooses which benefits to receive if more than one state law applies:

State where injury occurred

Location of usual employment

Where employee was hired

Persons and Employments Covered

Covers employees and not independent contractors

Exception - must cover employees of uninsured independent contractors

Common Features of Compensation Laws

Description of Injuries and Diseases Covered

Injury must be caused by accident arising out of and in the course of employment

Disease must be covered by the statute as one that normally results from the nature of the employment and exposure to the disease must arise from employment

Common Features of Compensation Laws

Benefits Provided

Indemnity payments for time lost from work

60-75% of wages

Tax free

Maximum set by state

Payment for medical services

Unlimited

No deductibles or coinsurance

Rehabilitation services

Death benefits

Common Features of Compensation LawsMethods of Financing Benefits

Private insurance

Insurance through assigned risk plans

Insurance through state funds

Qualified “self-insurance” plans

Excess insurance

Procedure for Obtaining Benefits

Notification requirements

Administration

Courts

Special commission

Third-Party ClaimsApplies when employee eligible for WC benefits was injured by the tort of a third partyEmployee has three choices:

1 Sue the third party

Can file for WC benefits if unsuccessful

2 Accept WC benefit

Employer is subrogated to rights of employee against third party to extent of WC benefits

3 Accept WC benefit and sue third party

Employer has lien on proceeds of recovery to extent of WC benefits

Types of Injuries Covered by Workers’ Compensation

• Fatal Injury

• Permanent Total Disability

• Permanent Partial Disability

• Temporary Total Disability

• Medical Only

Illinois WC BenefitsState Average Weekly Wage (SAWW) = $747.48

Average Weekly Wage (AWW) =

(Earnings over last year- Overtime)/52

Cost of Living Adjustment (COLA)

Survivors’ Benefits

Burial Benefit: $4,200

66 2/3% of AWW w/ COLA

Min Weekly Benefit: Lesser of $373.74 or AWW

Max Weekly Benefit: $996.64

Max Lifetime: Greater of $250,000 or 20yrs

Remarriage “Award”: 2yrs Lump Sum w/o children

Illinois WC Benefits (continued)Permanent Total Disability

66 2/3% of AWW w/ COLA

Min Weekly Benefit: Lesser of $373.74 or AWW

Max Weekly Benefit: $996.64

Max Lifetime: Unlimited

Temporary Total Disability

66 2/3% of AWW

3 Workday waiting period/14 day retroactive period

Min Weekly Benefit: Lesser of $113.40* or AWW

Max Weekly Benefit: $996.64

*Assumes Married, 2 children

Illinois WC Benefits (continued)Permanent Partial Disability

60% of AWW Min Weekly Benefit: Lesser of $88.90* or AWWMax Weekly Benefit: $541.23 or $996.64**Duration:

Non-Schedule: % of disability * 500 wksSchedule: Thumb 70 wks

Hand 190 wks Foot 155 wks Leg 200 wks Hearing Both Ears 200 wks

*Assumes Married, 2 children**$996.64 paid if amputation or enucleation occurs

Illinois WC Benefits: Example

An employee is injured at work while performing his job duties. His medical bills are $400. His average weekly wage is $1,540. He is totally disabled for 13 calendar days (9 workdays).

Assuming the injury is covered by the workers’ compensation law, how much will paid in benefits?

Illinois WC Benefits: ExampleInjury is a Temporary Total Disability

66 2/3% of his AWW = $1,026.67

Max benefit for TTD = $996.64

He will receive benefits for 6 workdays (9 workdays minus 3 day waiting period.

1.2 weeks * $996.64/week = $1,195.68

$400 for medical expenses

TOTAL: $1,595.68

Federal Compensation LawsFederal Employers’ Liability Act (1908)

Applies to employees of interstate railroads

Eliminates traditional employer defenses in suits by employees

Longshore and Harbor Workers’ Compensation Act

Provides more generous WC benefits to maritime workers (loading, repairing, building vessels)

Jones Act (1920)

Extends FELA to crew members

Migrant and Seasonal Agricultural Worker Protection Act