Chapter 16: Worker's Compensation Laws and Benefits

How can unemployed workers be disqualified from benefits?

-Quit voluntarily without good cause or who were discharged for just cause. -Refuse to apply for or accept suitable work -Are unemployed because of a work stoppage caused by a labor dispute -Receiving pay from a former employer -Receiving worker's compensation benefits -Receiving Social Security Benefits -Being deemed an independent contractor and not an employee

What are the requirements for unemployed workers to obtain benefits?

-They must first be involuntarily unemployed -They must have been employed in a job covered by the state unemployment compensation law. -They must have earned a specified amount of pay or worked for a specified length of time, or both. =They must be able to work available for work, and willing to take a suitable job if it is offered to them.

Employers can choose to retain the workers' compensation risk if they can show financial ability to pay claims.

True

Employers' risks can be transferred to a workers' compensation and employers' liability policy.

True

Firms that do not qualify for insurance based on normal underwriting guidelines and premiums can buy insurance through an assigned risk plan, that is, the residual market.

True

If a firm is large enough to self-insure, the workers' compensation premium is experience rated.

True

In most states, an unemployed worker who is sick and therefore unable to work is not entitled to unemployment compensation benefits.

True

Most unemployment compensation insurance is noncontributory: employers pay all the cost in most states.

True

The federal portion of the Unemployment program is administered by the Employment and Training Administration of the Department of Labor.

True

This residual market burden can be avoided by self-insuring.

True

Unemployment insurance usually pays qualified, involuntarily unemployed workers half their weekly pay, subject to a waiting period and a maximum duration.

True

Workers' compensation laws hold the employer responsible for providing benefits to injured employees (Employees do not contribute directly to this cost)

True

Covered Injuries

injuries that arise out of and in the course of employment or occupational diseases

If those who administer the law are conservative in their evaluation of borderline cases...

premium rates will be lower.

What types of possible losses does industrial accidents create for employers?

Employer is responsible for employees covered by worker's compensation law and they may become liable for injuries to employees not covered by law

Why was worker's compensation developed?

It was developed as a compromise that would force employers to cover employees' injuries regardless of cause, in exchange for this being the employees' sole remedy

Experience Rating

Large employers can elect to have this which takes a company's prior losses into account in determine current rates

What are the benefits provided under workers' compensation?

Medical, Income replacement, Survivors' benefits, and Rehabilitation

Benefits received by injured are high...

rates will tend to be high.

Self-Insurance of the workers; compensation risk major question

whether the firm has a large enough number of exposure units (employees) that its losses are reasonably stable and can be predicted with some accuracy

Unemployment Compensation

A purely social insurance program and is designed to relieve workers in certain industries and occupations of part of the economic burden of temporary unemployment

Excess loss insurance

Employer can buy this insurance for very huge losses

Where do employers considered uninsurable obtain workers' compensation insurance?

The Residual Market

Unemployment compensation is established by federal legislation, but it is administered by each state.

True

Contributory Negligence

A rule in tort law, used in only a few states, that completely bars the plaintiff from recovering any damages if the damage suffered is partly the plaintiff's own fault.

What are the three aspects of benefit payments?

Amount and Duration, Qualifications for benefits, and Disqualifications

Why is Self-Insurance desirable?

Because of the predictability afforded by legislated benefits

Fellow Servant Rule

Common law defense against liability that allowed employers to escape liability for injury to an employee if another employee's carelessness or negligence had contributed to the loss

Assumption of Risk Doctrine

Defense against a negligence claim that bars recovery for damages if a person understands and recognizes the danger inherent in a particular activity or occupation.

What influences the rate for worker's compensation?

Degree of haphazardness on the job and the nature of the state law and its administration

Amount and Duration

The amount of the weekly benefit payment a worker may receive through unemployment compensation varies according to the benefit formula in the law of each state.

State fund

The employer pays a premium (or tax) to the state fund and the fund, in turn, provides the benefits to which injured employees are entitled.

What are the three common law defenses against liability for injury to workers?

The fellow-servant rule, assumption of risk doctrine, and contributory negligence doctrine

What is the premium for worker's compensation insurance typically based on?

The payroll paid by the employer and the degree of hazard of the occupation

How is unemployment insurance financed?

Through taxes in employers between .8 to 6.2 percent and subject to experience rating

Can small employers from the same industry join together to create a group self-insurance program?

Yes