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Workers' Compensation

Workers' compensation programs are comprised of state and some specific, limited federal programs (such as compensation for federal employees) that provide benefits to workers who are injured on the job or have a work-related illness. Those benefits may include payments for medical treatment(s) and replacement of lost wages.

Unlike temporary, partial or long-term disability benefits, workers' compensation programs are intended to provide support for employees immediately upon injury. They may be applied to cover short-term or long-term absences from work.

Workers' Compensation Programs

The vast majority of workers in the United States are covered by these workers' compensation programs, which replaces some of the employee's earnings when injured on the job and pays for their medical expenses related to the injury. The majority of workers' compensation programs are enacted and administered by states, though there are also some specific, limited federal programs .

The vast majority of American employees are covered by state and federal workers' compensation laws, including nearly 125 million employees in 2009.


Workers' compensation wages may be paid by federal or state workers' compensation agencies, employer funds or by insurance companies on behalf of employers. The type of compensation programs available vary by state.

These benefits are coordinated with Social Security payouts to ensure that benefits for workers eligible under both programs do not exceed 80 percent of prior earnings.

Other Disability Benefits

Workers' compensation is intended to pay for medical care for work-related injuries immediately. Temporary disability benefits are usually distributed after a waiting period of 3 to 7 days. Permanent partial and permanent total disability benefits are often paid as compensation to workers who have lasting consequences of disabilities caused by injury or accident on the job.

Workers' Compensation for Federal Employees

The Federal Employees' Compensation Act (FECA) provides benefits to civilian employees of the United States for injuries and illness sustained while in the performance of duty.

Benefits available to injured federal employees include:

  • medical treatment
  • continuation of pay
  • disability payments
  • vocational rehabilitation benefits
  • wage loss replacement
  • impairment awards

FECA also provides compensation to dependents of a federal employee if the injury or disease resulted in the employee's death.

FECA is administered by the Division of Federal Employees' Compensation (DFEC), Office of Workers' Compensation Programs (OWCP) headquartered in the U.S. Department of Labor and also located in 12 district offices throughout the United States.

Disability Compensation Payout

An employee who is disabled as a result of a workplace injury is entitled to wage loss compensation.

If the employee has no dependents, compensation is generally payable at the rate of two-thirds of pre-disability gross wages tax-free. If the employee has one or more dependants, compensation is payable at the rate of three-fourths of pre-disability gross wages, tax-free.

Loss of Wage Earning Capacity Payments and Schedule Awards for Permanent Impairment

FECA provides compensation benefits based on the loss of wage earning capacity that the employee suffers as a result of limitations imposed by the work injury. If the employee suffers permanent impairment, OWCP provides awards based on loss or loss of use of specified members, organs, and functions of the body.


Return-to-work programs help reduce workers' compensation costs and increase productivity by helping employees resume work sooner. A quick return to work allows employees to go back to 100% earnings and employers to retain a valued employee. This may involve providing accommodations for employees who have acquired disabilities.

An example of a return-to-work program is the provision of light duty which may address the needs of some workers receiving benefits. The provision of light duty complies with the Americans with Disabilities Act, the Family and Medical Leave Act, the Occupational Safety and Health Act, and state workers' compensation and other disability-related laws.

Workers Compensation and the Americans with Disabilities Act

The purpose of Title I of the ADA is to prohibit employers from discriminating against qualified individuals in all aspects of employment because of their disability, while workers' compensation law provides a system for securing prompt and fair settlement of employees' claims against employers for occupational injury and illness.

The ADA prohibits employers from asking job applicants about their workers' compensation history during the initial interview, but may do so after making a conditional offer of employment AND if such questions are asked of all employees entering in the same job category.

Likewise, employers must also be careful not to force a potential employee to disclose disability related information. The EEOC offers guidance on how to manage Workers Compensation information while protecting a potential employee's ADA rights.

Other Resources

EEOC Enforcement Guidance: Workers Compensation and the ADA< >
This Equal Employment Opportunity Commission enforcement guidance describes the Commission's position on the interaction between Title I of the of the Americans with Disabilities Act of 1990 and state workers' compensation laws.

Workers' Compensation<>
This resource provides an overview of the components of workers' compensation and a listing of state contacts for addressing workers' compensation issues.

Division of Federal Employees' Compensation (DFEC) <>
For federal employees and employers, the Division of Federal Employees' Compensation adjudicates new claims for benefits and manages ongoing cases; pays medical expenses and compensation benefits to injured workers and survivors; and helps injured employees return to work when they are medically able to do so.

Office of Workers' Compensation Programs (OWCP)<>
For federal employees and employers, the Office of Workers' Compensation Programs administers four major disability compensation programs which provide wage replacement benefits, medical treatment, vocational rehabilitation and other benefits to certain workers or their dependents who experience work-related injury or occupational disease.This includes workers' compensation for federal employers.

Page last updated on Wednesday, September 18, 2013