Understand how workers' compensation programs support retention of your workforce.
The vast majority of workers in the U.S. are covered by workers’ compensation programs, which replace some of the employee’s earnings when injured on the job and pay for their medical expenses related to the injury.
The majority of workers’ compensation programs are enacted and administered by individual states, although there are also some specific, limited federal programs run by the U.S. Department of Labor's Office of Workers' Compensation Programs (OWCP). 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 wages may be paid by federal or state workers’ compensation agencies, employer funds or 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% 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 three to seven days. Permanent partial and permanent total disability benefits are often paid as compensation to workers who have lasting consequences of disabilities caused by an injury or accident on the job.
Workers’ Compensation for Federal Employees
The Federal Employees’ Compensation Act (FECA) provides benefits to civilian employees of the U.S. 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), which is part of OWCP.
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 dependents, 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 (ADA)
The purpose of Title I of the ADA is to prohibit employers from discriminating against qualified individuals because of their disability in all aspects of employment. Workers’ compensation 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. For more information, read Medical Inquiries and Equal Employment Opportunity Commission (EEOC) guidance on how to manage workers' compensation information while protecting a potential employee's protections under the ADA.