Workers' compensation

Workers' compensation
Authored by Andrew Wampler

Wilson 1bca35f096d56ee718c45bfa7080d4cdc0dac51aa6b2e653b2ea8ce1b527da5a

Introduction to workers' compensation

Virginia’s workers’ compensation law is governed by the Virginia Workers’ Compensation Act. The act is intended to provide weekly wage benefits for workers injured at work who lose time from work and payment of healthcare expenses caused by the workplace injury. The obligation of the employer to pay weekly wage benefits and healthcare benefits arises if the injury arose out of and in the course of the employee’s employment. The obligation exists regardless of fault; in other words, even if the employer is blameless, if the injury arose out of and in the course of the employee’s employment, the injury is a compensable injury. This no-fault system provides the benefit for the employer of being immune from any civil lawsuit by the injured worker for damages arising from the work injury.

Parties covered by the Virginia

Workers’ Compensation Act:

Covered employers

The term “employer” is broad under the act. It is applies to any individual, firm, association, or corporation, or the receiver or trustee of the same, or the legal representative of a deceased employer, using the service of another for pay. Employers employing less than three employees are not covered under the act until they elect to be covered under the business’s insurance policy and notify the insurer of that election.

 

Covered employees

The definition of employee under the act is quite broad and includes both full and part time employees under either a written, implied, or oral employment contract.  Certain workers are not considered employees under the act, including:


  • domestic workers

     

  • casual workers

     

  • railroad workers

     

  • licensed real estate agents

     

  • officers and directors of non-profit corporation

     

  • elected state and local officials

     

  • federal employees

     

  • taxi drivers.

     

Independent contractors

Independent contractors are typically not considered employees for the purposes of the act.  However, at the election of the employer, the independent contractor may be covered by the act. For independent contractors to be covered, the employer’s insurer must agree in writing to such inclusion (unless the employer is self-insured). All or part of the cost of the insurance coverage of the independent contractor may be borne by the independent contractor.

When trying to determine if a person is an independent contractor and not an employee, the Virginia Workers’ Compensation Commission considers the following factors:



  • the employer’s right to hire




  • the employer’s power to dismiss the worker




  • the employer’s obligation to compensate the worker




  • the employer’s power to control the manner in which the work is done.

     



Illegal employment

Most illegal employment relationships are still subject to workers’ compensation coverage.  Accordingly, minors employed in violation of child labor laws are subject to the same protections as other employees.  Likewise, illegal aliens are entitled to workers’ compensation benefits to the same extent as other employees.  Coverage can even extend to illegal aliens who present fraudulent documents to secure employment.   

 

Statutory employers

In addition to the explicit definitions of “employer” and “employee” set forth herein, the act creates another category of employers – statutory employers.  Statutory employers are covered by the act even though a traditional employment relationship does not exist between the employer and the worker.  For instance, under the act, when a contractor subcontracts work that is a part of its trade, business, or occupation to a subcontractor that contractor will be liable to pay to any worker employed in the work any compensation it would have been liable to pay if the worker had been immediately employed by it.  Statutory employer status does not extend to entities contracting for property management services in certain situations.

 

Temporary employees

It is not difficult for an injured temporary employee to prove that legally he/she is an employee of the leasing employer for purposes of workers’ compensation benefits.  To mitigate such risk, employers should consider requesting a copy of the declaration sheet of any temporary employment agency to ascertain whether the temporary employee is covered by its policy.  If the employer is leasing temporary employees on a regular basis, the employer may want to investigate whether the temporary agency would add the employer to its policy as an “additional insured” so as to obtain the benefit of the workers’ compensation immunity provisions by being deemed an assenting employer together with the leasing company.     

 

Consequences for not being covered

An employer who fails to secure workers’ compensation coverage for its employees will be assessed a civil penalty of not less than $500 nor more than $5,000, and will be liable during continuance of such failure to any employee for compensation that otherwise would have been due under the act.  Additionally, if the employee sues an employer that failed to secure workers’ compensation insurance, the employer also loses its right to assert certain defenses to the claim including the employee’s own negligence and assumption of risk.  Employers that continually fail to procure the insurance may be subjected to criminal penalties and may by prohibited from operating by the commission.

 

Options for coverage

There are a few basic options for an employer to fulfill its obligations to secure workers’ compensation protection for its employees:



  • purchasing the insurance




  • receiving a certificate of authorization from the Workers’ Compensation Commission allowing the employer to be an individual self-insurer




  • being a member in good standing of a group self-insurance association licensed by the State Corporation Commission




  • entering into an agreement with a professional employer organization for professional employer services, which includes voluntary market workers’ compensation insurance for co-employees of the professional employer organization. 



Compensable Injuries

Any injury, illness, or death arising out of and in the course of employment is compensable under the act. 

For an accident to be covered under the act, it must:


  • occur during work or while the worker is performing a work related function

     

  • be caused by the work activity

     

  • happen suddenly.

For an illness to be covered under the act, it must:


  • be caused by work

     

  • not be a disease related to the back, neck, or spinal column.

     

Exceptions

There are several exceptions or qualifications to this broad category of compensable injuries. 



  • Preexisting injury or illness

    An injured employee with a preexisting condition can only recover under the act when a work related accident aggravates the preexisting condition.  In such a situation, the employee can only recover for the degree of impairment caused by the aggravation.  Interestingly, if the employee is already permanently disabled and suffers a work related injury, the act only permits compensation for the degree of incapacity that would have resulted from the injury if the disability did not exist.            

     


  • Subsequent injury

    If an employee receives a permanent injury after having sustained another prior permanent injury in the same employment, the worker is entitled to compensation for both injuries, but the total compensation will be paid by extending the period and not by increasing the amount of weekly compensation.

     


  • Willful intention to bring about injury

    Compensation or other benefits are not allowed for the injury or death of an employee when it is proved that the injury or death was occasioned by the employee’s willful intention to bring about the injury or death of the employee or of another, or that the injury or death resulted from the employee’s intoxication (from either alcohol or illegal drugs or unauthorized use of prescription drugs) while on duty.

     

Unusual compensable situations

The following is a list of some unusual situations that may give rise to a compensable injury.



  • Acts of God

    Although historically not considered compensable, most injuries arising from acts of God, such as lightning strikes, are now usually compensable. 



Example

An employee injured by a tree falling on his car while driving in the course of his employment would likely suffer a compensable injury.

 



  • Assault

    An employee injured in an assault will generally be covered where the assault is work related.  Where the employee is assaulted at work for personal reasons unrelated to the employment, however, such as a fight over a romantic encounter, the assault will typically not arise out of and in the course of employment.  Also, injury resulting from an assault where the injured employee is the aggressor will typically not be covered.

     


  • Emergencies

    Coverage typically extends to workers injured while attempting to rescue themselves or others in an emergency situation.

     


  • Exposure to elements

    Injuries resulting from exposure to the elements, such as heat stroke, are typically covered.

     


  • Heart attacks (myocardial infarctions)

    Although heart attacks are generally not compensable, employees often try to show that the heart attack was the result of strenuous employment conditions that caused an increase demand for oxygen in the heart muscle, thus making the infarction and the damage to the heart muscle compensable.  

     


  • Hernias

    Hernias will typically be deemed compensable if they occur at work while performing a strenuous work activity.

     


  • Horseplay

    Generally, injuries arising from horseplay or practical jokes where the claimant was either the instigator or a participant are not compensable.

     


  • Weapons brought into the workplace

    Injuries resulting from weapons or other dangerous objects brought into the workplace by employees are typically not compensable when such objects are unrelated to the nature of the work.

     


  • Traveling to and from work

    Generally, injuries occurring while an employee is traveling to or from work are not compensable.  These injuries may, however, be compensable where:

     

    • the employer furnishes transportation

       

    • the employee is performing an act for the employer, such as running an errand on the way to work

       

    • the employee is on call and the employer covers transportation costs

       

    • the alleged injuries occurred while the employee is walking to or from parking facilities provided by the employer.

       




  • Breaks

    Most accidents occurring during scheduled breaks where the employee is free to use the break time for his/her own affairs are not covered.  This is true even if the injury occurs on the employer’s premises.  An injury occurring on a break where the employee is subject to the employer’s control or performing tasks for the employer may, however, be compensable. 

     


  • Premises and parking lots

    Generally, accidents and injuries occurring in parking lots or premises used for entrance and exit to work are compensable.

     


  • Recreational and social activities

    Typically, accidents occurring at employer-sponsored recreational or social activities are not covered.  However, such injuries may be compensable where the employer benefits from these activities and there is an express or implied requirement of participation.

     

Foreign or out-of-state injuries 

The act covers injuries occurring outside of the Commonwealth for injuries that would be compensable if they occurred in state.  The act only applies to such a situation, however, if the contract of employment was made in Virginia and the employer’s place of business is in Virginia.  The act prohibits the injured employee from recovering more than once for the injury (such as under another state’s workers’ compensation laws as well as Virginia’s). 

 

What to do when an injury occurs

Immediately after an injury occurs, the employer must complete an Employer Accident Report (EAR) form and submit it to insurance carrier.  Within 10 days of the accident or injury, the employer (or the insurance carrier) must make a report to the commission.  The report must:


  • include the name, nature, and location of the business of the employer

     

  • include the name, age, sex,wages paid, and occupation of the injured employee

     

  • state the date and hour of the accident causing the injury and the nature and cause of the injury.

Benefits that employees are eligible for

Benefits payable to injured workers under the act include medical, income, and death benefits.  These benefits are paid to injured employees or their surviving dependents. 

This section will briefly discuss the different types of benefits to which injured workers are entitled.

 

Wage replacement benefits 

Employees that are temporarily unable to perform any work are entitled to 2/3 of their gross average weekly wage up to a set maximum weekly limit.  Benefits are not payable unless a disability exists for seven days.  If the employee is disabled for more than three weeks, the employee will be paid for the first seven days.  Benefits will not be paid for more than 500 weeks unless the person is totally and permanently disabled.

If an employee returns to light duty work after the illness or injury, benefits are paid in the amount of 2/3 of the difference between the pre-injury rate and the employee’s current rate.  Injured employees on light duty work must prove that they are actively looking for a light duty job, even if they expect to return to their original job.

Employees receiving temporary benefits will not receive cost of living supplements.   

 

Lifetime benefits

If an employee files a timely claim (within two years from the injury or illness), the employee will receive medical expenses for the injury or illness for as long as necessary.

To ensure that medical benefits are paid, the employee must either select and seek treatment from a doctor from the panel offered by the employer, or if no panel is offered, seek treatment from any physician.  If the employee cooperates with his/her medical treatment benefits will be paid.  (The bills should be sent directly to the insurance carrier.) 

 

Death benefits

Upon the death of an employee, certain benefits will be paid to the employee’s family members.  First, funeral expenses (not exceeding $10,000) are covered.  Second, dependent children (under 18 or students under 23), surviving spouse, and certain other qualifying dependents may be entitled to wage loss benefits.

 

Permanent partial impairment

Employees that experience permanent hearing or vision loss, disfigurement, or the permanent loss of a body part are typically entitled to separate benefits.  The amount and duration of these benefits depends on the extent of the loss.  Employees that become permanently disabled or paralyzed may be entitled to a lifetime wage.

 

Cost of living increase

If requested by the injured employee, an employee may be entitled to receive an annual cost of living increase (effective October 1 after the first year) if compensation under the act and social security benefits are less than 80% of the pre-injury earnings.

 

Lump sum settlements

Upon the agreement of the employer, the insurance carrier, and the injured employee, the employer may make a payment to the injured employee representing, in whole or in part, the present value of the future compensation payments owed.  Prior to any lump sum settlement, the commission must approve it as being in the best interest of the injured employee and/or his dependents.  

Resolving disputes

The Virginia Workers’ Compensation Commission administers the act.  The principal mission of the commission is to resolve disputes between employers and employees over entitlement to benefits.

The dispute resolution process consists of several stages: 


  • If the injured employee and the employer cannot agree on entitlement to benefits, either party may request an evidentiary hearing or a hearing on the record.  The evidentiary hearing goes before a deputy commissioner and involves the presentation of evidence and argument.  An on the record hearing, by contrast, involves the submission of written statements and documents to the deputy commissioner for a decision on the papers. 

     

  • If either party is displeased with the deputy commissioner’s decision, it may request a full panel review within 30 days of the decision.  Typically, the parties submit written statements to the commission.  If appropriate, the full commission may schedule an oral hearing. 

     

  • Within 30 days of the commission’s opinion following a full review, either party may appeal it to the Court of Appeals of Virginia by filing a written notice of appeal and a $500 appeal bond with the clerk of the commission and a notice to the clerk of the Court of Appeals with a $50 filing fee.

     

  • If dissatisfied with the decision of the Court of Appeals, either party may file a petition for appeal with the Virginia Supreme Court.  

Workers' compensation and discrimination

The Americans with Disabilities Act (ADA) prohibits an employer from inquiring about the existence, nature, or severity of an applicant’s disability, including workers’ compensation history.  A prospective employer may, however, inquire about the applicant’s ability to perform specific job functions under the ADA.  Upon hiring, the ADA requires the employer to make a reasonable accommodation to an employee’s known disability if the employee is otherwise unable to perform the essential functions of the job. 

Virginia’s Workers’ Compensation Act prohibits an employer from discharging an employee for testifying or asserting any claim under this act.  An employee may bring a claim in a Virginia Circuit Court for any such violation by his/her former employer.  The Court has jurisdiction to award, for cause shown, reinstatement to the employee’s previous job, payment of back wages, reestablishment of employee benefits, and reasonable attorney’s fees.

Workers’ compensation premiums

Employers are encouraged to work closely with their agents to understand the pricing of their workers’ compensation premiums and, should claims arise, the expenses incurred and the reserves posted to claims against the employer.  The workers’ compensation premium is essentially a result of the employer’s payroll dollars per classification of type of employment position multiplied by the employer’s history of claims experience.  Employers are encouraged to make certain that their employees are properly classified in the rating system used for employers.  A misclassification of an employee or a class of employees can cause a substantial change in the premium.

Similarly, the expenses attributed to new claims and the reserves (projected future expenses) can materially affect the employer's experience modification factor (EMF).  The EMF is a number that reflects the frequency of claims for an employer and the “severity” of the claim; that is, how expensive is the claim.  The EMF is the tool used by the workers’ compensation insurers to establish a track record or history for the employer.  This EMF is then used with the amount of annual payroll dollars paid by the employer and the classification of the employees that assesses how risky (such as clerical positions vs. loggers) the employer’s work is to determine the annual premium.

The employer is encouraged to be proactive about the management of the claim by the insurance company to make certain that the EMF remains as low as possible to retain control over future premiums.  The employer has the right to control with whom the employee initially seeks treatment for healthcare.  Employers should use this right to try to maintain management of the healthcare expenses.  The employer should also aggressively try to return the injured worker to work as quickly as possible to keep the wage loss low.  Such steps are important for controlling costs, keeping the EMF low, and saving on premiums.