What is Workers' Compensation?

Workers’ compensation insurance is a no-fault insurance system that is compulsory for employers. In the compensation bargain created by workers’ compensation, the employer gives up its right to challenge a claim for work-related injury, and the employee gives up the right to sue his/her employer for far greater damages in civil court. Essentially, employers are liable for work-related injuries and illnesses but employees usually cannot sue for additional damages.

If there is any doubt that workers’ compensation is applicable to a particular situation, the Division of Workers’ Compensation (DWC) generally rules in favor of coverage. Workers’ compensation coverage benefits employers by making workers’ compensation the “exclusive remedy” for workplace injuries or illnesses. However, there are exceptions to workers’ compensation exclusivity, either created by statute or court decision. For examples, see Covered Employers and Employees and Exceptions to the Exclusive Remedy of Workers’ Compensation in Exclusive Remedy for Workplace Injuries.