Advantages and Disadvantages of Workers' Compensation

 Advantages for the employer

____ 1. Workers compensation protection narrows an employer s disability benefit planning for its employees to the areas of accidents or illnesses that are not job related;

____ 2. Workers compensation is the exclusive remedy for on-the-job injuries, therefore employees may not seek further damages through a separate tort suit against the employer; and

____ 3. Employees are limited as to the amount of benefits they may recover.

Disadvantages for the employer

____ 1. Premiums may be high due to the nature of the employer s business-the costs of the premiums being based on the accident record of the company;

____ 2. An employer is required to file accident reports with the administering state authority, thus increasing its paperwork burden.

____ 3. In some cases, time is spent defending against spurious claims.

Advantages to the employee

____ 1. Prompt payment of claims following an injury;

____ 2. Payments are based on the employee s current earnings;

____ 3. Payments are made to an employee s spouse or dependent children in the event of death;

____ 4. Medical expenses are compensated; and

____ 5. Coverage is provided without direct cost to the employee.

Disadvantages to the employee

____ 1. The employee is denied the opportunity to seek further damages-such as pain and suffering or punitive damages-through a separate tort action against the employer;

____ 2. In some states workers compensation benefits may be offset by social security disability benefits; and

____ 3. An employee s retirement plan benefits may be reduced by the amount of workers compensation benefits that he or she receives.