Most Iowa employers view the workers’ compensation system and the premiums they pay for coverage as necessary evils. This view, however, does not always take into account how the system was developed and how it can benefit employers as much as employees.
At the turn of the 19th and 20th centuries, workers lacked any systematic method of recovering compensation for job-related injuries. Workers could bring law suits against their employers, but the outcomes varied widely. Some juries returned large verdicts in favor of employees, while other juries denied recovery altogether. As industrialization spread across the country, state legislatures, including Iowa’s, began to take notice of these patchwork results. The result was the adoption of workers’ (in the beginning, the laws were called “workman’s compensation”) compensation statutes. These statutes struck a bargain between workers and employers: in return for a statutorily guaranteed benefit for any job-related injury, workers were prohibited from suing their employers for damages.
As it has developed over the decades, the workers compensation system now benefits both employers and employees. Employer can predict their costs of participating in the system with reasonable accuracy by anticipating workers’ compensation premiums and their liability for claims not covered by insurance. Workers can depend upon the system to provide compensation for any injury suffered on the job. The level of benefits is determined by the legislature. Of course, both employers and workers argue endlessly about whether benefits are too high or whether defined benefits are too low.
A workers’ compensation claim has three elements. First, the worker making the claim must be the employee of the company against whom the claim is made. Second, the injury must be related to the employee’s normal, job-related duties. Finally, the injury must be incurred during the employee’s workday. All employers are required to purchase insurance to cover workers’ compensation claims; employers who attempt to avoid this requirement face criminal and civil penalties. In addition, employers without insurance lose the protection on immunity from common law negligence claims.
Some business entities are not required to carry workers compensation insurance. Partners in a partnership, sole proprietors and members of a limited liability company are excluded, although these entities can purchase insurance that provides coverage similar to the coverage afforded by a standard workers’ compensation policy.
The claims process begins with the employee’s first report of injury. The employer, or, more commonly, its insurer, has a legal duty to begin a reasonable investigation of the claim. If the employer decides to deny the claim, it must provide a written notice of the decision to the employee. The employee can either accept the decision (very unusual) or begin the appeal process. The appeal process has several levels, ending with a law suit if either party is dissatisfied with the results of the internal appeal. If a claim is approved, the statute requires regular payment of benefits plus penalties for delay. The employer is entitled to participate at every level of an appeal.
The workers’ compensation system has a number of exceptions and exemptions that may affect coverage and the amount of benefits that are payable. An employer who is considering denying a claim may wish to consult an attorney who is experienced in defending workers’ compensation claims for advice on the likelihood of sustaining the denial if the worker appeals.