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Workers compensation: Where does opting out leave employees?

Posted On March 02, 2016

Worker’s compensation history

Until workers’ compensation, an employee injured on the job could only sue their employer for recourse. This was a costly process, for employer and employee, and often didn’t produce anything for the employee. Some European countries adopted legislation to protect employees who were injured while at work. In 1855 the United States followed suit, with Georgia and Alabama passing similar legislation. In 1907, 26 more states also passed some form of workers’ compensation. However, in effect, these did little as most still required that the employee prove fault to recover.

(Article continues below Infographic)

workers' comp infographic


In 1908, the US federal government passed the Federal Employer’s Liability Act, after the urging of President Roosevelt, but that was limited to federal employees. In 1911, a universal federal law began, where the medical and wage replacement benefits were paid by the employer for workers injured at work. In return, the employee gave up their right to sue. Today, most states have state- regulated laws in place for on-the-job injuries, with a uniform concept: if an employee gets hurt at work, they are entitled to compensation from their employer for medical bills and lost wages. These regulations are meant to be no-fault, meaning if the employer doesn’t have to prove fault, the employee cannot sue for negligence. An Illinois workers compensation lawyer can help to understand the law.

Opt out of worker’s comp?

Texas and Oklahoma have passed legislation giving companies the option to not take part in the federal workers’ compensation regulations. Bill Minick, a Texas lawyer, is heading the campaign to let the companies opt out. This allows companies to write their own rules- develop a workplace injury plan for their company- making it not only cheaper for employers, but better for workers. An estimated 100,00 to 125,000 employers in Texas currently opt out of workers comp insurance, ranging from small companies to some of the largest in the state. With Walmart, Nordstrom, and Lowe’s being on board, Minick wants to get more states passing similar legislation in the next decade.

With companies making their own rules, generally, few injuries will be covered, benefits payments will get cut off sooner, doctors’ access would be controlled, and mandatory settlements could be imposed. Most plans in Oklahoma violate the law, but regulators cannot respond to this. While most companies opt out because of the cost to provide this insurance, they face unlimited liability and possible punitive damages if the employer sues them after a workplace accident. An Illinois workers compensation lawyer can help those who need it in this area.

Problems with the opt-out law

There are many problems that can arise from this new law. Some of these are:

  • When an employer is allowed to opt out, the regulations that protect employees by providing minimum benefit levels no longer apply.This puts the power in the employers’ hands, allowing them to decide what circumstances constitute an injured worker.
  • The employer chooses the doctor to examine the worker, not the worker.
  • Approving any treatment can be denied. They also choose how often a worker gets examined or reexamined.
  • Compensation can be denied for certain disabilities.
  • Workers must accept what they’re offered or risk losing all benefits. And the employer can terminate benefits at their discretion.
  • An employee can sue an employer for negligence, depending on the law. But, the employer can force an employee to sign a contract stating that all cases be solved through an arbitration system designed by the employer, rather than in court.

An Illinois workers’ compensation lawyer can understand the law and help determine how a case should be handled.

Illinois workers comp laws

The Illinois Workers’ Compensation Commission helps resolve disputes that arise between an employee and an employer concerning work related injuries or illness. There are two steps that may be taken when a claim is made:

  1. It is first tried by an arbitrator. This decision may then be reviewed by a panel made up of three commissioners.
  2. The case may then be appealed in circuit court, Appellate Court, and the Illinois Supreme Court.

Most cases are settled out of court. An Illinois workers compensation lawyer can help determined what steps need to be taken.

Who’s next?

Even though Illinois has not adopted the opt out plan, it’s uncertain how long they’ll hold out. It is believed that geographical location and politics can influence a state’s decision to allow the opt out option. The Association for Responsible Alternatives to Workers’ Compensation (ARAWC) is an association created to look at the long-term goals in targeted states. While aware of the nuances this can create, their goal is national, to take this option to every state.

An Illinois workers’ compensation attorney can help make sense of the laws surrounding this legislation and what can be done.

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