Workers’ Compensation for Construction: Understanding the Basics

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A construction worker carrying wooden beams climbs a ladder.In 2020, the National Safety Council (NSC) included construction among its list of most dangerous industries. The dangers that construction workers face make workers’ compensation insurance vital — for protecting both construction employees and employers alike.

Workers’ compensation helps defray medical costs and recoup lost wages for employees who are hurt on the job. It also provides death benefits for the families of employees killed in work-related accidents. But workers’ compensation is just as valuable for employers, protecting them from most worker injury lawsuits while also encouraging the development and application of safety protocols at their workplace.

An advanced education in safety management can provide construction leaders with an understanding of workers’ compensation for construction. This knowledge can then be applied to effectively protect workers and construction businesses. This education also can build expertise in the health and safety measures that can help prevent the injuries and illnesses that lead to workers’ compensation claims.

What Is Workers’ Compensation for Construction?

Often referred to as the “grand bargain” between workers and employers, workers’ compensation provides employees with benefits for certain workplace injuries, illnesses and deaths. In exchange for this insurance, employees generally are prohibited from filing lawsuits against employers in these cases.

History of Workers’ Compensation

The original intent of workers’ compensation — or workers’ comp, as it is more commonly known — was to facilitate medical care for employees who are injured at work.

Since the first law governing workers’ compensation in 1911, the insurance has been designed to meet the needs of employees as well as employers. For employees, the introduction of a workers’ compensation requirement meant that employees no longer had to rely on the court system to seek relief from workplace injury-related costs. For employers, the insurance allowed them to more accurately plan for expenditures related to repaying workers’ costs for injuries sustained on the job.

Today’s Workers’ Compensation for Construction

Over time, workers’ compensation benefits grew to include additional benefits. While specific payments vary by state, they also can include job displacement training costs and death benefits for family members. These benefits cover expenses related to short- and long-term injuries that occur accidentally during working hours while the employee is performing job-related tasks.

From falls off of ladders to exposure to chemicals, a variety of incidents in construction can lead to accidental injury and illness. In these cases, most states require that employees receive benefits through workers’ compensation, which employers pay for through a state fund or self-insurance. The cost for employers to provide workers’ compensation varies according to factors such as:

  • The type of tasks the business performs
  • The location where employees work
  • The size of the business’s payroll
  • The amount of the company’s past workers’ compensation claims

Navigating workers’ compensation can be particularly challenging in the construction industry. In addition to the high risk posed by the physical demands of the work, job sites frequently change — and so do teams and their employers.

Why Is Workers’ Compensation Important for Construction?

Construction workers handle dangerous, heavy equipment. They also often work in high places and in challenging weather conditions. In ranking construction among the most dangerous industries in 2020, the NSC noted that the field has had the highest yearly number of workplace deaths among U.S. industries since 2012.

The U.S. Bureau of Labor Statistics (BLS) reported more than 300 workplace-related deaths among construction laborers in 2020. Additionally, of the approximately 970,000 construction laborers, 16,590 sustained nonfatal injuries and illnesses that led to days away from work.

Work in the construction industry overall led to more than 150,000 injuries, illnesses and deaths in 2020, the BLS reported.

Without workers’ compensation for construction employees and employers, the ramifications of these incidents could be physically, emotionally and financially devastating. Workers’ compensation is a requirement for businesses in 49 states. Texas, which does not require companies to carry the insurance, cautions employers about the risks of not having workers’ compensation.

Benefits of Workers’ Compensation for Construction Employees

Workers’ compensation gives employees peace of mind in knowing that they — or their families — have protection that covers all or part of workplace accident-related medical, disability, death and burial fees.

In the case of injury or illness, employees may file workers’ compensation claims to cover medical expenses only, or they may also request reimbursement for wages lost because of time away from the job. Death benefits cover a portion of lost family wages.

Benefits of Workers’ Compensation for Construction Employers

Workers’ compensation for construction employers provides the security that they likely will not face lawsuits in the case of an injury, illness or death on their worksite.

While employees generally waive their right to sue their employer in these scenarios, businesses sometimes may still face negligence lawsuits. Employers can purchase a level of workers’ compensation coverage that can help pay costs associated with these cases.

How Do Construction Employers Address Workers’ Compensation Claims?

Each state has its own workers’ compensation requirements, and employers who have worksites in more than one state should have workers’ compensation insurance that meets each of those states’ requirements. Business leaders should research the requirements and options for coverage in their state.

How Employers Purchase Workers’ Compensation Insurance

Construction employers can purchase policies that range from “ghost policies” to more traditional plans. Ghost policies exclude the business owner from coverage and are more affordable than other plans. Traditional policies include Coverage A, which covers all state-mandated workers compensation benefits, and Coverage B, which includes any costs that go beyond the minimum requirements.

In some states, employers must purchase insurance through a state fund. In most states, however, a business can purchase workers’ compensation insurance through a state fund or through private insurers.

How Employers Handle Workers’ Compensation Claims

Handling workers’ compensation issues begins before a workplace accident even occurs. Employers can help protect themselves and their workers — and save money — by promoting a culture that encourages safe workplace practices as well as open communication about workplace injuries or illnesses.

If an incident occurs, employers generally should follow these steps:

  1. Ensure the worker receives medical evaluation and treatment.
  2. Complete any form the state requires to report the injury.
  3. Conduct an internal investigation of the incident and document findings.
  4. Preserve any evidence related to the incident.
  5. Conduct post-accident tests, such as drug tests.
  6. Promptly file a notice of any necessary workers’ compensation claim upon receiving notice of the injury.

Employers also should have a clear plan for facilitating workers’ return to the job as soon as they are able to do so.

How Employees Submit Workers’ Compensation Claims

The process for employees to submit workers’ compensation claims also varies by state. Generally, the process for seeking workers’ compensation is as follows:

  1. Record in writing a description of the injury or illness, with photos and names of any witnesses to the incident.
  2. Report the injury or incident to the employer. While the employer must file the claim, it’s a good idea to follow up with the insurer to verify the filing.
  3. In the case of a claim denial, employees can appeal the decision with the state’s workers’ compensation board.

Families seeking workers’ compensation for a workplace death should contact the employer, who will submit the claim to the insurer.

Protect Yourself and Your Construction Employees

Workers’ compensation is an important safeguard for employees, their families and for employers — especially in the dangerous construction industry. Eastern Kentucky University’s online Master of Science in Safety, Security and Emergency Management can provide you with the knowledge to protect yourself and others on the job.

Whether you choose a concentration in corporate security operations, emergency management and disaster resilience or occupational safety, you’ll learn how to guard against accidents and to respond appropriately should they occur. Additionally, the program’s online courses allow you the flexibility to manage work commitments and other obligations while completing your degree.

Discover how EKU’s online Master of Science in Safety, Security and Emergency Management can help you become a leader in safe construction practices.

Recommended Readings

Bridging the Generation Gap in Workplace Safety Culture

How to Conduct a Job Hazard Analysis

Reducing Driver, Pilot and Machinery Operator Distractions 

Sources:

The Balance Small Business, “Workers’ Compensation: 10 Basic Facts for Employers”

Builders Mutual, “Workers’ Compensation 101”

Construction Business Owner, “Workers’ Compensation 101 for Construction Firms”

ForConstructionPros.com, “Everything Contractors Must Know About Workers’ Comp Insurance Before Buying”

Insurance Information Institute, “Spotlight On: Workers’ Compensation”

Insurance Information Institute, Workers’ Compensation Insurance

Insureon, “Workers’ Compensation Insurance for Contractors and Construction Businesses”

Investopedia, Workers’ Compensation

National Safety Council, Most Dangerous Industries

U.S. Bureau of Labor Statistics, Injuries, Illnesses and Fatalities

U.S. Bureau of Labor Statistics, Occupation Snapshot, Construction Laborers, 2016-2020, January 2022

U.S. Congressional Research Office, “Workers’ Compensation: Overview and Issues”

WorkCompOne, Buy Workers’ Compensation for Construction & Trade Contractors

WorkersCompensationShop.com, “What Are Workers’ Compensation Benefits?”