1-Excluded People (no coverage)
When an employer does not meet the state’s requirements for workers comp insurance, the employee might not have a workers comp claim. For instance, in the states requiring employers with three or more employees to carry workers comp insurance, and the employer only has two employees, the injured employee would not be able to pursue a workers comp claim.
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When the injured employee is the sole proprietor or a partner in the business, s/he will not be covered for a workers comp injury unless s/he buys a workers comp insurance policy on him/herself (which most sole proprietors do not do). (WCxKit)
Another instance where an employee might not be able to pursue a claim is in the states excluding farm laborers, seasonal workers, domestic servants, real estate agents and direct sellers from coverage under the workers comp statutes. When one of these type employees is injured on the job, they still have the right to bring a lawsuit against the employer if they believe the actions of the employer caused their injuries.
2-Pursuing a Tort Claim (want deeper pocket)
In the states where the workers comp insurer has full right to subrogation recovery, the employee will occasionally chose not to pursue the injury claim against the employer. An example of this would be the injury to the traveling salesperson resulting from an automobile accident. The third party was at fault and the accident occurred in a state where the employer controls the selection of the medical provider and the employer/insurer has full subrogation rights.
An attorney representing the injured employee will often tell the employee they can get a much bigger settlement through the tort system than they can through workers comp. Instead of the employee being treated by the medical provider selected by the employer or the employer’s insurance company, the employee is treated by a medical provider selected by the employee’s attorney.
The attorney, of course, is recommending the liberal medical provider who will keep the employee coming back for additional treatment for as long as the employee is willing to go to the doctor. The reasoning for this is simple, the longer the employee is off work and the higher the medical bills are, the greater the settlement the employee’s attorney can demand from the insurer of the vehicle at fault in the auto accident.
Another example of where an injured employee might want to opt out of filing a workers compensation claim is an injury on a construction site. On a large construction project you often find various subcontractors all working at the same time. This will often result in an employee getting injured due to the negligence of a third party. The employee again will have the choice between pursuing the claim for personal injury against the responsible party or filing a workers compensation injury claim. (Of course, in the states where the right of subrogation has been diminished or taken away from the workers comp insurers, the employee’s attorney will often pursue both types of claims simultaneously).
A third example of where an employee might choose to pursue a tort claim rather than a workers comp claim is the delivery person who trips and falls on the defective sidewalk belonging to the business where s/he is making a delivery. While a delivery person has the right to pursue a workers comp claim against the employer, the owner of the property where s/he fell has liability insurance, and the award s/he can collect on the tort claim will surpass what can be collected on a workers comp claim.
Summary
While it is unusual for the employee to opt out of coverage for a workers comp claim, or for coverage not to apply to the work related injury, it does happen. The wise employer will know when this situation is occurring and keep in close contact with the employee in case the circumstances change.
Author Rebecca Shafer, JD, President of Amaxx Risks Solutions, Inc. is a national expert in the field of workers compensation. She is a writer, speaker and website publisher. Her expertise is working with employers to reduce workers compensation costs, and her clients include airlines, healthcare, printing/publishing, pharmaceuticals, retail, hospitality and manufacturing.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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