With the passage of the recent workers’ compensation bill in the Legislature, I have heard many people ask, “What, exactly, is workers’ comp?” If you don’t own a business, don’t work in human relations or have never been injured while on the job, chances are good you probably don’t know a whole lot about workers’ comp or how it can affect you. However, if you work, you should have an understanding of what it is in case you need it someday.

Workers’ compensation laws were adopted in every state in the early 1900s as a response to the increasing number of injuries occurring in workplaces and the success injured workers were having in lawsuits against their employers for their injuries.

The workers’ compensation laws were created to protect businesses and workers by providing employees who are injured at work prompt payment of lost wages and medical expenses, and protecting businesses by eliminating all workers’ rights to sue for injuries. It does not matter whose fault the injury is or if there is no fault, if an injury occurs at work, the injured worker is covered. As an extension of that, if a worker gets injured on the job and is unable to work, no matter if it’s completely the company’s fault, he or she has no right to sue. Instead, he or she is eligible to receive workers’ compensation benefits.

What the injured worker is entitled to receive is limited. There are no payments for “pain and suffering” and some of the other types of damages common in personal injury claims, such as car accidents, in court. Benefits in Maine are paid to injured workers at 80 percent of after-tax income with a cap of $634.13 a week. That caps stands regardless of the income of the employee. For comparison purposes, other New England states have caps at roughly $1,000 a week, and more than $1,250 in New Hampshire.

The length of time injured workers can receive benefits depends on the level of the injury. If it’s a temporary injury, the benefits last for the length of that injury. If it’s a permanent injury, the length of benefits is determined using a formula based on the “permanent impairment threshold.”

A person who has suffered a severe permanent disability from the injury and cannot work currently is eligible to receive benefits for as long as they are disabled until retirement. This will change to a 10-year limit starting in 2013. People with less severe permanent injuries receive benefits for less time.

All businesses in Maine are required to have workers’ compensation insurance. The businesses pay an annual premium, which covers the monetary and medical benefits for injured workers. Premiums have gone down substantially in Maine over the last 20 years — dropping 50 percent since 1993. In fact, in just the last few months, premium rates were dropped twice, each time by more than 3 percent, saving Maine’s businesses more than $13 million total a year. This is actually a positive point for Maine’s business environment. Those two rate decreases contrast nicely against New Hampshire’s recent 7.5 percent rate increase in workers’ compensation premiums.

When an employee is injured on the job, whether it’s a quick accident or a slow-developing injury, the employee is eligible for workers’ compensation. The employee has 90 days to report the injury once he or she realizes the problem results from work, even if it’s not debilitating yet. Beginning January 2013, workers will have 30 days to report a problem. If the worker does not formally report the injury within the mandated time frame, the claim can be denied. Once it’s reported, the employer files the report with the Workers’ Compensation Board.

When the injury is such that the employee can no longer work, he or she needs to file a claim for the employer to pay. The employer has 14 days to agree to the claim and have the insurer begin paying benefits or file a notice of controversy to deny the claim. If a company denies the claim, the appeals process can take upward of a year before a decision is made and the employee receives any benefits.

When it all goes as planned, workers’ compensation works well for everyone. The injured employee is covered for lost wages and medical costs right away. He or she doesn’t have to lose his or her job, house, or health due to the injury. When the injury is healed, he or she goes back to work. The business doesn’t have a negative effect on its finances and doesn’t have to worry about being sued.

No matter how safe your workplace is, injuries can happen. And workers’ compensation is there for you when they do.

About the author: Kevin Noonan is an attorney at McTeague Higbee who concentrates a large portion of his practice on workers’ compensation. He can be reached at 207-725-5581 or knoonan@mcteaguehigbee.com.

Editor’s note: The Bangor Daily News welcomes submissions for business columns. They should be 650-850 words, and should be unique to the BDN and pertinent to the Maine business community. Columns, a head and shoulder photo and a short bio can be sent to business@bangordailynews.com.