workers compensation
Definition
Workers compensation is a type of insurance that covers your employees if they get hurt or sick because of their job. It pays for their medical bills and replaces a portion of their lost wages while they recover, and in exchange, the injured employee generally gives up the right to sue you personally for the injury.
Example
If one of your warehouse employees throws out their back lifting boxes and needs surgery and six weeks off work, workers comp pays for the surgery and sends the employee a weekly check while they heal.
Watch Out
Most states legally require you to carry workers compensation insurance the moment you hire your first employee, and operating without it can result in heavy fines or even criminal penalties.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.