What is workers' compensation Workers' compensation is compensation given to employees who incur job-related injuries. This compensation is given without regard to fault and in return employers are relieved of liability beyond the direct costs of such compensation. Coverage is optional for agricultural and domestic workers, musicians, theatrical performers, and others hired on a short-term basis.
Coverage is also optional for real estate licensees.
An employer may elect to cover exempt workers by opening an account and paying a premium. Sole proprietors and partners have the option of insuring themselves for workers' compensation purposes. Each employer within a specific class is assigned the same basic premium rate. To arrive at the premium rate for a classification, the actual loss experience of all businesses within that classification is compared with the total reportable payroll for those businesses. Rates are adjusted so that the premium and the projected return on investments equal all projected costs for claims occurring in the coming fiscal year.