noun · also: WC, workers comp
workers compensation
In plain English
Insurance that pays employees for work-related injuries — medical bills, lost wages, disability — without going to court.
It's a no-fault system. The employee gives up the right to sue for negligence; the employer gives up many common-law defenses. Coverage A (statutory benefits) is no-fault. Coverage B (employers liability) covers the rare lawsuits that fall outside the bargain.
What it covers
Coverage A: medical, indemnity (lost wages), and rehabilitation benefits required by the state's workers' comp statute. Coverage B: damages from employee suits not covered by Coverage A.
What it does not cover
It is NOT optional in most states. Kansas requires it for any employer with payroll over $20K; Missouri requires it for 5+ employees (1+ in construction). Sole proprietors and partners can usually exclude themselves.
Where it trips people up
Misclassification is the silent killer. If a 1099 'contractor' is functionally an employee — works set hours, uses your tools, has no other clients — the state will reclassify them at audit and bill you back-premium plus penalties.
The technical version
A statutorily-required form of insurance providing wage replacement and medical benefits to employees injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue the employer for negligence.