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Labor Laws in the Workplace, What's Workers' Compensation, What is Unemployment Compensation?

Updated: Aug 13, 2022

MGMT 402: Employment and Labor Law Unit 2 - Individual Project

Workers’ compensation and unemployment insurance statutes are a part of virtually every state’s statutory safety net for injured and out-of-work workers. You are a human resource manager. A new employee needs an explanation of workers' compensation and unemployment. In an inter-office memorandum, define and explain what workers' compensation is for the new employee.

Divide the internal report in 2 parts. In Part 1, explain workers' compensation. In Part 2, discuss and explain unemployment compensation. Explain the following to the new hire in a minimum of 5 pages:

  • Part 1: Workers' compensation

  • What is workers' compensation?

  • Who does it apply to?

  • When does it apply?

  • How does it apply

  • Part 2: Unemployment compensation

  • What is unemployment compensation?

  • Who does it apply to?

  • When does it apply?

  • How does it apply?

Labor Laws in the Workplace, What's Workers' Compensation, What is Unemployment Compesation?

Every employer has to understand the employment law and the regulations that come with the law. As a human Resource manager or director, one has a duty to fulfil in the workplace consisting employee welfare. As such, they have to fully understand what is expected of them in fulfilling employee welfare needs and the safety of the work environment as well as the employment period. With this understand, they can know what policies to develop and rules to utilize to ensure they fulfill the expectations laid on them. Every human resource manager or the employer have to understand on worker’s compensation and unemployment compensation. These two compensation plans will play a bid role in the decisions on work place safety and hiring terms.

Part 1: Workers' compensation

Workers compensation refers to an insurance that provides cash benefits and/or medical aid to workers who have been injured or become disabled due to their job. The worker’s compensation insurance is not applicable to every employee at work and it is not easily offered. This was due to the cases of fraud that used to occur where employees would use their injury that was not even work related to claim compensation from the employers. Through this insurance, the employee entitled for the benefit must be injured or disabled because of their work and have to be on clock. This means that when an employee gets injured when they are not supposed to be on duty, then are not liable for worker’s compensation but when they are injured while on duty and doing their work at that time, they could claim for the compensation (Cihon, & Castagnera, 2019).

Worker’s compensation applies when an employee has been in an accident at work during their working hours and have been severely injured or left disabled. They are compensated when the injury inconveniences them or their families and makes the employee not be live their life as before. Worker’s compensation is a regulation by the OSHA which is concerned with safety and health of the working environment. It is a provision under worker’s compensation laws making it a statutory obligation by employers. When an employee has been injured at work and claim for worker’s compensation, they have to fulfill their part of the responsibility. As much as it applies to employees, it also protects the employers from being sued by employee. Any employee who accepts to receive the compensation, has to give up their rights to sue the employer for negligence. Walsh states that “the right for an employee to get the Workers’ compensation without proving their employer was negligent comes at a price” (Walsh, 2016). Employee must prove the injury is work related and not chronic illness, intentional injury or injury outside work. the compensation is done according to the severity of the injury and is settled between the employer, insurer and the employee. This cost of worker’s compensation is paid by the employer and the exact premium paid is the function of each employer’s past experience with job-related illness or accidents.

A situation to explain when worker’s compensation is applied would be the case of two employees in a factory. Josh and Anna were both injured in the factory where they work. Josh was arranging the boxes in the store when the roof which had been reported to have been lose for two weeks collapsed and fell on him. He had a broken spine and he was not able to walk until a surgery was done. More so, he was to stay on wheelchair for the rest of his life. Anna on the other hand was off duty and had been told to leave the work premises because they needed to have a pest control and the chemicals would cause adverse effects in breathing system if inhaled by employees. However, she claimed she had a lot of work and was to extend her shift. She stayed despite being asked to leave. A week later, she was admitted in the hospital because of breathing difficulties caused by inhaling the harmful chemicals. The chemical was that which was sprayed in the factory. Both employees sort worker’s compensation because they were injured at work. however, Josh got the compensation while Anna was denied.

According to the worker’s compensation laws, Anna was not liable to get the compensation. First, she was off clock and was not supposed to be in the factory at that time. This shows that the employer had considered the safety of the employees while asking her to take a day off. She was injured for her own intentions. She should have listened to the pest control team when they asked her to leave. Her choice to stay was what caused her to be sick. This made her unqualified. Her actions were termed as fraudulent which used to cause a lot of problems for employers and insurers when employees sort worker’s compensation for their own mistakes. On the other hand, Josh was qualified for the worker’s compensation, he was on clock and was working when the roof collapsed. He was injured because of the job and the damage has left him a disabled person. His medical cost was covered by the factory and was compensated for staying on wheel chair (Walsh, 2016).

Part 2: Unemployment compensation

Sometimes employees may face a situation when they are forced to be out of work because of some situations. This will leave them devastated as the situation is not their cause or they have no control over it. To avoid such scenarios, there was a provision of unemployment compensation to protect such employees. Unemployment compensation is a compensation that an employer gets when they are forced to be out of work when it is not their fault or when they are forced to work less than their full-time work hours. The idleness caused by the situation that is out of control of the employee to make them unemployed is what causes the need for unemployment compensation. The compensation is not to every employee out-of-work but only to those eligible to receive it. To get it, one must prove that they are out of work through no fault of theirs and they are available to a suitable work if it arises (Cihon, & Castagnera, 2019).

Unemployment compensation is applied when an employee is out of work for not their fault and/or are pushed to work lesser hours than their full time hours when they are available and willing to work on suitable jobs if available. Sometimes, it is offered for employees who have been properly dismissed for poor performance at work and are pushed to unemployment. To get or claim the unemployment compensation is not an easy process as the employee must undergo the necessary and due process. An employee has to file the unemployment claim first. An employment agency or office will evaluate the validity of the claim before ruling it as worth having unemployment compensation. If decision is challenged and not accepted, then an appeal if accepted for the employee. The employer could also be allowed to challenge the claim when he thinks, it is not worth it and then the employment agency or office can evaluate the situation from both sides. A referee will be needed in such a case and the case can then be moved to the state courts for the decisions on whether the employee should or should not get the unemployment compensation (Cihon, & Castagnera, 2019).

A situation that would help elaborate when unemployment compensation is applied would be a case of a production plant that had two employee’s filing for the compensation. Production plants sometimes face challenges where they have to lay off employees because of unfavorable conditions. Sometimes, they may not be able to accommodate and sustain all the employee when the work or orders are low which increases cost of employment. Other times, they may need more labor to cater for their needs due to increased demand of their products. Considering two types of employees A and B who are employees of the plant but have a situation. Employee works in the marketing and his pay varies depending on the situation as sometimes due to commission. Employee B works in the production sector which faces volatility depending on season. Since last year, the factory started facing challenges with the customers which reduced their demand on products thus pushing the plant into financial crisis that they had to lay off some employee until they picked up. For this reason, they had to give compensation to employees who were to be laid off while waiting to be called in. others, who were to work on a reduced shift hours were also compensated. Employee B was a contract employee and that day he was off so he did not register for the compensation and missed it. He was forced to file the claim. However, employee A also had claimed the compensation because he was fired thus felt he needs compensation as it was an unfair fring. The company accepted employee B’s request and refused employee A’s.

The two employees received different responses because after analysis, employee B was qualified. He was willing and available to work when the work was available. He was also getting laid off because the situation was unfavorable for the company and not because of his fault as the situation was beyond his control or intervention. More so, he was working in the production where some employees were being laid off. However, employee A, was noted to have been the cause of the situation since he had messed an order to one of the company’s major customer. He packed the wrong quality of the product, label, quantity and delayed the shipment. Despite the customer complaint, he did not take heed of the complaint or apologize or even notified the management which caused the company to lose its largest market. This was a willful misconduct which disqualified A from getting unemployment compensation unlike the other employees in production team and B.

Unemployment compensation is sometimes an expense that a company or employer can avoid. This could be done through use of independent contractors who are easier to let go after the work is done or when the company is not doing well. Employees will need to be compensated when they have no contribution in income generation of the company and sometimes attract legal issues for the company. However, independent contracts are easier to deal with in a production setting that is seasonal.

In conclusion, employee and labor laws are there to bring an understanding and a great relationship at work. through the employment and labor laws, employees and employers understand their roles, positions and rights at work. employees are protected from unfair firing by the unemployment compensation which helps compensate for the idleness they are caused without fault. On the other hand, employees are protected from work related injuries due to unsafe and unhealthy work environment by the worker’s compensation. Both compensations are well explained and illustrated in the employment and labor laws of the states and the federal governments.


Walsh, D. J. (2016). Employment Law for Human Resource Practice (6th Edition.). Mason, OH: Cengage Learning (South-Western). [ISBN: 978-1305-112-124]

Cihon, P. J., & Castagnera, J. O. (2019). Employment and Labor Law (10th Edition). Cengage Learning US.

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