What Is Workers' Compensation? 

Workers' compensation is a system created by state law to provide benefits to employees who sustain on-the-job injuries, while also protecting employers from the liability of employee lawsuits. Under the workers' comp system, employees are entitled to lost income and medical expenses when they suffer a work-related injury or illness, regardless of who was at fault. In return for these benefits, employees give up the right to sue their employers in court for workplace injuries. 

To recover workers' comp benefits, you need to show that your injury or illness is "work-related." An injury generally is considered work-related if you were doing something for the benefit of your employer, and you were injured or became ill as a result. The injury need not take place at the worksite, but must take place during the course of your employment. 

An injury typically is not considered work-related if: 

the injury occurred during your lunch break, unless you were eating lunch on the company premises, or 

the injury happened during your commute to or from work, unless you are driving a company car, are required to bring your own car for business use during the workday, were running special errands for your employer, or were on a business trip. 

Example. James, a salesperson, suffers an injury from a car accident while driving from his office to his client's place of business. James will likely be covered by workers' comp because his trip was business-related and occurred during the workday. However, if James was injured while driving home in his car after his workday was over, he probably wouldn't be entitled to workers' comp.