Chapter Seven – WORKERS’ COMPENSATION
TRUE OR FALSE: Place T or F in the space provided.
_____1. Workers’ compensation applies when an injury can be categorized as
arising out of employment or occurring in the course of employment.
_____2. Today, all !fty states, the District of Columbia, Guam, and Puerto Rico
have workers’ compensation laws.
_____3. All workers are covered under the workers’ compensation laws.
_____4. Workers’ compensation laws are uniform from state to state.
_____5. Workers’ compensation was developed to allow injured employees to
be compensated without the need for litigation.
_____6. If employers go out of business, they are not liable to injured
employees.
_____7. A person who accepts a service contract to perform a speci!c task is
considered an employee of the company.
_____8. Temporary disability is the state that exists when it is probable that
an injured employee will be able to resume employment.
_____9. Permanent partial disability is the condition that exists when an
injured employee is not expected to recover fully.
_____10. There are no serious problems with workers’ compensation in the
United States.
_____11. Workers may not bypass the workers’ compensation system and sue
even if the employer has been reckless.
MULTIPLE CHOICE: Circle the letter before the correct answer.
1. All employees are covered under the workers’ compensation laws except
which one of the following?
A. Industry employees
B. Government employees
C. Agricultural employees
D. Service employees
2. Insurance rates are affected by all the factors listed below except which of
the following?
A. Pro!t/loss of the company
B. Types of work performed
C. Potential future losses
D. Number of employees
3. When the employer is classi!ed by type, which one of the following
methods is used to determine the premium rate?
A. Schedule rating
B. Experience rating
C. Manual rating
D. Retrospective rating
4. Which of the following statements are problems with workers’
compensation?
A. Lost income not adequately replaced
B. Number of accidents not decreased
C. effectiveness of cost allocation
D. All of the above
5. The following are all approaches used to settle a workers’ compensation
claim except:
A. Direct settlement
B. Union arbitration
C. Public hearing
D. Agreement settlement
11. F
5. B
1. Explain the underlying rationale of workers’ compensation as a concept.
2. List four objectives of workers’ compensation.
3. List !ve types of employees who may not be covered by workers’
compensation.
4. What is meant by the term contributory negligence?
5. What is meant by the term assumption of risk?
6. Explain the reasons for the unprecedented increases in medical costs in
the United States.
7. What are the three types of workers’ compensation insurance?
8. Insurance companies use one of six methods for determining the premium
rates of employers. Select three and explain them.
9. How can one determine if an injury should be considered serious?
10. Explain the concepts of AOE and COE.
11. Distinguish between an employee and an independent contractor.
12. De!ne the following terms: temporary disability, permanent disability.
13. Explain the following theories of handling permanent partial disability
cases: whole-person, wage-loss, loss of wage-earning capacity.
14. Distinguish between medical vocational rehabilitation.
15. What are the three approaches for settling workers’ compensation
claims?
16. Explain the concept of medical management of workplace injuries.
17. Explain the theory of cost allocation.
18. Summarize brieGy the problems most widely associated with workers’
compensation.
19. What types of actions are workers’ compensation reform movements
likely to recommend in the future?
20. Explain the most common workers’ compensation cost reduction
strategies.