Definition
Workers' compensation is state-regulated insurance that pays medical bills and a portion of lost wages when an employee is hurt or becomes ill because of work. In exchange, employees generally cannot sue their employer over the injury. Almost every state requires employers to carry it; Texas is the notable exception where it is optional for most private employers. Premiums are priced by job classification and payroll. For W-2 temp workers, the staffing agency normally carries the policy.
This definition is general information, not legal, tax or financial advice. Rules vary by state and change over time.