Arizona Workers Compensation

Workers compensation coverage helps Arizona businesses meet legal requirements and care for employees when injuries happen on the job. From understanding coverage responsibilities to navigating reporting and benefits, employers need to stay informed. Find out how workers compensation coverage applies in AZ, from employee benefits to employer responsibilities.

Understanding workers compensation in Arizona

The often-sunny Southwest climate in Arizona is a melting pot of cultures, traditions and generations. Residents can explore national parks and enjoy pools, spas and a renowned food scene. With all Arizona has to offer, it’s become one of the nation’s fastest-growing states.

A sizable workforce is needed to support leisure activities and basic needs such as healthcare and construction infrastructure. Employers can support employees through providing workers comp solutions that grow with their workforce. As the nations’ top workers compensation insurer, Travelers offers solutions at scale, which can be fitted to unique industry considerations.

Who is required to carry workers compensation insurance in Arizona?

If an employer has more than one employee, they are required by law in Arizona to obtain workers compensation coverage.

Arizona requirements to consider

An employer may not require an employee to waive their rights to workers compensation coverage.
Employers who fail to maintain required workers compensation coverage in Arizona may face business closure until compliance is achieved.

Who can receive workers compensation benefits in Arizona?

Injured employees are generally eligible to receive workers compensation benefits. Some individuals are automatically included in or excluded from workers compensation in Arizona. 

Corporations: Officers who are not working shareholders and working shareholders who own less than 50% interest in the corporation are included in coverage and may elect to be excluded from coverage. Officers who are working shareholders and own 50% or more of the interest in the corporation are excluded from coverage and may elect to be included in coverage. 
Partnerships: Partners are excluded from coverage and may elect to be included in coverage.
Sole Proprietorships: Sole proprietors are excluded from coverage and may elect to be included in coverage.
Limited Liability Companies (LLCs): Members who are not working members and working members who own less than 50% of the membership interest are included in coverage and may elect to be excluded from coverage. Members who are working members and own 50% or more of the membership interest are excluded from coverage and may elect to be included in coverage.

Overview of workers compensation requirements in Arizona

Understanding Arizona workers compensation is essential for employers. Being aware of state requirements helps employers comply with the law and support employees. This is an overview of the fundamentals of employer responsibilities and the benefits employees may receive under AZ workers compensation law.

Arizona workers compensation employer responsibilities overview

Compensable injuries

Generally, injuries arising out of and in the course of employment, regardless of whose fault it is, have potential for workers compensation benefits. This includes occupational diseases and cumulative trauma injuries.

Occupational diseases and cumulative trauma injuries are conditions that develop over time in the workplace. 

For an occupational disease, the employee must show that there is a direct causal connection between the disease and employment and that it is peculiar to the employment.

Posting notices

Employers must post the following posters in a conspicuous location at the worksite, informing employees of their rights, responsibilities and protections provided under the Arizona Workers' Compensation Act.

“Employee Safety and Health Protection” poster (bilingual, English and Spanish)
“Workers’ Compensation Compliance” poster (English and Spanish)
“Work Exposure to Bodily Fluids” (bilingual, English and Spanish)
“Work Exposure to MRSA, Spinal Meningitis, or Tuberculosis”

Providing medical treatment 

Employers should make sure injured employees know they should obtain prompt and appropriate medical care.

The employer can direct the injured employee to a physician of their choice for one visit only, after which the injured employee may then choose the treating physician.

Providing lost wages (indemnity) 

Employers can be responsible for lost wages, including decrease in pay due to modified job responsibilities. The employee benefits section gives a more in-depth explanation of the types of wage benefits employers may be responsible for.

Prompt reporting and forms

Employers should encourage employees to promptly notify them of any accident or injury. Once aware of a work-related injury, the employer should make sure the injured employee understands they can seek medical treatment if needed. The employer should notify their insurer right away of any work accident or injury.

Employers or their insurer may need to report claim information throughout the claim process.

Prompt reporting is essential to avoid penalties and provide timely benefits for injured employees.  

Record keeping

Employers should maintain thorough documentation, including details about what happened, when, where and witnesses involved. Accurate record keeping and prompt reporting to their workers compensation insurer can play a key role in a timely and complete investigation and handling of the claim.

The employer should continue to maintain and provide necessary information to their insurer throughout the claim process as it is vital for efficient claim handling and compliance with the workers compensation law.

Penalties

Employers who fail to maintain required insurance may face legal and financial penalties, including liability for compensation and medical costs.

Arizona workers compensation employee benefits overview

Calculating Average Monthly Wage (AMW) in AZ

The Average Monthly Wage (AMW) is determined based on the employee's earnings at the time of injury, including wages, overtime and other compensation.

Employers must provide accurate wage information for this calculation.
Correct benefit amounts can be determined after an employee’s average monthly wage (AMW) is calculated.

Temporary Total Disability (TTD) benefits

Temporary Total Disability (TTD) benefits are provided when an injured employee is unable to work due to a work-related injury.

There is a 7-day waiting period before benefits begin.
If the disability extends beyond 14 days, compensation for the initial 7 days is retroactively paid.
TTD benefits are then calculated at 66 2/3% of the employee’s AMW (Average Monthly Wage), up to the state-mandated maximum rate.

Temporary Partial Disability (TPD) benefits

Temporary Partial Disability (TPD) benefits apply when an injured employee returns to work in a limited capacity, earning less than their pre-injury wages.

The benefit is calculated at 66 2/3% of the difference between the pre-injury AMW (Average Monthly Wage) and current earnings.
The benefit is subject to the state maximum rate.

Permanent Partial Disability (PPD) benefits

Permanent Partial Disability (PPD) benefits are provided when an injured employee sustains a permanent impairment but remains able to work in some capacity.

The benefit amount varies based on the severity and type of impairment, and the extent to which the injury affects the injured employee's earning capacity.
Arizona regulations outline specific schedules and formulas to determine the exact benefit amount awarded for each type of impairment.

Permanent Total Disability (PTD) benefits

Permanent Total Disability (PTD) benefits are awarded when a work-related injury leaves an injured employee completely and permanently unable to work.

The benefit calculation is similar to Temporary Total Disability (TTD) benefits.
Payments are set at 66 2/3% of the injured employee’s AMW (Average Monthly Wage), up to the state-mandated maximum rate.

Fatality benefits

In the event of a work-related death, the injured employee’s dependents may be entitled to compensation.

These benefits include coverage for funeral expenses and financial support for dependents.
The compensation amount is based on the deceased injured employee’s AMW (Average Monthly Wage), up to the statutory mandated maximum rate.

Vocational rehabilitation

There is no requirement in Arizona for employers to provide vocational rehabilitation so an employee can be placed in an employment within his/her restrictions. Upon request, the Special Fund (state fund) may agree to pay for vocational rehabilitation, subject to the fund’s specific guidelines.

Medical benefits

Injured employees are entitled to all medical, surgical and hospital treatment required to cure or alleviate the injury effects. This includes doctor visits, hospital stays, medications and necessary medical equipment.

Employees are not responsible for any copayments or deductibles.

Legislative updates

Regulations, laws and potential changes that can shift your course

As the nation’s largest writer of workers compensation insurance, Travelers is committed to understanding new and evolving legislation, regulations and trends at the state level. Our employees serve on regional and national associations, boards and committees to advocate on behalf of our customers and the industry. We educate stakeholders on the impact legislation can have on businesses. By taking an active role in the legislative process, we participate in the important dialog around worker safety and advocate for best practices industry-wide so all can benefit from our workers compensation expertise.

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Why choose Travelers

Care for the employee, confidence for the employer

Employees are at the heart of every business. That's why Travelers is here to help employers keep them safe and support them when accidents happen. Our experienced teams guide both employers and their injured employees through recovery, from getting the right care to returning to work as soon as medically appropriate. In fact, 70% of injured employees return to work within 30 days.

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