Each state has its own workers' compensation laws to handle claims from employees who are injured on the job. These laws are strict liability - fault and negligence by the employer are not considered in order to collect benefits. Punitive damages are not available to the employee. The legal defenses available in a civil action such as comparative negligence and assumption of the risk are not available to the employer in workers' compensation.
However, the injury or illness has to be incurred in the course of employment in order for the workers' compensation system to provide benefits to the injured worker. Workers' compensation is generally the exclusive remedy for an employee's injuries or illnesses arising out of the course of employment. It is typically required by the state for every employee - although state law may provide for specific exemptions for officers/owners, small companies (those with three/four/five or fewer employees), domestic workers, farm hands, and independent contractors.
Workers' compensation hearings, if necessary, are normally administrative proceedings that take place in a separate court system. However, there are some limits to workers' compensation being an "exclusive remedy."