The History of Workers Compensation
The History of Workers Compensation
Workers compensation, at its foundation, is a system of laws to protect employees from economic hardship occurring as a result of industrial illness or injury. Individual states create and maintain their own programs, and every worker is protected under the law. Injured worker benefits under the workers compensation system include wage reimbursement that varies state to state (typically 1/2 to 2/3 of the injured worker’s wage), coverage of medical expenses incurred as a result of an industrial injury or illness, as well as complete rehabilitation programs and death benefits for the surviving dependents of an employee whose death was the result of an industrial injury or occupational disease. Today, workers’ compensation is a “no fault” system; ideally this means that there is no ill will between employers and injured workers as related to workers’ compensation claims. The overall system has progressed tremendously since its inception, moving toward increasing employer responsibility and injured worker benefits and protection under the law.
Until 1911 when the first workers compensation law was passed, workers assumed all responsibility for injuries that occurred while in the course of employment. In order to recoup the financial loss resulting from their injuries, workers would have to file a lawsuit against their employers. This meant that in addition to the lost wages, often the only income supporting their family, the injured worker had to pay for medical care, rehabilitation costs and to hire a lawyer to prove the employer’s negligence related to the cause of the injury. Fellow employees often had to testify, creating a negative work environment, or in some cases, putting their own jobs at risk.
Even if the worker could overcome these challenges in the process, it was extremely difficult to win lawsuits brought against the employer due to the “common law” that weighed heavily in favor of corporations. These were principles that arose out of judicial decisions, not laws. The goal of the employee and his lawyer was to prove that employer negligence was directly responsible for the injury. The employer could easily dodge the allegations using three common law principles: assumption of risk, fellow servant rule, and contributory negligence.
The first, assumption of risk, was the belief that by accepting a job, an employee was also accepting responsibility for all of the risks and occupational hazards of said job. Employers could not be held responsible if the hazard that caused the injury was a common part of the job, or if the employee knew that the hazard existed. For example, if an employee complained about a wet floor that later caused him to slip and fall incurring an industrial injury, then his employer would assert that because the employee was aware of the hazard then he assumed the risk involved while working in that area.
Another principle called on by the employer’s legal defense was that of the fellow servant rule. If a fellow employee caused an injury, then it was not deemed the fault of the employer, thereby the employer was relieved of any responsibility.
The third major defense called forth by employers was the doctrine of contributory negligence. This one was a major blow to the employee’s case as it stated that if the employee was in any way involved with his injury that the employer was not responsible. Under the common law system, less than 1/3 of injured workers who pursued suing their employers actually won awards. Considering these virtually airtight absolutions of employer responsibility for maintaining a safe workplace or prevent accidents, and their high success rates in winning lawsuits, it is no surprise industrial injuries and occupational illnesses began to increase.
Eventually times began to change. Many large corporations had made steps toward internal compensation systems to help injured workers continue to support their families. Soon the common law defenses were less emphasized, and new employer liability acts took their place. Not all employees reaped these benefits, however, as they were exclusive to large corporations. Reforms aimed at creating more encompassing programs were gaining momentum. Oddly enough, progressive era reformers worked shoulder to shoulder with big business to enact effective legislative changes that would supercede the common law system of the time. Many believe that employers feared upheavals in the ranks of workers and thus wanted to have some say in the changes that were being made. Whatever the motive, this work led to the first workers compensation laws to be enacted in 1911 in New York. By 1948, all 50 states passed similar laws. Finally workers had access to a swifter, more certain resolution to their claims, with fewer lawsuits and legal expenses. Employers gained protection from being sued as the “no fault” system of today began to take effect. One drawback experienced by workers was the lower financial awards. Pain and suffering, used before to increase the financial award, did not apply under the new laws. Also, the disability payments injured workers received were only a fraction of the income they lost due to their injuries or illnesses, both from payday to payday as well as future earnings that these workers no longer had access to if they experienced any permanent disability.
Around 1940, the states began to accept occupational illness under the law as well as provide for permanent disability. In 1960, terms such as “aggravation of a pre-existing injury or illness” further expanded the law. At this point in history, only medical costs and wage compensation were part of the law, but in the 1970’s, dramatic changes came with the Occupational Safety and Health Act of 1970 which created the National Council of Compensation Insurance (NCCI) as an advisory organization. The recommendations put forth by the NCCI were adopted by nearly all states and resulted in substantially increased benefits for injured workers. These included compulsory coverage for injured workers, even if they waived their rights to benefits, no exemptions based on occupation or number employed by a business, full coverage of work related diseases, full rehabilitation, employee’s choice of state jurisdiction when filing claim, and adequate cash benefits for temporary, total, and permanent disability and fatality. Step by step, employers were being held more responsible for their workplace conditions, and injured workers were given access to expanded rights under the law.
The goals of workers compensation laws originally were to provide more support for injured workers. While this has surely happened, there is a long road ahead. Issues still exist that are being pressed out, some of which will work out over time. These include continuing litigation issues, the larger of which lead back to where the money for injured workers should come from. At the moment, the employer or their insurance company shoulders these costs, which leads to higher rates of contested claims in an effort to minimize business expenses. In addition, the argument over causation presents a challenge to the system in that it is difficult for physicians and employers to work cooperatively to create definitions and standards for whether or not an injury or illness is work related. Process questions will also need to be addressed. At present there is a federal employee system, a Longshoremen and Harbor Workers system, state-funded programs, and self-insured companies, each of which has its advantages and disadvantages and operate under different regulations.
The workers compensation system has made enormous advances in the area of employee safety and the extent of provisions available to them should they sustain industrial injuries or illnesses. Employers have made great strides in creating safer workplaces by implementing prevention measures, and training employees to identify and maintain a safe work environment.
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