Gavin Howe
The creation of workers' compensation laws has been a long and complex process, with the first comprehensive workers' compensation law being passed in Wisconsin in 1911. The history of workers' compensation goes back much further, with early laws permitting injured employees to sue their employers and prove negligence. Over time, the increasing number of lawsuits and the rise of industrialization prompted the need for a compensation law, with the US eventually adopting the German system, which was based on insurance and removed the right to sue. Today, workers' compensation laws vary across different states and cover a wide range of employees, including federal employees, maritime workers, and coal miners.
| Characteristics | Values |
|---|---|
| First modern workers' compensation law | Passed in Germany in 1884 by Otto von Bismarck |
| Basis of the law | Insurance-based, removing employees' right to sue |
| First US workers' compensation law | Passed in 1908 by President Taft, covering federal employees in hazardous occupations |
| First comprehensive US state law | Passed in Wisconsin in 1911 |
| Current status | All 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have their own programs |
| Funding | Employer-funded through insurance or self-insurance |
| Coverage | Varies, but common exemptions include domestic service, agricultural employment, and small employers |
| Medical benefits | 100% of medical costs covered for injured workers |
| Cash benefits | Provided for lost work time after a waiting period |
| Exclusions | Railroad employees in interstate commerce and seamen in the US Merchant Marine are exempt |
| Discrimination protection | In most states, employers cannot discriminate against employees for filing claims |
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What You'll Learn
The US follows the German model
The US workers' compensation law, in its original form, was modelled on the German system. The German model was based on insurance and removed employees' right to sue, while the British system preserved the right to sue. The United States eventually followed the German example.
Germany took the lead in protecting injured workers in 1838 by passing legislation to protect railroad employees and passengers in the event of accidents. Further changes were made in 1854 when a law was passed requiring certain classes of employers to contribute to sickness funds. In 1876, a "Voluntary Insurance Act" was passed, which failed in actual operation.
Chancellor Otto von Bismarck introduced a Compulsory Plan in 1881, which was enacted in stages and finalized in 1884. The German compensation system has been a model for many nations. The German Worker's Compensation Law of 6 July 1884 was passed only after three attempts and was the first of its kind in the world. Similar laws were later passed in Austria, Norway, and Finland. The law paid indemnity to all private wage earners and apprentices, including those in the agricultural and horticultural sectors, marine industries, and family helpers with work-related injuries for up to 13 weeks. Workers who were totally disabled received continued benefits at 67% after 13 weeks, paid by accident funds financed entirely by employers.
In the US, workers' compensation is compulsory for most private employment, except in Texas, where it is elective. Employers in Texas who reject coverage lose the customary common-law defences against suits by employees in private industry. In most states, workers' compensation claims are handled by administrative law judges, who often act as triers of fact.
In the late 19th and early 20th centuries, US policymakers, journalists, and social scientists convinced of the need for a compensation law disagreed over whether the country should follow the German or British system. Prior to the adoption of compensation laws, the United States dealt with employee injuries entirely through litigation. The law made a trio of tort defences available to employers, including contributory negligence, assumption of risk, and the fellow servant rule. As a result, employees injured in accidents, or the families of workers killed at work, often lost lawsuits.
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The first US compensation law
The history of workers' compensation law in the United States began in the early 1900s, with the first law covering federal employees passed in 1906. However, the push for modern workers' compensation laws at the federal level began a few years earlier, with President Taft proposing what is arguably the first compensation system in America in 1908 to cover workers involved in interstate trade.
Statewide workers' compensation laws were passed in New York in 1898, Maryland in 1902, Massachusetts in 1908, and Montana in 1909. However, several of these early laws were quickly challenged by employers and struck down by American courts as unconstitutional. The most notable example was a 1910 New York law that was declared unconstitutional by the New York Court of Appeals in the landmark decision of Ives v. South Buffalo Railway on March 24, 1911.
Despite these setbacks, the adoption of workers' compensation laws represented a significant shift in how workplace accidents were compensated. Under these new laws, compensation was no longer based on the worker proving that the employer was at fault, nor could compensation be denied if the worker's negligence contributed to the injury. Additionally, employers were now required to have insurance to cover medical costs and partial wage replacement for injured or ill workers.
In 1911, Wisconsin became the first state to pass a comprehensive workers' compensation law that was not successfully challenged in the courts. Drafted by Daniel Hoan, the Wisconsin Workers' Compensation Act marked a crucial turning point in the history of workers' rights in the United States. By 1949, every state in the country had enacted a workers' compensation program, with Mississippi being the last state to do so in 1948.
The adoption of workers' compensation laws in the United States was hailed as a significant event in the nation's economic, legal, and political history. It provided a quick, equitable, and predictable no-fault compensation scheme for employees and tort relief for employers. Additionally, it carried an intrinsic incentive toward the rehabilitation of injured workers, reflecting the value placed on the active worker within the system.
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State vs federal laws
The first workers' compensation laws were passed in Europe in the 19th century. Germany led the way in 1838, passing legislation to protect railroad employees and passengers in the event of accidents. In 1884, Germany introduced the first modern system of workers' compensation. England followed suit in 1880 with the "Employer's Liability Act".
In the United States, the first workers' compensation law was passed at the federal level in 1908, covering federal government employees engaged in hazardous work. However, the matter of workers' compensation was generally considered best left to the states, and the first comprehensive state-level workers' compensation law was passed in Wisconsin in 1911. By 1921, all but six states and the District of Columbia had workers' compensation laws. Today, each of the 50 states, the District of Columbia, Puerto Rico, and the US Virgin Islands have their own workers' compensation programs.
State and federal workers' compensation laws coexist and sometimes overlap. For most employees, their claims will be governed by state law. However, in some cases, federal law may supplant or replace state law benefits. For example, the Longshore and Harbor Workers' Compensation Act (LHWCA) is a federal program that covers longshore and harbor workers throughout the United States, and in some states, injured longshoremen can file claims under both federal and state law.
There are several key differences between state and federal workers' compensation laws. Firstly, federal workers' compensation is administered by the Office of Workers' Compensation Programs (OWCP) of the US Department of Labor, while state workers' compensation is handled by state compensation boards or courts. Secondly, federal workers' compensation provides uniform benefits across all states, while state workers' compensation benefits can vary from state to state. Thirdly, federal employees cannot sue the federal government, even in cases of negligence, while state workers' compensation programs may allow employees to sue their employers in certain circumstances.
In terms of eligibility, to receive benefits from the OWCP, one must be a civilian employee of the US government, and the injury or illness must be duty-related. For state workers' compensation, eligibility varies by state, but generally includes employees of private companies and government agencies at the state or local level.
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The medical community's response
Initially, the medical community, particularly the subspecialty of orthopaedics, exhibited a lukewarm response to workers' compensation laws. Some physicians, such as the noted shoulder specialist Codman, criticized the regulated physicians' fees and viewed the legislation as an attempt to "socialize" the medical profession. Codman's perspective was shaped by his objections to other forms of government intervention, including public parks and hospitals. However, it is worth noting that Codman's views were not universally shared, and the medical profession has had diverse opinions on the matter.
In the 1930s, a significant shift occurred in the attitudes of medical professionals with the introduction of Social Security Disability Insurance. This program aimed to provide coverage for individuals unable to work due to infirmities, which helped change the perception of workers' compensation laws among healthcare providers.
Over time, workers' compensation laws have evolved to include a range of benefits that address various medical needs. These benefits typically encompass medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, and death benefits. Medical care can include a wide array of services such as physician consultations, hospitalization, physical therapy, dental care, prescriptions, and laboratory services. The treating physician plays a crucial role in determining the necessary and reasonable treatment for the injured worker, subject to applicable guidelines.
In addition to federal laws, each state in the United States has its own workers' compensation program, reflecting the decentralized nature of labor regulation in the country. These programs are compulsory for most private employment, with Texas being the only exception, where participation is elective. The majority of workers' compensation schemes are fully employer-funded, and employers are required by law to provide workers' compensation benefits in the event of work-related injuries or illnesses.
While the medical community's response to workers' compensation laws has had its nuances, the overall recognition of the importance of protecting workers' rights and providing them with access to necessary medical care and benefits has prevailed. The evolution of workers' compensation laws and their adaptation to the changing needs of the workforce and medical advancements continue to shape the relationship between healthcare providers and these legislative frameworks.
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Exemption and discrimination
While workers' compensation laws have been in place in some form since the late 1800s, they have evolved over time, with exemptions and discrimination playing a significant role in shaping the legislation.
Early Efforts and Exemptions
Early workers' compensation laws often included exemptions for certain industries and worker categories. For example, Germany's legislation in 1838 protected railroad employees and passengers in accidents, and later laws mandated that specific employer classes contribute to sickness funds. In the United States, early efforts at the state level, such as in Maryland in 1902, provided for cooperative accident insurance funds, but these had limitations and often excluded domestic and agricultural workers, small firms, and casual labor.
Discrimination and Retaliation
Workers' compensation laws also aimed to address discrimination and retaliation against employees who filed claims or sought benefits. In 1973, New York State enacted Section 120 of the Workers' Compensation Law to protect injured workers from employer retaliation when pursuing their rights. This law specifically prohibited discrimination against employees who claimed or attempted to claim benefits, requested claim forms, or testified in workers' compensation claims. It ensured that employers could not discharge, fail to reinstate, or discriminate against employees for exercising their rights.
Disability Discrimination Laws
In addition to workers' compensation laws, disability discrimination laws, such as the Americans with Disabilities Act (ADA) and the California Fair Employment and Housing Act (FEHA), protect employees with disabilities from discrimination. These laws require employers to provide reasonable accommodations to ensure equal access to employment opportunities. A work-related injury that results in a disability, such as difficulty with basic functions like walking or seeing, triggers these protections. For example, an employee rated 100% permanently disabled under workers' compensation may still be able to return to work with reasonable accommodations under the ADA and FEHA.
Court Interpretations and Precedents
Courts have played a significant role in interpreting and enforcing workers' compensation laws related to discrimination. In one case, a worker injured at a hotel was threatened with termination if they sought medical attention. The Board and the Court agreed that this constituted discrimination under the law. In another instance, a worker who returned to work after surgery was subjected to discriminatory treatment, including being assigned to a filthy desk and denied differential pay. Again, this was recognized as discrimination. However, in a different case, a machine operator with work restrictions was fired due to their inability to perform an essential part of their job, and the Board and Court agreed there was no discrimination as the employer had a valid reason.
Continuous Evolution
Workers' compensation laws and their interaction with discrimination laws continue to evolve. While workers' compensation laws provide a safety net for injured or ill workers, discrimination laws ensure that employees are not retaliated against for exercising their rights. Together, these legal frameworks strive to balance the rights and responsibilities of both employees and employers.
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Frequently asked questions
The workers' compensation law in the US was created by the federal government in 1908.
Wisconsin was the first US state to pass a comprehensive workers' compensation law in 1911.
The US workers' compensation law was influenced by Germany and England's philosophy that the industry should be responsible for the costs of injuries inherent in industrial occupations.
Germany was the first country to implement workers' compensation in 1838, protecting railroad employees and passengers in the event of accidents.
