Workers' Comp Law Turns 100

18th Century pirates and the 19th Century German Chancellor Otto von Bismarck are two of the forefathers of modern workers' compensation law, according to a history of comp law honoring its 100th birthday. While pirates were compensated by their benefactors for injuries sustained in their work -- but death benefits were not paid -- Bismarck introduced workers' accident insurance in 1881, Christopher Boggs, education director for Insurance Journal's Academy of Insurance, explains in his article titled "Workers' Compensation History: The Great Tradeoff!"

In America, several states had their workers' compensation laws struck down before Wisconsin in 1911 became the first state with a law that withstood legal challenges. A key argument against the laws was removed on March 6, 1917, when the U.S. Supreme Court issued three decisions upholding state laws in Iowa, New York, and Washington that made insurance requirements compulsory, as is typical today. Two of them created state funds to compensate injured workers and dependents of workers who died while performing hazardous jobs.

The three cases were Hawkins v. Bleakly, 243 U.S. 210; New York Central R. Co. v. White, 243 U.S. 188; and Mountain Timber Co. v. Washington, 243 U.S. 219. The key question was whether these laws violated the Fourteenth Amendment, and a divided U.S. Supreme Court held they did not. New York's law identified 42 groups of hazardous jobs and excluded farm laborers and domestic servants.

After Wisconsin passed its law, nine other states adopted comp laws before the end of 1911. And by the end of 1920, 42 states had enacted workers' comp laws. Mississippi was the last state to implement such a law in 1948.

The Illinois Workers' Compensation Commission's chronology of comp laws there and elsewhere in the United States is available here.

As Boggs explains, the "great tradeoff" was a compromise between labor and management that worked well for both. "Before any plan could move forward, an agreement between labor and industry had to be reached; each had to be willing to give up something for a workers' compensation system to function properly," he writes. "The employer agreed to pay medical bills and lost wages, regardless of fault; and the employee agreed to give up the right to sue."

Like many compromises, the resulting system has not entirely pleased either employers or workers. Though the essential elements of comp law have lasted a century, workers' compensation has long been a battleground. Many states have passed legislation in recent years to reform their comp systems, mainly by capping medical fees, setting up medical review panels, limiting lawyers' involvement, and sometimes by ending medical benefits five years after an injury to encourage return to work.

Posted by Jerry Laws on Mar 25, 2011