Before the concept of workers compensation insurance, in 1855, Georgia and Alabama passed Employer Liability Acts, and the only way a worker who was injured at the workplace could receive any benefits was to sue the company or employer in a civil or “tort” action. Unfortunately, since the worker had to prove that the injury occurred due to the employer’s negligence, there were many loopholes or arguments that the employer could argue to avoid taking responsibility, such as:
• The worker was also negligent
• The worker was fully aware of the dangers involved and “assumed the risk”
• The injury occurred because of a fellow employee
Thus, under the tort litigation system, it was very difficult for employees to gain compensation from their employers; however, in the unlikely case that they won, they could be awarded a very large sum due to the lack of restrictions or limits imposed on jury rulings. As more judges and juries starting awarding injured employees with favorable verdicts, the companies and employers became more open to a workers compensation coverage program.
In the U.S., the emergence of workers compensation programs began in 1902 in Maryland (the first state-wide program), and the first law covering federal employees was enacted a few years later in 1906. That same year, the Workmen’s Compensation Act was adopted in Wisconsin, and was intended to protect and provide compensation for the worker who suffered injury on the job, regardless of whose fault it was.
However, in the early 1900’s, companies were not required to carry workers compensation insurance and it was still on a voluntary basis – one of the factors was the concern that it would infringe upon the 14th amendment rights of due process. Later in 1917, the United States Supreme Court resolved that issue in the landmark case, New York Central Railway Co. versus White. It maintained that an employer’s constitutional rights are not affected. After that historic ruling, most states enacted mandatory workers compensation coverage laws.
These laws eliminated the need of an injured worker to prove that the employer had been negligent in order to win the verdict, thus, it consequently eliminated the three defense arguments that employers used to employ to dispute their fault and negligence. However, when enacting workers compensation coverage it also placed a limit on the amount of funds that a worker could receive and it didn’t account for compensation addressing loss of enjoyment of life, pain, suffering, and other damages. Basically, any employees injured at their workplace are entitled to:
• Wage loss benefits
• Cost of medical treatment
• Certain disability payments
• Payments for vocational rehabilitation retraining
Since universal workers compensation coverage was first conceptualized, it’s gone through many changes, additions, and refinements. However, the spirit and intent of the law – which was to quickly award reimbursement and payment for a worker’s injury from the employer – has been maintained and it can be argued, even strengthened.
Workers compensation insurance differs by state-to-state, and a state governing board oversees the different private and public workers compensation systems. In addition, the federal government also has its own system for workers compensation coverage, and it’s subject to different requirements and guidelines for federal employees. In the majority of states, private insurance companies provide workers compensation coverage.
Since the early 1900s when workers compensation laws were first enacted, it’s gone through many changes, but we’re closer than ever to universal workers compensation coverage.
Make sure you, your car, your home, and your health is protected. Freeway Insurance can offer you the best rate for the best low-cost coverage. Give us a call or get a free insurance quote online to get the best protection for your money.