Workers' compensation (which formerly was known as workmen's compensation until the name was changed to make it gender neutral) in the United States is a primarily state-basedMary Kati Haupt (2016) "Workers' Compensation Law & the Remedial Waiver," Barry Law Review: Vol. 21 : Iss. 2, Article 4. Available at: https://lawpublications.barry.edu/barrylrev/vol21/iss2/4 system of workers' compensation.
In the United States, some form of workers compensation is typically compulsory for almost all employers in most states (depending upon the features of the organization), with the notable exception of Texas as of 2018. Regardless of compulsory requirements, businesses may purchase insurance voluntarily, and in the United States policies typically include Part One for compulsory coverage and Part Two for non-compulsory coverage.
By 1949, every state had enacted a workers' compensation program.
History The Accident Insurance Law of 1884 instituted by German Chancellor Otto von Bismarck served as a model for the rest of Europe and the United States.Karmel, Dying to Work: Death and Injury in the American Workplace (2017), 180. American journalists, policymakers, and social scientists subsequently debated whether to adopt the German welfare system or the British approach, which preserved the beneficiary's right to sue.Rodgers, Atlantic Crossings: Social Politics in a Progressive Age (2009), 209-266. Prior to compensation laws, the United States dealt with employee injuries entirely through litigation. The law made an "unholy trinity" of tort defenses available to employers, including contributory negligence, assumption of risk, and the fellow servant rule. As a result, injured employees and their families typically lost lawsuits over workplace injuries.Holdren, Injury Impoverished: Workplace Accidents, Capitalism, and Law in the Progressive Era (2021)
In 1855, Georgia and Alabama passed Employer Liability Acts based on the British Employers' Liability Act 1880; 26 other states passed similar acts between 1855 and 1907. Early laws permitted injured employees to sue the employer and then prove a negligent act or omission. New York's 1910 law was declared unconstitutional by the New York Court of Appeals in the landmark decision of Ives v. South Buffalo Railway on March 24, 1911, one day before the Triangle Shirtwaist Factory Fire.Ives v. South B. R. Co., 201 N.Y. 271 (1911). According to law professor John Fabian Witt, the Ives decision represents the "rupture" between an old paradigm that was dying and a new paradigm that was gradually emerging in American law, society, and politics. The massive public reaction to Ives led to the triumph of the American workers' compensation movement and crushed the judicial legacy of the author of the Ives opinion, Judge William E. Werner. Werner's philosophy of free labor and freedom of contract was replaced by legal requirements based on scientific management, actuarial risk, and insurance.
After the 1906 Federal Employers Liability Act was held unconstitutional for instituting a worker's compensation scheme over all employees of railroads engaged in interstate commerce, a revised version was passed in 1908 to only cover employees who were personally engaged in interstate commerce and thus within Congress' Commerce Clause authority. The 1916 Federal Employees' Compensation Act created a similar system for federal civil service employees. In 1911, Wisconsin became the first state to pass a comprehensive law that was not successfully challenged in the courts. It was drafted by Daniel Hoan, who later served as the Socialist mayor of Milwaukee from 1916 to 1940. By 1949, every state in the country had enacted a workers' compensation program. These early laws generally restricted a husband's ability to recover for his wife's injuries until Wengler v. Druggists Mut. Ins. Co. (1980) held such sex-based discrimination unconstitutional under the Equal Protection Clause.
In the early 20th century workers' compensation laws varied between states in the degree to which they were voluntary or required. In some states, employers were forced to become liable for the costs of employees' injuries. In other states, employers could choose whether or not to fall under compensation laws.eh.net Fishback Includes extended data tables. See table one, note D. In still other states, employers had the choice whether to fall under compensation laws, but if they chose not to they ran greater risks of employee injury lawsuits.
In some states, employers argued in court that compulsory participation laws were unconstitutional and violated the 14th amendment, which required due process before a person or entity could be deprived of property. In 1917, the issue of due process was resolved by the United States Supreme Court in New York Central Railway Co. v. White which held that an employer's due process rights were not impeded by mandatory workers' compensation. Following this ruling, each state instituted different threshold requirements. The adoption of the workers' compensation laws led to changes in how workplace accidents are compensated. Compensation is no longer based on the worker showing that the employer was at fault, nor can compensation be denied if the worker's negligence contributes to the injury. Nearly all employers are required to have insurance to cover payments for: (1) medical costs resulting from occupational injuries and some occupational illnesses suffered by workers; and (2) partial replacement of injured or ill workers' lost wages, also known as indemnity. One unfortunate side effect of compensation laws in their early days was to create incentives for employers to fire or refuse to hire employees with disabilities or health conditions that made them more expensive to insure, such as a person with only one eye.Rose, No Right to Be Idle: The Invention of Disability, 1840s–1930s (2017) and Holdren, Injury Impoverished: Workplace Accidents, Capitalism, and Law in the Progressive Era (2021).
Modern practice
In the United States, most employees who are injured on the job receive medical care responsive to the workplace injury, and, in some cases, payment to compensate for resulting disabilities. Generally, an injury that occurs when an employee is on their way to or from work does not qualify for workers' compensation benefits; however, there are some exceptions if an employee's responsibilities demand that they be in multiple locations, or stay in the course of their employment after work hours.
There are two methods by which an employer can comply with its obligation to provide workers' compensation coverage for its employees. Very large organizations and governments may choose to "self-insure" in which the organization obtains permission from the workers' compensation agency to pay claims directly, without being required to carry insurance.
Smaller organizations must, and self-insured organizations may, purchase a workers' compensation insurance policy to cover obligations for work-related injuries to employees. Some self-insured organizations will use a "hybrid" approach, hiring an insurance company to investigate workers' compensation claims, but paying the claims itself out of its own pockets.
Insurance policies are available to employers through commercial insurance companies: if the employer is deemed an excessive risk to insure at market rates, it can obtain coverage through an assigned-risk program. In many states, there are public uninsured employer funds to pay benefits to workers employed by companies who illegally fail to purchase insurance.
Various organizations focus resources on providing education and guidance to workers' compensation administrators and adjudicators in various state and national workers' compensation systems. These include the American Bar Association (ABA), the International Association of Industrial Accident Boards and Commissions (IAIABC), the National Association of Workers' Compensation Judiciary (NAWCJ), and the Workers Compensation Research Institute.
In the United States, according to the Bureau of Labor Statistics' 2010 National Compensation Survey, workers' compensation costs represented 1.6% of employer spending overall, although rates varied significantly across industry sectors. For instance, workers' compensation accounted for 4.4% of employer spending in the construction industry, 1.8% in manufacturing and 1.3% in services.
Clinical outcomes for patients with workers' compensation tend to be worse compared to those non-workers' compensation patients among those undergoing upper extremity surgeries, and have found they tend to take longer to return to their jobs and tend to return to work at lower rates. Factors that might explain this outcome include this patient population having strenuous upper extremity physical demands, and a possible financial gain from reporting significant post-operative disability.
State laws
As each state within the United States has its own workers' compensation laws, the circumstances under which workers' compensation is available to workers, the amount of benefits that a worker may receive, and the duration of the benefits paid to an injured worker, vary by state. The workers' compensation system is administered on a state-by-state basis, with a state governing board overseeing varying public/private combinations of workers' compensation systems. The names of such governing boards, or "quasi-judicial agencies", vary from state to state, many being designated as "workers' compensation commissions". In North Carolina, the state entity responsible for administering the workers' compensation system is referred to as the North Carolina Industrial Commission. In Michigan, the Workers' Disability Compensation Agency administers Michigan's Workers' Disability Compensation Act, which provides benefits to cover medical expenses and lost wages for workers who suffer injuries on the job.
In a majority of states, workers' compensation is solely provided by private insurance companies. Twelve states operate state funds (that serve as models to private insurers and insures state employees), and a handful of states have state-owned monopoly insurance providers. To keep state funds from crowding out private insurers, the state funds may be required to act as assigned-risk programs or insurers of last resort for businesses that cannot obtain coverage from a private insurer. In contrast, private insurers can turn away the worst risks and may also write comprehensive insurance packages covering general liability, natural disasters, and other forms of insurance coverage. Of the twelve state funds, the largest is California's State Compensation Insurance Fund.
Reporting Underreporting of injuries is a significant problem in the workers' compensation system. Workers, fearing retaliation from their employers, may avoid reporting injuries incurred on the job and instead seek treatment privately, bearing the cost themselves or passing these costs on to their health insurance provider—an element in the increasing cost of health insurance nationwide.
Typically, workers can only receive compensation for injuries received while on the job, but in some states there are exceptions: traveling salespersons and similar employees can be covered if they are injured while taking a work-related trip, employees who are sent on special errands can receive compensation for injuries received on those errands. In some cases workers who, though not currently working, suffer injuries while on the premises of the employer can also receive compensation.See, e.g.,