Workers’ Compensation Origin

Workers’ Compensation insurance provides wage replacement and medical benefits to injured employees in exchange for suing for relinquishment of the employer’s negligence tort. The “compensation bargain” is the trade of assured, limited coverage and lack of recourse beyond the Workers’ Compensation system.

This bargain prevents and solves the employer’s problem of becoming insolvent due to high damage awards. In addition, the collective liability system ensures a worker’s compensation security.

Workers’ Compensation plans vary among jurisdictions, including weekly payment provisions to replace lost wages (a form of disability insurance), past and future economic compensation, medical reimbursement expenses (a form of health insurance), and payable benefits to an employee’s dependents in the event of workplace death.

However, Workers’ Compensation plans do not cover general pain and suffering damage or punitive damages due to employer negligence.

Origin and International Comparison

Workers’ Compensation laws vary by country. However, Prussian Chancellor Otto von Bismarck developed the Workers’ Accident Insurance system in 1884 with the evolution of the Workers’ Accident Laws for Europe and later within the United States. Transnational networks among policymakers and social scientists began the development of global compensation laws.

Statutory No-fault Compensation

Workers’ Compensation statutes intend to eliminate litigation and common law remedies limitations by requiring employees to waive the potential for pain and suffering awards by becoming unable to prove their employer’s tort or legal fault. In exchange, employees receive monetary awards to cover lost wages and compensate for permanent physical impairments and medical expenses due to a workplace injury.

In addition, dependents of employees who died from a work-related injury or illness receive benefits. Some laws protect employers and employees by limiting an injured employee’s recovery and eliminating coworker liability in most incidences. State statutes provide guidelines for most employment scenarios, and federal regulations cover federal employees and some interstate commerce.

The remedy provision reports Workers’ Compensation as the primary method to remediate injured workers’ claims. Therefore, preventing employees from claiming tort liability against their employer.

Common Law Remedies

Common law nations developed a system motivated by an “unholy trinity” of tort defenses for employers, including contributory negligence, risk assumption, and the fellow servant rule.

The common law imposes employer obligations to provide a safe environment and tools, deliver danger warnings, allow coworker assistance (fit, trained, and suitable “fellow servants”), and not to overburden and promulgate and the enforcement of workplace safety rules.

Three defenses afford employers claims under the common law for worker injury, including:

  • First, the Fellow Servant Doctrine protects the employer when the injury extent was caused in part or whole by a peer of the injured employee.

     

  • Contributory negligence protects the employer when the employee fails to use adequate precautions required by ordinary sensibleness.

     

  • Assumption of risk protects the employer when the employee voluntarily accepts the work-related risk.

Some form of Workers’ Compensation includes compulsory defenses for nearly all employees in most states, except Texas, as of 2018, depending on the organization’s features. In addition, companies may purchase voluntary insurance, typically including Part One for compulsory coverage and Part Two for non-compulsory coverage in the United States.

Finally, companies may engage in self-insurance, forgoing insurance purchases by showing sufficient funds to cover Workers’ Compensation liabilities. Every state enacted a Workers’ Compensation program by 1949.

Administrative law judges who act as triers of fact handle Workers’ Compensation claims within the US.

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