March 7, 2001
HISTORICAL SUMMARY OF WORKERS' COMPENSATION LAWS
By: Jack J. Burriesci, Legislative Fellow
You want to know what historical events led to the development of workers' compensation laws in Europe and America.
Economic and social problems surrounding work-related injuries resulting from industrialization provided the impetus for workers' compensation laws. Beginning in the late 1800s, several European countries adopted laws granting employees the legal right to receive compensation for such injuries.
Prior to these laws, an employer was liable for damages resulting from industrial accidents only when an employee could prove that the accident was a result of the employer's negligence. However proving employer negligence was very difficult because, at that time, employers had three defenses: (1) contributory negligence if a worker's own negligence contributed to his injury, (2) fellow-servant doctrine if an accident was caused by the negligence of a fellow employee, and (3) assumption of risk if an employee knew or should have known of the inherent risks involved. These three defenses exempted an employer from paying damages for employee accidents.
In modern industrialized nations, workers' compensation laws make the employer legally liable for employee injuries resulting from industrial accidents. Most countries, including the United States, extended the laws so that the costs of these injuries are one of the employer's production costs. To equalize this burden and protect an employer from catastrophic losses, insurance coverage was developed specifically to cover workers' compensation claims. Germany and England had the greatest influence on the American workers' compensation movement.
The 1838 Prussian Railway Liability Act established the general principle of workers' compensation by making railroads responsible for injuries to employees as well as passengers, unless they were due to employee negligence or an “Act of God.” In 1845, other German states began passing similar liability laws and laws regulating and strengthening workers' mutual aid societies and the guilds (Armstrong, Barbara, N., Insuring the Essentials: Minimum Wage Plus Social Insurance: A Living Wage Program, New York: The MacMillan Company, 1932, p. 224).
In 1881, the German legislature considered a bill for compulsory and non-profit insurance against industrial accidents. The bill was modeled after earlier government subsidized miner's relief and factory funds established in Prussia. That bill and an 1882 revised bill failed to gain legislative approval. In 1883, the legislature enacted a sickness insurance law, which covered sickness and work accidents for the first 13 weeks after injury (id. at 225-6).
Germany enacted a workers' insurance law in 1884. The law insured workmen in certain industries against serious and fatal accidents occurring on the job, unless they were intentionally self-inflicted. It eliminated government subsidies for workers' relief and placed the entire cost of the liability on the employers. Subsequent legislation revised the 1884 law and codified the changes in the Insurance Code of 1911 (id. at 226-8).
Prior to 1880, English common law made it practically impossible for workers to recover damages from industrial accidents. The 1880 Employers' Liability Act, applicable to all manual workers except seamen and domestics, gave injured employees, or their dependents, about the same rights to recover damages from their employers that non-employees always enjoyed (id. at 233-4).
In 1897, the British Parliament unconditionally accepted the principle of employers' liability. To secure indemnity, it required injured employees to prove only that they had been injured on the job. This change basically gave English employees about the same rights German employees enjoyed under their 1884 law (Frankel, Lee K., and Dawson, Miles, M., Workingmen's Insurance in Europe, New York: Charities Publication Committee, 1911, p. 42).
In 1900, the law was extended to common and agricultural laborers, but not clerks, sailors, and domestic servants. A 1906 law extended employers' liability to virtually all occupations and made the previous provisions clearer and more favorable to employees (id. at 43).
One of the first published surveys of European social insurance, W.F. Willoughby's Workingmen's Insurance, appeared in an 1898 special report of the U.S. Department of Labor. A subsequent 1899 report by A.F. Weber of the New York Bureau of Labor Statistics, also surveyed European workers' compensation legislation. These studies concluded that such legislation was both suitable and feasible for the United States and are considered the beginning of the American workers' compensation movement (id. at vii; Winslow, Todd W., “Look at the History of Workers Compensation to See How it Evolved,” Idaho Statesman, April 25, 1996, p.1).
In 1906, Congress enacted the Federal Employers' Liability Act (FELA) for railroad employees and reflects a transition from common law remedies to those based on workers' compensation no-fault laws. FELA eliminated an employer's use of contributory negligence, assumption of risk, or fellow-servant liability defenses (“Workers Comp System Has Been a Work in Progress,” Business Insurance, Vol. 33, Issue 52, December 27, 1999, p. 14).
In 1908, Congress established the Federal Employees' Compensation Act that provided workers' compensation coverage to federal civilian employees in unusually risky jobs. Congress subsequently expanded the act to benefit most federal civilian employees (Business Insurance, p. 14).
In 1911, Wisconsin became the first state to enact a permanent workers' compensation system. By 1920, all but eight states had enacted workers' compensation laws similar to Wisconsin, and by 1949, all states had such legislation. These laws provided compensation to workers hurt on the job, regardless of who was at fault, making the employer responsible for paying medical costs and wage-loss benefits. Employees receiving compensation under this system forfeited their right
to sue the employer for negligence (Houge, Robert D., “Workers Compensation: A New Phase,” Insurance Advocate, Vol. 110, Issue 14, April 3, 1999, p. 33).
New York actually approved workers' compensation legislation before Wisconsin, but a state court overturned it just one day before the infamous fire at the Triangle Shirtwaist Company in Manhattan. The blaze resulted in the death of 146 employees, primarily immigrant girls, many of who jumped to their death to escape the fire (Business Insurance, p. 14).
Connecticut enacted its workers' compensation law in 1913. The basic structure of the original law still survives despite four major revisions and numerous smaller modifications. Attached is OLR Report, 93-R-0973, which gives a brief history of Connecticut's workers' compensation law.