 |
The History of Workers' Compensation
Part 2
By Tracy Watson
Tracy Watson became interested in workers’ compensation
through his work on getMedLegal Magazine and while earning his paralegal
certification.
For Part 1, click here.
|
 |
|
 |
|
 |
|
The
concept of workers’ welfare
takes hold in Britain and influences the U.S.
Although the English Parliament was slow to establish a WC system
of its own, Prime Minister William Gladstone pushed for legislation
abolishing the oppressive common-law defenses favored by employers
with the Employers’ Liability Act in 1880 – but compromised
by keeping the death contracts in place. Britain finally repealed
that law in 1897, marking the formal beginning of workers’ compensation
in England. Gladstone recognized that strengthening the condition
of workers “is the record of what we ought to regard as satisfactory,
as a real social advance [that] tends to a fair principle of division
of the fruits of industry.” During his third premiership in
1891, an increasingly liberal Gladstone said,
“It is a lamentable
fact if, in the midst of our civilization, and at the close of
the nineteenth century, the workhouse is all that can be offered
to the industrious labourer at the end of a long and honourable
life. I do not enter into the question now in detail. I do not
say it is an easy one; I do not say that it will be solved in
a moment; but I do say this, that until society is able to offer
to the industrious labourer at the end of a long and blameless
life something better than the workhouse, society will not have
discharged its duties to its poorer members.”
This inexorable social and economic shift
would slowly begin to influence leaders in the U.S., though not
on a national level as seen in Europe.
|
|
|
William Gladstone lobbied for better treatment of workers in his
final term as Prime Minister of Britain at the close of the 19th
century. |
|
|
|
|
|
The Progressive Era in America begins
At the turn of the 20th century, American companies and corporations
were firmly entrenched as the sole determiners of their injured
workers’ fate. This
period also began what has been described as the “Progressive Era” in
both government and social policy reform in America. Although the U.S. was not
yet an international power, our presidents and political leaders were well aware
of European politics and social reforms, particularly in England. This shift
in policies toward workers’ rights started with the presidency of William
McKinley and continued with Theodore Roosevelt. One of Roosevelt’s first
notable acts as president in 1901 was to deliver a 20,000-word address to Congress
asking it to curb the power of large corporations known at the time as “trusts.”
Roosevelt
went on to deal with union workers as well. In May 1902, the United Mine Workers
went on strike for higher pay wages and shorter workdays. He set up a fact-finding
commission stopping the strike, and resulting in the workers getting more pay
for fewer hours – but no attention was paid to worker injuries or deaths.
In 1904, muckraking author Upton Sinclair’s seminal book, The
Jungle, documented
his firsthand accounts of the dangerous, deplorable and inhumane conditions of
the meatpacking industry in Chicago. The public was captivated by the grisly
descriptions of the hapless workers unfortunate enough to become part of the
products they manufactured:
“. . . and as for the other men, who worked in tank
rooms full of steam, and in some of which there were open vats
near the level of the floor, their peculiar trouble was that
they fell into the vats; and when they were fished out, there
was never enough of them left to be worth exhibiting,– sometimes
they would be overlooked for days, till all but the bones of
them had gone out to the world as Durham’s Pure Leaf
Lard!”
Sinclair intended to
change the way workers were treated by their employers, and instead
his book became the impetus for passing laws such as The Meat Inspection
Act of 1906 banning misleading labels and preservatives that contained
harmful chemicals, and The Pure Food and Drug Act, banning food
and drugs that are impure or falsely labeled from being made, sold,
and shipped. Despite these small initial successes against companies’ dominance,
the government was conspicuously absent on the larger issue of
workers injured or killed on the job. Nevertheless, a reform-minded
public gradually came to demand changes in workers’ benefits.
|
|
|
|
|
|
|
|
Congress finally begins to weaken employer
hegemony
in the courts
Eventually, Congress passed the Federal Employers’ Liability
Acts of 1906 and 1908, weakening the common-law doctrine
of contributory negligence used so effectively against
workers’ claims. Sporadic efforts by individual states
to pass comprehensive workers' compensation acts were attempted
in New York (1898), Maryland (1902), Massachusetts (1908),
and Montana (1909), but none of these state laws specified
an actual compensation principle and most simply said to
the injured worker, “sue them and prove it.” On
the federal level, sentiment for modern workers’ compensation
was a few years ahead of the states, but responsibility
was generally abdicated to the states. Congress controlled
the regulation of interstate commerce – and President
Roosevelt urged passing of what is arguably the first substantial
compensation system in America in 1908 and enacted it to
cover certain federal government employees engaged in hazardous
occupational duties as well as employees of common carriers
engaged in interstate and foreign commerce.
Unfortunately for America’s workers, the decentralized
nature of labor laws in the United States provided an additional
obstacle delaying the implementation of any meaningful
state regulation. As in England and Germany, many U.S.
manufacturers were ready for change only if it included
relief from tort claims, but they strongly objected to
state-by-state regulation. Corporations argued that state-based
reforms would create an unfair advantage for unregulated
competitors in neighboring jurisdictions. In the most telling
example, manufacturers of phosphorus matches testified
before Congress, that despite knowing of the widespread
problem of “phossy jaw” poisoning their workers,
they were unwilling to invest in alternative solutions
unless the law in all states mandated it. This problem
led to a conference in Chicago by representatives of the
industrial states to create a uniform set of guidelines
for compensation law in 1910.
|
|
|
President Roosevelt pushed Congress to make reforms in how companies
in the U.S. treated their workers, and was responsible for the
first WC program, for some federal workers, enacted in 1908. |
|
|
|
|
|
New laws allowed injured workers to
sue, but failed to make
the workplace safer
By 1910, the majority of
states had abolished or substantially limited some of the traditional
legal defenses that favored employers since the 19th century, and
some had moved to a system of contributory negligence by which injured
workers who were partly at fault could still recover some damages.
However, some judges still aided the employers by narrowly interpreting
the laws in their favor such as claiming a foreman’s contribution
to an employee’s injury was irrelevant because he was not a
fellow worker. There was no consistent application of the doctrine
of respondeat superior. As the courts eventually reduced employers’ defenses,
companies became more willing to purchase private accident insurance.
Despite the modifications of liability laws by the states, they remained
insufficient to induce employers to make the workplace noticeably
safer. Industrial accident rates in the U.S. reached their all-time
peak in the first decade of the twentieth century. In 1907 alone,
over 7,000 workers were killed in just two industries – railroads
and bituminous coal mining.
While these incremental changes increased injured workers’ odds
of winning in court, they still left workers without much in the way
of compensation. For the majority of injured workers and their families,
recompense consisted of very little or nothing at all. Those who managed
to win in court usually had to wait years from the time of their injury
before receiving any payment; it was in the employers’ interest
to prolong most workers’ claims in court as long as possible.
And even when there was payment, by the time appeals were exhausted,
attorneys’ fees, doctors’ fees, and experts paid, the worker
received almost nothing for his trouble. |
|
|
Employees who managed to prevail
in their claims usually had to wait years before receiving any payment;
it was in the employers’ interest to prolong most workers’ claims
in court as long as possible.
|
|
| |
|
|
|
Tragedy fuels the formation of workers’ compensation
It would take a series of worker injuries and tragedies for the
government to begin the piece-meal process that would result in
the formation of workers’ compensation and protections. One
of those inevitable and avoidable tragedies resulting in reform
occurred in New York City in 1911. The infamous Triangle Fire on
March 25, 1911, killed 146 people, mostly young immigrant women,
many of them children. The fire broke out on the upper floors of
the 10-story factory, too high for fire department ladders of the
day to reach. People gathered on the street below watched in horror
as women and men jumped to their deaths to avoid the raging fire.
Many of the trapped workers were charred beyond recognition. Typical
of the laissez-faire system of American capitalism at the time,
there were no laws that required that the owners install safety
devices or sprinkler systems. There were no laws that guaranteed
workers the right to unionize and engage in collective bargaining.
There was no government agency to prevent employers from engaging
in unfair labor practices. And no laws to ensure compensation for
the injured workers who managed to survive. The owners of the factory
just walked away without any criminal penalties, and by the time
all the insurance settlements had been paid, they actually made
a profit on the fire because they were over-insured. And not one
dime had been paid to the surviving employees.
A factory inspection committee established by the New York state
Legislature exposed occupational dangers to health and safety in
the garment and other industries and motivated it to enact a series
of laws and regulations that would drastically reduce the incidences
of death and injury. Similar actions were soon taken in other industrial
states. Workers' compensation laws were passed over the next several
years in response to this and other tragedies, with disability
insurance eventually becoming customary. New government agencies
were created to specifically oversee the labor conditions of women
and children. |
|
|
It would take a series of worker injuries and tragedies such as the
infamous Triangle Shirtwaist factory fire in 1911 for the government
to begin the slow, piece-meal process that would result in the
formation of workers’ compensation laws.
|
|
|
|
|
|
The great trade off begins
Although individual states moved a little slower than the federal government,
the year 1911 is clearly a watershed moment in the history of workers’ compensation
in America. Wisconsin was the first state to adopt a "workmen's" compensation
law that was vigorously debated in the legislature. Employers lobbied for what
is now known as the “great trade-off.” Through this radical new legislation,
employers agreed to provide medical and wage replacement benefits – and
in return, the injured employee agreed to give up the right to sue the employer.
It was clear that the growing success of worker lawsuits was beginning to be
felt by companies and manufacturers; it is estimated that by the time this law
was passed, workers were prevailing in court in more than 15% of all claims.
Ten more states followed Wisconsin that year, enacting their own "workmen's" compensation
laws. Four more states adopted laws in 1912, and eight more passed laws in 1913.
By 1948, every state had at least some form of workers’ compensation in
effect, including Alaska and Hawaii. Although they did not acquire statehood
until 1959, Alaska and Hawaii had passed WC legislation in 1915 while they were
still territories. Today, in addition to the 50 states, workers’ compensation
laws are in effect in the District of Columbia, Puerto Rico, Virgin Islands,
plus the Navajo Nation, the Dominion of Canada, and the ten Canadian Provinces.
|
|
|
By
1948, every state had at least some form of workers’ compensation
in effect, including the territories of Alaska and Hawaii.
|
|
|
|
|
| |
Some workers are more equal than others
As a practical matter, the patchwork-quilt state-level control of
workers’ compensation has led to some unaccountably bizarre
variations in policy. For example, workers in small businesses (3-5
employees) are covered in 35 states but not in the rest. A worker
who loses a hand because of a workplace accident in Connecticut,
Iowa, or New Hampshire is entitled to over $160,000 in compensation.
If that same injured worker has the misfortune to live in Alabama,
Colorado, or Massachusetts, compensation is less than $30,000. There
is no reasonable moral or technical explanation for such disparate
treatment of similarly injured persons. The only plausible reasons
are historical and political. The common features of the workers’ compensation
program among states are the inadequacy of benefits paid and the
huge amounts of money frittered away by administrative overhead and
byzantine regulations.
|
|
|
The common features of the workers’ compensation
program among states are the inadequacy of benefits paid and the
huge amounts of money frittered away by administrative overhead and
byzantine regulations.
|
|
|
|
|
| |
No workers’ comp
reform at the federal level is on the horizon
Workers’ compensation has not
been left alone at the state level by the federal government because
those programs are functioning well or because policy makers wanted
to encourage “flexibility” and “innovation.” Far
from being innovative, the workers’ compensation programs at
the state level quickly became entrenched politically and saddled
with fundamentally flawed problems. Over the years Congress has consistently
avoided comprehensive reform to workers’ compensation because
it was too large a battle to take on, and would certainly jeopardize
other policy objectives and agendas. In effect, workers’ compensation
laws in the individual states have erected a stubbornly resilient “preemptive
policy space,” that effectively blunts federal level involvement.
Not unsurprisingly, significant reform of workers’ compensation
has never come close to a vote in Congress at any time during the
20th century, although such reform was considered more than once.
Each time, key officials within the executive branch, such as FDR’s
Committee on Economic Security, Social Security officials in the
late 1930s and 1940s, and White House staff in the Johnson administration
in the 1960s, perceived that a fundamental challenge to states’ programs
was a political quagmire almost beyond comprehension. They repeatedly
observed how poorly states were enacting and managing workers’ compensation
laws, and how formidable the various stakeholders were. The fractured
history of state-based workers’ compensation influenced federal
policy makers’ sense of what was or was not possible. It is
noteworthy that a major expansion of the federal government’s
authority in regulating workplace safety (OSHA) was assumed more
likely of success than a national referendum on workers’ compensation,
or even enacting uniform standards for state laws.
Without strong guidance from the executive branch and a willingness
(and backbone) to withstand a political firestorm of epic proportions,
fundamental change of the WC system at the federal level is unlikely.
Proponents and lobbyists for the continuation of state-level control
of workers’ compensation have enjoyed an overwhelming advantage
in Congress, whose members are particularly vulnerable to geographically
disparate attacks from locally powerful lobbies. The only time members
of Congress approved changes to workers’ compensation (i.e.,
the 1969 Coal Miners’ Black Lung program) was when it benefited
a tiny subgroup of workers – and would not affect the system of
state-level control. Workers’ compensation is essentially the
800-pound gorilla in the room that everyone tries not to annoy and
to walk around. It is hard to imagine a better example of the “second
face of power” in which actions are never attempted by our
elected leaders because the chances of success are calculated to
be too low.
|
|
|
Workers’ compensation is
essentially the 800-pound gorilla in the room that everyone tries
not to annoy and to walk around, effectively preventing reform at
the federal level.
|
|
|
References
Bachrach, Peter and Morton S. Baratz.
1962. “The Two Faces of Power.” American Political
Science Review 56, 4: 947-52.
Michael Barker, Gladstone and Radicalism. The
Reconstruction of Liberal Policy in Britain. 1885-1894 (The Harvester
Press, 1975), p. 92
Berkowitz, Edward D. 1979. “The American
Disability System in Historical Perspective.” In Disabled
Policies and Government Programs, edited by idem, 16-74. New York:
Praeger.
Fraser, Steve, Fire 100 years ago gave birth
to worker rights.
Special to CNN.com March 22, 2011
Haller, J.S., Industrial accidents-worker
compensation laws and the medical response. Western Journal
of Medicine. 1988;148:341–348.
Harger, L.; Workers' Compensation, A Brief
History, Florida Division of Workers' Compensation
Howard, Christopher.
2001. “Workers’ Compensation, Federalism, and the
Heavy Hand of History.” Wiener Inequality & Social
Policy Seminar Series, John F. Kennedy School Of Government, Harvard
University
Graetz, Michael J. and Jerry L. Mashaw. 1999. True
Security: Rethinking American Social Insurance. New Haven: Yale University Press.
Guyton,
Gregory, Iowa Orthop J. 1999; 19: 106–110.
Lubove, Roy. 1986.
The Struggle for Social Security, 1900-1935 2nd ed. Pittsburgh: University
of Pittsburgh Press.
Rosenbaum, Phillip, The Triangle fire: A blaze
that woke a nation. CNN.com. March 25, 2011
Sinclair, Upton. The
Jungle. 1904
The Times (12 December 1891), p. 7.
|
|
|
|
|
|
|
|
Tracy Watson is a marketing communications professional
and web designer who has worked on getMedLegal’s website for
the past six years and also works part time for a law firm as a certified
paralegal.
For more about Tracy, click
here.
To reach Tracy, email him at
tracy@twdgroup.com |
|
|
|
|
