Masonry Magazine June 1986 Page. 25
PART I
THE BASICS OF
WORKERS COMPENSATION
While many workers and employers are aware that workers compensation exists, there seems to be a general lack of understanding about the benefits provided and some of the issues impacting on the system.
Workers compensation insurance is one of the most important insurance coverages in the United States. More than $18 billion of this coverage was written by insurance companies last year to protect employees via benefits to injured or ill workers for hospital and medical care and vocational and physical rehabilitation.
Although many workers and employers are aware that workers compensation exists and that benefits are provided, there probably is a lack of understanding about the basics of workers compensation and some of the principal issues impacting on the system at this time.
For this reason, the National Council on Compensation Insurance (NCCI) a national organization headquarterd in New York City which develops and administers rating plans and systems for workers compensation insurance-has prepared the following article dealing with various aspects of this coverage. The information should be of special interest to employers because, among other things, it includes explanations of how workers compensation rates are determined and how premium savings can be realized by employers with good safety records.
Background to Workers Compensation
The first compenhensive workers compensation law (then called workmen's compensation) in America was adopted by the New York Legislature in 1910. The following year it was declared unconstitutional by New York's highest court. Some of the women on the way to work at the Triangle Shirtwaist Factory in New York City the next morning may have read of the court's decision. More than 150 of them never came home to discuss it with their families, because the factory caught fire and they were burned to death.
The strange coincidence of the court's decision and one of the worst industrial accidents in the history of the United States guaranteed that the decision would not stand. In the firestorm of public protest that followed the Triangle holocaust, the New York Constitution was amended to prevent the court from intervening against workers compensation again, and the 1910 bill, virtually unchanged, was passed once again, taking effect in July of 1914.
The struggle over the constitutionality of the New York statute cost the state its precedence, and Wisconsin has the honor of enacting, in 1911, the nation's first workers compensation law to pass constitutional muster.
Workers compensation made a fundamental change in American law. The employer was made liable for all work-related injuries, without regard to fault. Thus, workers compensation became the first no-fault insurance. In the New York statute, which was widely copied in the other states, the employer had to either insure himself through a newly created state fund (the state fund-in effect, a state-run insurance company was not widely copied), a private insurance company, or through self-insurance, which required proof of his financial responsibility.
Prior to the adoption of workers compensation, the injured employee's only recourse was to sue at common law. In theory, the employer had a serious responsibility for the safety of his employees; in practice, those responsibilities could be evaded. Three major defenses were available to employers sued by injured workers: contributory negligence, the fellow servant rule, and assumption of risk.
If the employee in any degree contributed to his injury through his own negligence, the employer, even if negligent himself, would be held liable. The fellow servant rule prevented employees from recovering when their injury was the result of a negligent action by another employee. Finally, the assumption of risk doctrine made the employee assume all the ordinary and usual risks of his job.
With these defenses available, few employers could lose at common law; conversely, few injured workers were compensated. While employers liability statutes, adopted before workers compensation, softened these strictures somewhat, they were inadequate for the task. As long as employers enjoyed almost airtight defenses, their common law obligation to provide a safe workplace was, in many cases, honored more often in the breach than in the observance. But even without these defects, the delays inherent in litigation, to say nothing of the expense, made the common law system ineffective for addressing work-related injuries.