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A Brief History of Workers Compensation                                                                                  

Workers compensation has been one of the oldest insurance programs in the United States dating back to the early 1900’s. It provides monetary compensation to the employee for work-related injuries or illnesses.  In the event of such injury or illness, workers compensation pays the medical expenses, income loss due to disability, and death & survivor benefits.

Today, all state governments require employers to carry workers compensation to protect their employees.  It is a far more effective system for remedy than the process of litigation exercised prior to the establishment of workers compensation. Before the nineteenth century, most workers had no insurance coverage for injuries while on-the-job. This started becoming a larger issue during industrialization as the increase in number of factory workers correlated with an increase in job-related injuries. During these times, workers could only recover damages by suing their employers for negligence, claiming breach of common law obligations. These were the duties of the employer to the employees to provide a safe working environment, warning the employees of risks the job entails, hiring competent coworkers, providing safe working equipment, and imposing safety rules.

Although the employees could obtain restitution in court for their injuries, the process of litigation was often unfavorable. Lawsuits were not only tedious and drawn out, but also expensive. Furthermore, employers were often able to escape liability and avoid paying compensation to the injured workers through the use of certain defenses, such as the contributory negligence defense. This defense removed the worker’s right to collect compensation if they had in any way caused or contributed to their own injuries.  All these obstacles made it very difficult for employees to recover. The solution was the creation of workers’ compensation.

The establishment of workers compensation eliminated many of the problems of the past. Workers are entitled to recovery for injuries or diseases as long as they were related to the job. Workers’ compensation follows a no-fault system, meaning that the employer is liable to any work-related injury regardless of fault or negligence. In turn, workers’ compensation is the employees’ exclusive remedy; this is the only method of claiming compensation for job-related injuries. Employees cannot sue the employer for such injuries under normal circumstances. Even though each state differs slightly from each other, the purpose of workers’ compensation is ultimately the same. It provides a definite compensation and helps the employee recover faster and more efficiently with minimal damage to business.

Written By Kevin Chang,

Edited by William F. Schaake, CIC, CRM  of Group Coverage, Inc. ©2010

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