Ever wonder how Workers’ Compensation Insurance came to be? Let’s take a brief tour through the coverage’s history and discover why it’s a necessary mainstay in American workplaces.
Workers’ Compensation’s Ancient Roots
Though Workers’ Compensation Insurance may seem like an entirely modern construct, you may be surprised to learn its roots trace back to ancient Sumer (present-day Iraq). According to Gregory Guyton’s A Brief History of Workers’ Compensation, in 2050 B.C., the ancient Sumerian law outlined compensation for injury to a worker’s specific body parts. For example, the loss of a thumb was worth half the value of a finger.
Ancient Greek, Roman, and Chinese laws also implemented similar “schedules” for specific injuries and the monetary compensation the maimed parts deserved. Their distinction between “impairments” (the loss of function of a body part) and “disabilities” (the loss of ability to perform certain tasks) still informs our Workers’ Comp laws today.
The Evolution of Workers’ Comp
The rise of the Industrial Revolution meant extreme working conditions in early factories. Hazards were plenty, and injury rates were colossal. Though hurt workers rarely received compensation, they could turn to the courts for help.
However, the legal framework for compensating injuries was exceptionally restrictive – so restrictive that the following principles became known as the “unholy trinity of defenses.” If the employer could prove these to be true about the injury, the worker couldn’t claim a farthing:
- Contributory negligence. The employer wouldn’t be held liable if the worker was responsible for his own injury, regardless of how hazardous the machinery or work environment was. So if a worker slipped and lost a hand, they wouldn’t receive compensation.
- The “fellow servant” rule. If a fellow employee caused the worker’s injuries, employers were not held liable.
- Assumption of risk. This doctrine held that employees accepted the hazards of their work when they signed their contracts. To make matters worse, many industries had employees sign contracts that relinquished their right to sue for injuries. That’s why these unfair documents earned the grim moniker “death contracts.”
Luckily, the rise of Realpolitik in Prussia would usher in the end of these dark times for workers. Chancellor Otto von Bismarck implemented a system of social insurance, known as the Employers’ Liability Law of 1871. This provided some social protection for workers in certain factories, quarries, railroads, and mines.
In 1884, Bismarck championed Workers’ Accident Insurance, which laid the groundwork for today’s Workers’ Compensation Insurance.
Workers’ Comp Trickles to America
Unfortunately, the trend toward compensating workers for their occupational injuries was a little slower to hit the United States. It took Upton Sinclair’s shocking 1906 novel The Jungle, which details the horrors workers experienced in Chicago slaughterhouses, to stir the public’s outrage.
Eventually, Congress passed the Employers’ Liability Acts of 1906 and 1908, which made contributory negligence doctrines less restrictive. Between 1898 and 1909, New York, Maryland, Massachusetts, and Montana attempted and failed to pass workers’ compensation acts.
Wisconsin passed the first comprehensive workers’ compensation law in 1911, while Mississippi was the last state to jump onboard in 1948. These early laws required employers to provide medical and wage replacement benefits for injured workers. If the injured employee accepted these benefits, they forfeit their right to sue the employer.
Today, this basic structure for Workers’ Comp is essentially the same. Most states require employers to carry Workers’ Compensation Insurance for their full- or part-time employees. You can learn more about your states laws in our guide Workers' Compensation Insurance Laws by State.
Why Workers’ Compensation Matters
Workers’ Compensation Insurance is a necessary safeguard for present-day workforces. The insurance and the laws that require employers to carry the coverage are designed to protect employees from risking their health, safety, and assets for their jobs.
Workman’s Comp can provide coverage when…
- Your employees are injured at work and need medical attention.
- Work-injured employees cannot work and need their wages.
- An occupational injury kills or disables an employee.
- Your employee waives their benefits and decides to sue your business for negligence.
As you can see, the insurance protects your employees from the high cost of occupational injuries, but it benefits you, too. Most of these policies include Employer’s Liability Insurance, which covers the cost of your legal defense, settlements, or judgments when an employee sues you for their injury.
Plus, you can also cover yourself with your Workers’ Comp policy if you are worried about your own risk of suffering a work injury or illness, though you may save money by excluding yourself. To learn more about Workers' Comp costs, read our Workers' Comp Insurance Quote Analysis.
This post is part of an ongoing series on Workers’ Compensation Insurance and the high cost of occupational injuries. Stay tuned for more on how to handle work injury claims, adhere to state Workers’ Comp laws, and find affordable coverage!