How Did Workers’ Compensation Insurance Come About?

Believe it or not, paying workers who are injured dates back to 2,050 BC, says the U.S. government. While these first regulations paid compensation for a loss of a digit or limb, disability wages were not around until decades later. As with any new system, the beginning attempts of creating a fair compensation program showed the need for major overhauls. As times changed, so did regulations and covered disabilities.

Early Disability Claims Were Rarely Paid

Before workers compensation began, people would have to resort to filing a civil claim to get paid for an injury at work. Tort legislation, as it was called, helped some of the disabled workers get a favorable outcome including monetary pay, but this was a rare occurrence. Often, workers could not hire a lawyer because of the outrageous fees of filing a civil suit. Many employers were able to say that the injury was due to another employee or the victim. Some business owners went so far as to say that employees understood the risks when accepting employment. Early legislation sided with the employer in most cases.

Otto Von Bismarck Introduces Legislation

The Prussian Chancellor won over the people by offering to incorporate workers compensation into his service term while fighting the other side of the government. He began with the Employers’ Liability Law of 1871. Then, the Workers’ Accident Insurance in 1884 improved conditions and became the initial cornerstone of the modern Worker’s Compensation Insurance entity that we all know today. Until this point, the typical blue-collar worker had no way to pay for bills and necessities when injured while working.

Why Bismarck Was Successful

None of the previous worker injury regulations were effective because they did not provide the safety net that Bismarck’s legislation did for employers. In his system, the employee would receive appropriate medical care, and a portion of wages providing the employee did not file a lawsuit against the company. The system remains primarily the same today. While a worker’s comp lawyer may be involved in the process, there are no civil suits filed against the company when an employee gets paid. These attorneys seek to get compensation for injuries that are questionable or when an employer disputes that the injury happened at work.

Following Bismarck’s Lead

Other countries like the United Kingdom would follow Prussia with the 1880 Employer’s Liability Act. This legislation would fizzle out and be replaced with the Workers’ Compensation Act. It was proposed in Parliament in 1893 ahead of the world model Bismarck would enact in 1884, but it would stall in deliberation until 1897 before being adopted. In 1908, U.S. President Taft would offer legislation for employees hurt in interstate activities, but manufacturers were slow to accept laws regulated by state bodies instead of the federal government. In 1911, Wisconsin passed the first state worker’s compensation package with nine more states to follow the next year. It took until 1948 for all the U.S. states to have a worker’s compensation system when Mississippi finally passed legislation protecting injured workers.

Today, the worker’s compensation system is still seeing changes in legislation, disability dates, and approved injuries. Each state has a separate set of rules that govern the population, but some things are similar. Every system has covered injuries, how and what amount employers must compensate, and plans in case of death or permanent damage. To read more about the current worker’s compensation system, you can access this helpful post from the Insurance Information Institute.