The History of Workers’ Compensation: From the Scriptures to the Present
Workers’ Compensation Section Review
Alan S. Pierce
Workers’ compensation is a very important field of the law, if not the most important.
It touches more lives than any other field of the law.
It involves the payments of huge sums of money. The welfare of human beings, the success of business, and the pocketbooks of consumers are affected daily by it.
Judge E.R. Mills: Singletary v. Mangham Construction 418 So. 2d. 1138
“The cost of the product should bear the blood of the workman.”
— W. Page Keeton
Workers’ compensation should be viewed and treated differently than other forms of insurance or other types of benefits, such as short- or long-term disability, Social Security disability, unemployment insurance, health insurance and the like.
Workers’ compensation, instead, has a deep moral and ethical element to it on a par with days of rest, the prompt payment of wages, and the obligation of employers to pass along to the consumer the costs of production, goods and services that inevitably involve the likelihood of injuries or death in the creation of said products or services.
Scriptures
As early as Genesis 2:2-3, there is the recognition of a need for a day of respite from work — a six-day work week: “On the sixth day, the Lord made the Heaven and the Earth, and all living things upon the Earth and rested on the seventh day of that first week.” It took several thousand years and the influence of trade unions to reduce this to the traditional five-day work week of today.
Most religions have similar precepts regarding working conditions as well as the obligation to provide economic redress and medical care in the event of injuries in the workplace.
- Hinduism: “… if a worker is harmed in service, he must be cared for.” (Manu smriti 8:29I)
- Confucianism: “Employers should care for injured workers as part of their duty to maintain social harmony.” (ren, or humanness)
- Islam: “If anyone is killed by mistake, compensation is due …” (Qur’an 4:92)
- Judaism: “If a man hits a servant and causes injury …. he shall let the servant go free as compensation.” (Exodus 21:18-27)
- Christianity: “Those who become rich by abusing their workers have sinned against God.” (James 5:1-6)
The recent election of Pope Leo XIV revealed he chose to be named for his predecessor, Pope Leo XIII, who, on May 15, 1891, issued an Encyclical Rerum Novarum, supporting workers’ rights, including ethical treatment, safe working conditions, and other proposals that were often cited in the advancement of nascent workers ‘compensation programs.
Dr. Gregory Guyton, in an article for The Iowa Orthopedic Journal titled “A Brief History of Workers’ Compensation, 1999,” noted that the discovery of the Nippur Tablet number 319 from ancient Somaria outlined the law of Ur-Nammu, King of the City — State of Ur. This was written in approximately 2050 B.C., and the law of Ur provided monetary compensation for specific injuries to workers’ body parts, including fractures, amputations or other permanent impairments.
The Code of Hammurabi from 1750 B.C. provided a similar set of rewards for specific injuries. For example, under ancient Arab law, loss of a joint of the thumb was worth one-half the value of a finger. The value of an ear was based on its surface area. Virtually all early compensation schemes consisted of schedules utilizing the concept of a loss of function of a body part or impairment as opposed to a disability, which is the loss of the ability to perform specific tasks or jobs, leading to an earnings loss.
Such schedules continued to be utilized over the ensuing centuries and are still in use today as impairment-based monetary schedules for losses of function.
Medieval Times
As we entered the Middle Ages, there was the rise of trade unions or labor guilds, and feudalism gradually became the primary structure of government, as well as economy. During those years, an often-arbitrary benevolence of the futile lord determined what, if anything, an injured worker would receive. This was part of the concept of noblesse oblige, trusting that the futile lord would take care of its injured serf.
Along with the development of English common law in the Middle Ages and the Renaissance, legal frameworks for compensating work injuries emerged.
In the late 17th century, privateers or pirates, such as Captain Henry Morgan (of rum fame) or Black Bart (Bartholomew Roberts), created their own systems of compensation in the contracts with their crew. They had written agreements that everyone on the pirate ship swore on a bible to uphold. Said code spelled out how shares of treasure would be distributed, along with other items, such as requiring all pirates to keep their pistols and swords at the ready. However, one of the most interesting clauses provided that in the event of any injuries, “we compense and reward each one ought to have that is either wounded or maimed in his body, suffering the loss of any limb, by that voyage.”
Depending on the body part injured or severed, the injured party would receive a scheduled amount of treasure, such as pieces of eight, or other forms of recompense. They also were frequently guaranteed a lifetime employment on the ship if they survived their injuries.
They also created their first modern modified work program allowing injured crew members to remain on board and be offered less strenuous duty.
The Industrial Revolution And Workers’ Compensation
Otto von Bismarck was the chancellor of the German Empire from 1871 to 1890. During that period of time, he enacted a broad workers’ compensation system in Germany/Prussia.
At that time, there was a growing rise of trade unionism, socialism, and flirtations with communism as economic models, and there were growing numbers of workers in factories and cities who were becoming seriously injured or killed, requiring both a loss of weekly income and payment of medical expenses. At that time in Europe as well as in the United States, the only system of compensation would be through the civil courts by bringing a tort action.
Litigation often resulted in what is known as the “unholy trinity” of defenses. The defenses that would bar almost every tort claim of an injured worker included contributory negligence, i.e., workers could be denied payment if they contributed even remotely to causing the accident; fellow servant offense, which would reduce the employer’s liability if another worker was at fault for the accident in question; or assumption of the risk — a defense where, if the employer could show that the injured worker assumed the risk inherent in the work, then the employer would not be found liable.
In order to quell social unrest and for other reasons to consolidate power, Bismarck’s political strategy included introducing social legislation. In 1871, he created the Employers’ Liability Act, and later in 1894, the Workers’ Accident Insurance Institute for the Kingdom of Bohemia located in Prague.
What was notable about Bismarck’s Law was that it also included a release from civil liability of the employer, and thus the doctrine of exclusive remedy was born.
Around the same time, Parliament in England passed the Employers’ Liability Act.
The Prussian system served as a model for the social insurance programs over a variety of countries, including the United States. It became apparent that the complex nature of modern workers’ compensation laws was present right from the start. One of the officials of the German system was noted writer Franz Kafka, who started with the Workers’ Accident Institute as a minor clerk and rose in seniority during his brief life to become a director of its safety program as well as a lawyer administering workers’ compensation claims. Kafka, as then-head of workplace safety, is credited by some as the first to require the use of hard hats on dangerous worksites. Many Kafka scholars suggest that his writings, including comments about the absurdities of bureaucracy, owe their origins to his role in processing claims for the institute.
Britain’s Parliament in 1893 passed the Workers’ Compensation Act, which was largely equivalent to the German/Prussian model establishing a “no-fault” doctrine of compensation.
In England, unlike in Germany, so-called “friendly societies” organized various forms of private insurance for workers, a model in use here in the Unites States. The act was vigorously opposed by business interests in Parliament, and the House of Lords delayed its passage by attempts to add language that would effectively neuter the law. The act was finally passed in 1897, after a four-year struggle.
Workers’ Compensation In The United States And Massachusetts
As the Industrial Revolution continued to grow and spread to the United States, the first issue that seemed to require legislation involved worker safety.
According to Dr. Abe Bortz, the first historian of the Social Security Administration, after the Civil War, numerous states attempted to establish, by statute, minimum safety standards for industrial workers. In 1877, Massachusetts passed legislation requiring employers to set up protective devices to safeguard workers around elevators, machinery and hoists. By 1893, 14 states and territories had adopted some form of safety legislation, and by 1917, most of the others complied.
The U.S. Bureau of Labor in 1893 and 1899 published studies concerning the effectiveness of workers’ compensation legislation in Europe.
Theodore Roosevelt, then governor of New York, introduced a workers’ compensation bill in New York in 1898 and another in Illinois in 1905. The bills were defeated because of opposition from both trade unions, who were fighting for more stringent employer liability, and employers.
In 1908, a Federal Compensation Act, covering civil service workers, provided a stimulus for movement in the various states.
Around the same time, organized labor, specifically the American Federation of Labor, began to push for workers’ compensation legislation.
Many of the earlier laws were declared unconstitutional by state courts. The first workers’ compensation law to be upheld was enacted in Wisconsin in 1911.
New York had enacted a workers’ compensation law that was challenged by business interests and resulted in a New York Court of Appeals (the state’s highest court) decision on March 24, 1911, declaring the new law unconstitutional. (Ives v. South Buffalo Railway Co. 94 N.E.2d 1911.) By coincidence, the very next day, on March 25, 1911, New York City was the site of the Triangle Shirtwaist fire, which resulted in the deaths of 146 garment workers, mostly immigrant women and children, and left many others injured.
The plight of workers killed, maimed or otherwise injured became the source of articles and books. In The Jungle, a novel detailing the horrors experienced by an immigrant working in the Chicago slaughterhouses, socialist author Upton Sinclair wrote the following passage:
“… [The fertilizer workers’] particular trouble was that they fell into the vats; and when they were fished out, there was never enough of them to be worth exhibiting, — sometimes they would be overlooked for days til but the bones of them had gone out to the world as Durham’s Pure Leaf Lard!”
Theodore Roosevelt, in the Jan. 25, 1913, edition of Colliers Magazine, wrote an article titled “Sara Knisley’s Arm,” detailing the lack of efforts available to an unfortunate woman who lost her arm in an industrial accident and received no recourse through the civil justice system.
Following Wisconsin’s lead in 1911, 10 more states, including Massachusetts, enacted workers’ compensation laws. Four more states adopted laws in 1912, eight more in 1913, and by 1948, all states had at least some form of workers’ compensation in effect, including the territories of Alaska and Hawaii.
Here in Massachusetts, legislation was passed in 1911, and the first workers’ compensation policy was issued on July 1, 1912, to Everett Mills, a large employer in the city of Lawrence. The policy was written by an organization created by the legislature — the Massachusetts Employees Insurance Association (later to become Liberty Mutual Insurance Company). A curious note as to the first policyholder, Everett Mills, was the fact that Everett Mills and the general working conditions in Lawrence served as the epicenter of the Bread and Roses Strike, which began in Lawrence and lasted from Jan. 11 to March 14, 1912, here in Massachusetts and across the country. It is a curious footnote and history that one of the allegedly worst employers in Massachusetts was also the first, nearly three months after the settlement of the strike, to take a risk and participate in the voluntary new workers’ compensation law.
The constitutionality of the basic underpinnings of workers’ compensation still had not been formally settled. The U.S. Supreme Court, in the case of New York Central Railway v. White (243 U.S. 188, 192), a 1917 decision, resolved the employer’s due process issues by stating that mandatory workers’ compensation did not impede due process so long as the cost of such programs was reasonable and the benefits were not unreasonable.
“Viewing the entire matter, it cannot be pronounced arbitrary and unreasonable for the state to impose upon the employer the absolute duty of making a moderate and definite compensation in money to every disabled employee, or, in the case of his death, to those who are entitled to look to him for support, in lieu of the common law liability confined to cases of negligence.”
The court left it to the individual states to determine the relative degrees of “reasonableness” in both costs and benefits.
At first, workers’ compensation programs were voluntary, but slowly they began to be mandatory, although many occupations were excluded from workers’ compensation coverage, and in many jurisdictions, there are still pockets of uninsured areas of work. Some of these areas include farm workers, domestic servants, and sometimes commission-based workers, among others.
Professor Emily Spieler, in her article “(Re)assessing the Grand Bargain,” published by the Rutgers University Law Review (Vol. 69:891), wrote that the acceptance of workers’ compensation laid the basis for future social insurance programs, and John Fabian Witt called workers’ compensation the “entering wedge in the establishment of a whole panoply of social insurance schemes.”
According to Spieler, fault became irrelevant with the assumption that efficient delivery of benefits to a large group of victims was superior to a highly individualized system that was inevitably more cumbersome, inefficient and costly, and would fail to deliver anything to many.
For a time, the inclusivity of workers’ compensation brought to a halt the development of tort law involving employer liability for workers’ injuries.
Over the ensuing decades into the 1920s, the Depression area of the 1930s and World War II in the 1940s, workers’ compensation slowly developed with an expansion of coverages, including some occupational diseases. Many other doctrines and defenses also emerged, such as the going and coming rule, the personal comfort doctrine and the intoxication defense. Benefits, however, seemed to lag behind the growth in our economy, especially in post-war America. By the early to mid-1960s, there was growing concern with the inadequacy of workers’ benefits along with the inefficient delivery of said benefits in various state jurisdictions.
President Richard Nixon, at the urging of union leaders as well as the progressive wing of the Republican Party, most notably Sen. Jacob Javits of New York, introduced and Congress passed the Occupational Safety and Health Act of 1970. A major component of said legislation, and pushed forward by Javits, was the creation of a blue-ribbon panel to study workers’ compensation in the United States titled the National Commission on State Workmen’s Compensation Laws. Said commission, chaired by Professor John F. Burton Jr., consisted of several prominent labor and economics professionals, all Republican, from around the country. Massachusetts was represented by Melvin Bradshaw, then the treasurer of Liberty Mutual Insurance Company (later to become its president), and attorney and professor Samuel B. Horovitz, the author of the first Treatise on Workers’ Compensation.
The National Commission delivered its report in July of 1972 to Congress and President Nixon, indicating that the workers’ compensation system was, in general, not meeting the needs of its participant members. The commission came up with over 80 recommendations, 19 of which were deemed “essential.” With the threat of a federal takeover of state-based workers’ compensation systems, states were urged at the peril of such a federal takeover to amend their statutes to conform with as many of the 19 essential recommendations as possible. Massachusetts followed suit. It took two to three years to raise the weekly maximum benefit, and it was not until 1985 that, under the governorship of Michael Dukakis, the state legislature enacted a major reform of the workers’ compensation system that went into effect in 1986 and dramatically changed the landscape of workers’ compensation in Massachusetts. The Industrial Accident Board was modernized into the Department of Industrial Accidents, the number of commissioners was increased, and they received the title of administrative judges.
The Reviewing Board consisted of administrative law judges handling an appellate review of the decisions of the administrative judges. Benefits were enhanced in terms of both weekly amounts and duration, and cost-of-living adjustments were introduced along with a variety of other enhancements of benefits and procedural changes.
Unfortunately, the costs of such changes resulted in a dramatic increase in premiums, threats by insurers to leave Massachusetts because they viewed it as an unfavorable state in which to do business, and a huge rise in the involuntary market — the so-called “assigned risk pool.”
At the same time, the so-called “Massachusetts miracle” began to decline. There was a huge spike in medical costs generally, and newly elected Republican Gov. William Weld oversaw the enactment of another major reformation of the workers’ compensation statute, which essentially rolled back many of the benefits that came from the 1986 changes. Soon thereafter, premiums leveled off and were reduced. Over the ensuing 30 years since the 1992 reforms, there has been little change to the benefit levels, and premiums remain relatively stable. Insurers have come back into Massachusetts to write workers’ compensation insurance.
Costs continue to rise on the medical end, and indemnity or lost-wage benefit costs have risen generally because of the yearly increase in the state average weekly wage upon which several other benefit sources are based. Nevertheless, insofar as Massachusetts is concerned, there is no current crisis, nor has there been for quite some time. Employers seem satisfied with their costs, and despite areas where things could be significantly improved, this system appears to be stable.
Conclusion
Workers’ compensation today, while based upon very early models involving the swift replacement of wages and provisions for medical care, most often without a determination of fault, has evolved into a much more complex and intricate system requiring a wide variety of professionals and others given the amounts of monies that are at stake. Additionally, developing an efficient process of delivering those benefits and/or resolving disputes involving the same has its own challenges. The changing nature of work and how such work is performed is creating a growing area of legislative and regulatory changes as well as bodies of case law. From the ancient tablets setting out a simple renumeration formula, to the pirates’ contracts, to the European and American models of workers’ compensation programs, we have today what I call the Industrial Accident Industrial Complex. Simply put, workers’ compensation has also become big business.
Analyzing these complexities, one word best describes the challenge we all have in making this system work; that word is balance.
When the system is out of balance, either the worker or their employer suffers. The remedy is often an overcorrection of the original problem.
As legislators, administrators, academics, actuaries, rate-setters and lawyers struggle in finding that balance of a reasonable benefit at a reasonable cost, we all should remember workers’ compensation’s moral and ethical roots; it is, as Judge E.R. Mills wrote, “a very important field of the law, if not the most important.”
Acknowledgments
“The Amazing History of Workers’ Compensation,” Richard Tirrell, Boston Bar Journal, c.1992.
“History of Workers’ Compensation,” AmTrust Financial.
“(Re) Assessing the Grand Bargain,” Emily Spieler, Rutgers U.L. Rev., Vol 69 (2017).
“Workmen’s Compensation,” Abe Bortz, PhD. VCU Libraries Social Welfare History Project.
“A Brief History of Workers’ Compensation,” Gregory P. Guyton, The Iowa Orthopedic Journal, 1999, 19:106-110.
Report of the National Commission on State Workmen’s Compensation Laws, John F. Burton Jr. 1972.
Empire of Blue Water, Stephan P. Talty, Crown Publishing 1999.
Alan S. Pierce of the Salem law firm Pierce, Pierce & Napolitano has been practicing workers’ compensation law for over 50 years. He is past president of the Massachusetts Academy of Trial Attorneys (MATA), the Workers’ Law and Advocacy Group (WILG) and the College of Workers’ Compensation Lawyers. He is an active member of the Massachusetts Bar Association’s Workers’ Compensation Section and a former member of the Workers’ Compensation Advisory Council. His podcast “Workers’ Comp Matters” can be heard on the Legal Talk Network.