50 Years Of Workers’ Compensation Reforms In The US 

It may be surprising to hear, but workplace injuries and illnesses are daily occurrences and cost about 99million lost workdays per year. There were 2.7 million nonfatal injuries and illnesses reported by industry employers in 2020 within the US alone. Workplace injuries not only make employees suffer but can also lead to employers facing lawsuits. This is where workers’ compensation steps in. 

What Is Workers’ Compensation? 

Worker’s compensation is a type of employers’ insurance that provides coverage for work-related injuries and illnesses. It pays affected employees’ medical bills as well as covers their lost wages. Workers’ compensation is based on a no-fault system, meaning employees get financial benefits forcovered injuries and illnesses even if they occurred due to their own mistakes. 

A Brief History Of Workers Compensation In The US  

The workers’ compensation system came to the US much later than in Europe. Hence, it’s only fair that it was developed on the same principles. While the efforts to draft a workers’ compensation system began in the early 1900s, it wasn’t until 1911 that the US adopted its first comprehensive workers’ compensation law. It was initially only enacted in Wisconsin but adopted by nine more states in the same year. Other states followed suit, and within a decade (by 1921), all but six states had some form of workers’ compensation provisions. By 1948, all US states had workers’ compensation legislation 

Modern Reforms In The US Workers’ Compensation System 

Even though the workers’ comp system was implemented throughout the country by the mid-20th century, it wasn’t one coherent set of policies and laws. There were several substantial weaknesses and no formal guidelines for states to follow.

Seeing this, the then US President Richard Nixon appointed a commission called the National Commission on State Workmen’s Compensation Laws to determine if workers’ comp should be taken under federal administration. The commission opposed it but proposed several recommendations to improve the workers’ compensation system that instigated a series of reforms across the country. 

50 Years Of Workers’ Compensation Reforms 

2022 marks the 50th anniversary of workers’ compensation reforms initiated by Richard Nixon’s government. To commemorate this, the Workers Compensation Research Institute (WCRI) reviewed and analyzed the system and its evolution over the years in this year’s meeting held in Boston.

Addressing the conference, the renowned workers’ comp attorney Alan S. Pierce said that while the system, on the whole, has improved over the past 50 years. The issue of adequacy vs. affordability that the 1972 commission report highlighted still prevails.

Pierce explained adequacy as the notion that workers’ comp should offer enough benefits to cover the needs of injured employees, but not to the point that the insurance becomes burdensome for the employers. There has been an ongoing battle between competing forces for 50 years, but now the balance is tilting more towards affordability.

Pierce highlighted that the underlying reason behind it is the phenomenon called ‘the race to the bottom.’ This refers to the lowering of workers’ comp benefits in many states. “Legislators tend to lower workers’ comp benefits in their state if they found that a neighboring state is offering lesser benefits,” Pierce said.

This is an interesting proposition because the workers’ compensation system has been focused on improving benefits for the employees and ensuring the provision of quality health care to injured workers, for the past several years. However, according to workers’ compensation expert Alan S. Pierce, employers are still the stronger force in the industry.

Things may be beginning to change, but the system still favors the employers more than injured employees, he said. Pierce’s views, however, were strongly contested by other participants of the conference. They believed that the industry is heading in the right direction and there has been an increasing focus on employees’ benefits, welfare, and well-being.