Workers compensation has been around for a long time, beginning in the early 20th century when the rapid growth of industrial jobs took place. This was when workplace injuries became much more common, as many workers were required to perform job duties amid hazardous conditions or work with heavy machinery, and subsequently expose themselves to danger on a regular basis.

Prior to the creation of workers compensation, an injured employee’s only recourse was to sue the person he or she worked for in order to recover money for medical expenses and lost wages. In most cases, workers lost their lawsuits, which contributed to mistrust among workers and employers, and ultimately damaged the employer-employee relationship at many companies. Employers often used the following three defenses when faced with a lawsuit by a former worker:

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Understanding Workers Compensation Laws

Assumption of Risk

The Fellow Worker Rule

Contributory Negligence

Workers Compensation Benefits

Assumption of Risk

This defense maintained that the injury occurred due to an accepted and normal hazard associated with the worker’s position at the company.

The Fellow Worker Rule

This defense was based on the assumption that the injury was caused by the negligence of another employee.

Contributory Negligence

This defense maintained that the accident was partially due to the negligence of the worker.

In most cases, employees had to wait significant length of time for any potential financial compensation, and if they could not work due to the injury, lawyers fees and lost wages were devastating factors. In instances where employees did win substantial judgments against employers during a court case, the amounts rarely corresponded to a defined system or scale.

Europe paved the way for United States workers compensation laws. Germany passed accident and sickness laws in 1884 and in 1897, England established workers compensation. The first law of this type in the United States was passed in 1908 and it covered federal workers. Using models from England and Germany, most states in America adopted their own workers compensation plans between 1911 and 1920.

Workers Compensation Benefits

Workers compensation provides employees who are injured on the job–or in the case of death, their families–with a predetermined compensation amount. This type of benefit program removes the costly and burdensome process of litigation from the worker’s shoulders. Its technical term is “exclusive remedy” or “compensation bargaining,” which is the basis of workers compensation programs. It gives injured workers definite benefits in case of disability or injury and in return, the injured worker gives up his or her right to sue the company or individual for whom he or she was working when the injury occurred. One part of the bargain is that employers cannot lower the benefit amount, even if the accident or injury was due in part to the worker’s negligence.

The majority of workers compensation programs include payment for loss of future earnings and vocational rehabilitation, which is a type of therapy that also trains the person for a new occupation or job. It also pays lost earnings and medical expenses. When an employee loses his or her life on the job, costs are typically paid and survivors may be awarded benefits that include wage replacement. In cases of injury, the employee receives medical expense compensation almost immediately, and then cash benefits after three to seven days for the work they lost due to the injury.