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HR 101: Let’s discuss workers’ compensation

The US workers’ compensation system has roots in 19th century German sickness and accident laws.
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Francis Scialabba

· 3 min read

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From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.

Welcome to HR 101. Class is now in session. Today’s discussion will focus on the history of workers’ compensation.

Picture this: You walk into the breakroom and slip on the banana peel that Karen from accounting thought she had successfully tossed into the garbage. Now, your back is out—thanks a lot, Karen—and you’re going to have to take time off to recover.

Good thing your company is legally required to reimburse you for medical expenses and lost pay as a result of your on-the-job injury. And it’s all thanks to workers’ compensation: a form of insurance through which employers must provide financially for employees who are injured at work.

The history. US workers’ compensation laws have roots in Europe, specifically Germany, where sickness and accident laws passed in the 1870s and 1880s included provisions that offered some social protections to workers in factories, railways, and other dangerous work environments, according to Pie Insurance. They ensured payments to workers injured on the job, as well as stipends for those with non-work related injuries.

In 1911, Wisconsin became the first state to pass a workers’s compensation law, according to insurance provider AmTrust Financial. Previously, Wisconsin employees had to sue their employer to receive compensation for work-related injuries, according to the Wisconsin Department of Workforce Development (DWD). Until around 1905, employers almost always came out of these lawsuits on top.

“After 1905, judges and juries in Wisconsin began returning verdicts more favorable to injured workers,” the Wisconsin DWD noted. “This growing trend in tort litigation began to make employers nervous, because they believed that as time went on, more and more injured workers would get more and more favorable verdicts. Thus for this reason, among others, many employers became increasingly open to the idea of eliminating tort litigation by adopting some sort of worker's compensation program.”

By 1948, all 50 states had adopted their own workers’s compensation laws.

Fast-forward. About 4.9 million workers’ compensation claims are filed in the US each year, according to Simply Insurance, with the average claim costing employers approximately $41,000.

Workers’’ compensation laws haven’t changed much since their nationwide adoption. But the reasons for filing claims may have: In 2012, an Arby’s employee working in Georgia filed for workers’ compensation after accidentally drinking lye from a cup employees typically used for drinking And in 2014, a truck driver trainee filed a claim after accidentally stepping in a Crockpot of hot water and burning his feet while climbing out of his bunk in the vehicle’s sleeping area.

Can you imagine the paperwork?

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Quick-to-read HR news & insights

From recruiting and retention to company culture and the latest in HR tech, HR Brew delivers up-to-date industry news and tips to help HR pros stay nimble in today’s fast-changing business environment.