Construction worker with head injury alongside female doctor. Construction worker with head injury alongside female doctor.

Navigating the Complex Landscape of Workers’ Compensation Laws in The US

Offering financial assistance coupled with medical aid to employees who sustain injuries or fall ill while performing their job duties is the entire crux of the worker’s compensation laws. With the aforementioned, to bestow monetary support to the families of the workers who, unfortunately, turn martyrs in their field of work is another branch that is taken care of by the aforesaid compensation laws. 

Diving further, the aforesaid benefits are granted to individuals irrespective of suggesting who is at fault, hence it serves as an exclusive recourse for addressing workplace injuries, illnesses, as well as fatalities. It has been seen that all workers, or employers panning across the United States, fall within the ambit of the workers’ compensation. This means that each state in the country, standing exclusive of the State of Texas, has curated a compulsory workers’ compensation framework. 

Statistically speaking, in 2017, more than 140 million workers, who accounted for more than $7.8 trillion in wages, were taken under the umbrella of either a state or federal workers’ compensation system.

Elaborating on the concept of compensation further, when an eligible employee comes in contact with an injury, illness, or death as a result of their job-related activities, they are entitled to receive comprehensive benefits that stand inclusive of complete medical coverage for the injury or illness, financial compensation to partially replace lost wages due to their inability to work, as well as an aid for the rest of the family members if an unfortunate event occurs that refers to a worker’s death. 

The fact that employers are obligated to bestow the worker’s compensation benefits to their employees, which is particularly done by purchasing insurance policies to cover the associated costs, serves as a highlight. 

Running parallelly on the same lines of thought is the fact that the federal government’s involvement in workers’ compensation stands typically limited because the majority of workers are taken under the umbrella of state laws. 

On the same lines, it deems it essential to mention that though every state has its own workers’ compensation modus operandi, participation under the same has been mandated in nearly all states. It is because of the idea that there is no federal requirement for states to establish workers’ compensation programs, no federal criteria dictating how state programs should operate, as well as no federal supervision of state-level systems.

1. The History of Workers’ Compensation in the United States

1.1. The Period of Litigation

Prior to bringing into play the implementation of workers’ compensation laws, it was seen in the early 20th century that the only way of resolving any dispute arising, which revolved around the liability for work-related injuries, illnesses, and fatalities, was through the civil court system. 

The aforementioned emphasized the idea that the courts were bestowed with authority to push the employers to grant the required coverage to the injured employees or the families of employees who lost their lives while serving their job duties. However, it was also said that the aforesaid can be done only if it can be proven that the employer acted negligently.

1.2. To Establish Negligence

Speaking of the time, when common-law negligence was on the rise, the legal responsibility rested on the employee, who was also known as the plaintiff, to put forth factually that the employer had been negligent in any capacity. 

The term negligence in this regard, as put forth above, meant proving that the employer had failed to exercise “due care” in taking preventive measures pertaining to the injury, illness, or death caused, hence the aforementioned negligence had directly led to the harm that was suffered by the worker. 

On the same lines of thought, from hiring capable and adequate workers, implementing as well as enforcing safety regulations in the workplace, to ensuring a safe working environment and equipment, and bestowing upon the employees with warnings regarding potential hazards, the employers are granted with numerous ways and methods in order to establish their commitment to due care. Coupled with the aforesaid ideas, the fact of strictly outlining the instructions on how to work under dangerous conditions has also been enlightened upon.

Not only the aforementioned, but the idea that it was generally expected for an employer to only demonstrate due care to prevent an accident occurring in the workplace if the expenses associated with such precautions stood less, in comparison with the anticipated costs of the said mishap taking place was an aspect of importance. 

The calculation of expected costs with regard to the accident took into account the concept of multiplying the real losses suffered by the victim of the mishap incident with the likelihood or probability of the accident happening. 

Such an aforesaid approach, which stands mathematical in nature, has often been referred to as the “Hand Formula,” which was enlightened upon Judge Learned Hand’s ruling in the case of United States v. Carroll Towing Co.

Not only did it establish that employers were not inherently obligated to entirely avert accidents, but it also pinpointed the fact that their duty extended only to the point where the expenses of prevention did not surpass the anticipated expenses, which would generally be coupled with the accident.

Injured worker at the work site
From UnlimPhotos

1.3. The Employer Defences

It has been seen very evidently that prior to the initiation of the laws pertaining to workers’ compensation, employees who wanted to seek payment as compensation for workplace injuries faced several challenges. Not only the aforesaid, but the fact that it was required to prove employer negligence, they had to deal with three aspects, which were the defenses that employers were authorized to use under common law that is stated as below:

  • The Assumption of Risk: This defense puts across the idea that the said worker in question has been aware of the job’s inherent risks, which stands inclusive of those related to hidden defects in the equipment as well as the employer’s business practices, followed by willingly consenting to these risks by taking the job. Hence, this defense is utilized by employers.
  • The Concept of Fellow-Servant: The idea that the accident or injury resulted from the actions of a fellow employee rather than the employer’s negligence or actions is the entire essence of the said defense used by the organizations.
  • The Idea of Contributory Negligence: Asserting the fact that the injured employee’s actions or lack of due care had contributed to the accident or injury is what the defense of contributory negligence is all about.

Emphasizing further on the said concept, it has been put forth under the workers’ compensation system, that the employer is supposed to be held responsible for the costs that are incurred by the worker for the injury, illness, or death, that they have experienced, regardless of whether the worker consented to the idea of having known the job risks or if the accident was caused by a co-worker, another third party, or the worker themselves. 

Thus, it can be said that such a shift in responsibility not only eliminates the need for employees to prove negligence but also aids in the removal of these common-law defenses.

 2. The Workers’ Compensation Legislation

Coming to the realization that a workers’ compensation system would be more advantageous for all parties who are involved than if placed in comparison with the traditional tort system is an idea all employers, workers, and insurers were enlightened upon. 

Not only did such an aforesaid concept bring into play the essence of the “grand bargain” of workers’ compensation, but also, unlike voluntary contracts between employers and workers, such aforementioned bargain mandated the aspect of enforcing a legislative action.

What makes the compensation laws unique is the fact that they lie in comparison with the historical approach that prevailed prior to the initiation of the said legislation. Before the workers’ compensation made its way into the judiciary of the United States, it was seen that certain employers utilized ex-post contracts with workers. These agreements revolved around having workers willingly accept benefits from a relief fund jointly funded by the employer and the workers

As a payback, not only did they waive off any future claims against the employer for injuries that the workers sustained on the job, but the fact that the said decision, which circled around entering into such aforementioned contracts that were curated by the worker after an accident had occurred was typically a point of highlight.

Diving further into the concept of the ex-post contract, though the courts did assent and dissect the legality of the said contracts, they ultimately stated that such a document serves to be an inadequate substitute for the traditional tort system. 

The aforementioned was brought into play as a judgment because the workers still held onto the option to refuse and deny to accept the relief fund payments as well as maintain their rights to pursue civil lawsuits against their employers, which acted as a method of preserving the inherent uncertainty of the tort system.

Not only the aforementioned, but the fact that employers also offered ex-ante contracts, which revolved around the workers having to agree in advance to forgo their right to sue their employers in exchange for work-injury benefits before any accident, injury, illness, or death occurred is another aspect to pinpoint. 

However, deemed unenforceable under common law, these ex-ante contracts were generally seen as violating public policy. It was only by 1909 that 28 states had enacted laws explicitly prohibiting ex-ante contracts, followed by the Wyoming Constitution as well restricting the use of such contracts.

On the same lines of thought, it deems it essential to emphasize the idea that despite the possibility for states to pass laws that stood in a position to authorize such ex-ante contracts, workers and labor unions took upon them actively to vehemently oppose such efforts followed by advocating the aspect for bring into force the entire regime of the workers’ compensation systems. 

The very fact that such aforementioned bodies of power led with the belief that the workers have greater bargaining power, speaking in particular to the aspect of negotiating benefits through the state legislature rather than relying on individual employers, served as a matter of importance.

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3. The State Workers’ Compensation Laws

Referring to the compensation laws, it deems it essential to highlight the efforts that were taken by a few states in the United States that yielded a positive outcome of making such legislation a success.

The State of Maryland, in 1902, served as a torchbearer in taking a step to enact the first state workers’ compensation law, subject to limited coverage. The aforesaid statute is not only deemed applicable to miners, steam and street railway workers but also the workers and contractors who are engaged in municipal public works projects. 

Running on the same lines of legislation enforcement, after a filing of a suit, the State of Montana also implemented a workers’ compensation law in the year 1909; however, it made it a point to be exclusively applicable to miners. 

Standing as an unfortunate decision, both of these early laws faced huge and vital legal challenges and were certainly termed to be unconstitutional by their respective state courts as an immediate effect. 

Another state that made a significant difference by bringing into play the first comprehensive state workers’ compensation laws was New York in 1910. Not only did the aforesaid legislation bring into light the elective aspect of compensation laws but also the compulsory workers’ compensation systems for employers serving within the ambit of the state. 

Speaking categorically, the functioning of the compulsory system brought before it a set of constitutional challenges, followed by its being declared unconstitutional by the New York Court of Appeals in 1911. 

Taking as an illustration, is the case of Ives v. South Buffalo Ry. Co. In the said case, the court had put forth the idea that the aforementioned law, i.e. the compulsory system, had been violative of the employer’s property rights without due process of law, which particularly arises in situations where the employer was bestowed upon the responsibility to compensate a worker for injuries that did not fall under the umbrella of the employer’s negligence.

Serving as a response to the aforesaid judgment that was presented in the Ives case, the State of New York made several changes to its state constitution, which allowed the authorization of a compulsory workers’ compensation law, followed by enacting such a compulsory law in the year 1913.

4. The Federal Workers’ Compensation Programs

Initiated in 1882, it was one of the earliest workers’ compensation laws in the United States, on the basis of which the federal government has predominantly transferred the authority pertaining to the functioning of the workers’ compensation policy to individual states.

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Standing at the federal level today, there are two comprehensive workers’ compensation programs that are coupled with two such programs, which are curated with the sole intention of offering and bestowing upon restricted benefits to workers in specific industries dealing with particular medical conditions.

4.1. Federal Employees’ Compensation Act

The Federal Employees’ Compensation Act, also known as FECA, was brought into force as a law by President Woodrow Wilson on September 7, 1916

Not only did the aforesaid legislation extend and broaden the protections of emerging workers’ compensation regimes in individual states in order to take under its umbrella nearly all federal employees, but it also continues to serve as the foundation for the workers’ compensation system for all federal civilian employees, that is known to span across the arenas of the executive, legislative, and judicial branches of the government. 

From federal jurors to state and local law enforcement officers, when they operate in a federal capacity, the aforesaid act plays a vital role in providing workers’ compensation benefits to federal civilian employees and, by extension, to specific aforementioned groups of individuals. 

Taking upon themselves the responsibility of administering The Federal Employees’ Compensation Act as a program in a nutshell, The Department of Labor, also known as DOL. However, to pinpoint the essence, the benefit costs for each beneficiary are covered by their respective host agency. 

Funded through appropriations from general revenue, with some exceptions for specific government corporations, such as the U.S. Postal Service, the administrative expenses associated with the FECA program are well taken care of. 

It deems it important to highlight the aspect that such aforesaid government corporations are required to cover their portion of the program’s administrative costs specifically.

4.2. Longshore and Harbor Workers’ Compensation Act

Established in 1927, coupled with the aim of bringing into force a federal workers’ compensation system that specifically dealt with private-sector workers who have been involved in activities such as loading, unloading, constructing, or dismantling vessels that operate on the navigable waters of the United States was The Longshore and Harbour Workers’ Compensation Act also known as LHWCA

Taking as an illustration is the case of Southern Pacific v. Jensen, where, due to the 1917 Supreme Court ruling, the concept of federal intervention in workers’ compensation for maritime workers became necessary. 

The fact that the said judgment stated the idea revolving around state-based workers’ compensation coverage for maritime workers to be unconstitutional because the United States Constitution granted the federal government authority over matters of admiralty and maritime jurisdiction was a matter of importance.

Not only the aforementioned but the idea that throughout the year, the Longshore and Harbour Workers’ Compensation Act has witnessed multiple as well as much-needed extensions to take under its umbrella certain additional groups of private-sector workers makes the said legislation a very crucial one.

Diving further into understanding the legislation, to pinpoint the aspect of coverage with regards to the Longshore and Harbour Workers’ Compensation Act, which has taken several expansions in its ambit over time, it deems essential to mention the stated below:

  • The year 1928 witnessed the fact that the coverage was broadened so as to include employees prevailing in the District of Columbia.
  • Following 1928, in the year 1941, not only was the Defence Base Act brought into force, but it was also extended so its protections took care of overseas military as well as public works contractors.
  • After 1941, taking into account the idea that the said safeguard had again been amended and expanded so as to stand inclusive of civilian employees of non-appropriated fund instrumentalities of the Armed Forces, which simply referred to workers in service clubs and post exchanges, was the change that took place in the year 1952.
  • The employees working on the Outer Continental Shelf in the exploration as well and development of natural resources, such as those on offshore oil platforms, were brought under the ambit of the Longshore and Harbour Workers’ Compensation Act’s coverage in the year 1953, post the changes made in 1952.

What makes the provisions of the Longshore and Harbour Workers’ Compensation Act unique is the fact that the employers falling within the said legislation’s scope are not only obligated to obtain workers’ compensation insurance from carriers that are approved by the Department of Labor but if required, as an alternative measure, post the Department of Labour’s approval, they are authorized to self-insure

On the same lines of thought, the employers are then responsible as well as obligated, for providing benefits that not only stand in accordance with the Longshore and Harbour Workers’ Compensation Act but also several other associated regulations.

Injured employee visiting lawyer for advice
From UnlimPhotos

5. The Elements of Workers’ Compensation

Comprising individual state programs as well as four federal programs with limited jurisdiction is a complex network of functioning, which is known as the workers’ compensation system in the United States. 

Running on the same lines of thought is the idea that deems it essential to pinpoint the fact that it is important to exercise caution when making generalizations about the aforementioned systems, as not only does each state, with regard to its workers’ compensation program operate under its own unique set of laws, regulations, and legal precedents but also the essence that despite the variations, there are certain common elements that tend to exist across under the said systems.

The Idea of Exclusive Remedy

The concept of exclusive remedy refers to the workers’ compensation system that serves as the sole recourse, which is made usable and available to workers and their families in order to address the damages that have resulted from covering the injuries, illnesses, and fatalities. 

The aforementioned simply means that individuals, as well as their dependents, are not only restricted from initiating legal actions against their employers in order to recover costs, which stands inclusive of expenses not covered by workers’ compensation or those linked to pain and suffering, but also the idea that they are not authorized to seek punitive damages for injuries, illnesses, or deaths that fall within the ambit circling the essence of workers’ compensation.

Running on a parallel line of thought is the fact that employees have the power to retain the right to sue third parties who may serve as the reason for their injuries, illnesses, or deaths. 

Elaborating on the aforesaid further, under such instances, not only the employee but also the employer has the right to retaliate. This means that the aforementioned party has a right of subrogation that allows them to recover any workers’ compensation benefits that have already been disbursed from the award obtained from the third party. 

What deems it essential to keep in mind is the fact that despite the exclusivity of the workers’ compensation remedy, not all cases are necessarily barred or restricted from entering into the processes of the United States court system.

6. The Workers’ Compensation Insurance

The fact that employers bear the expenses of workers’ compensation by acquiring insurance coverage, which permits them to pay premiums for the said coverage, yields them, in return, the gesture revolving around insurers to cover the expenses associated with the benefits provided to eligible employees. 

Such a curated funding model applies not only to workers’ compensation systems that stand inclusive of those operating under the Longshore and Harbour Workers’ Compensation Act and the Federal Black Lung Program but also to the overall functioning of the compensation laws. 

The regulation of insurance, which is purchased under the Longshore and Harbour Workers’ Compensation Act and the Federal Black Lung Program, is typically within the authorization purview of each individual state. 

The idea that premiums are usually determined based on several factors, including the level of risk associated with the specific types of jobs being insured and the employer’s experience rating, serves to be of crucial importance.

On the same lines of thought lies the idea of calculation of the aforementioned. The experience rating is generally computed by assessing the employer’s history of past claims as well as taking into account the insurance losses. 

Employers with a history of more frequent and costly claims are facing higher premiums, whereas those with fewer and less severe claims may enjoy lower premium costs. Such a system encourages employers to not only maintain safe workplaces but also promote worker safety in order to reduce their risk as well as insurance costs.


The Workers’ Compensation Act is one such legislation that has been solely curated to provide financial as well as medical aid, in terms of monetary support, to employees if the employers have been found to be negligent of their illness, fatalities or death. Serving as a protection for the workers, this statute takes care of the employers as well so as to maintain balance in the working system. 

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