History of the Pennsylvania Workers' Compensation Act
In the 1840s, the United States was an agrarian economy and the great waves of immigration had not yet begun to sweep across our shores. People were injured in the course of the work activities; however, the nature of medical care and the economy created a situation where the injured individual bore the responsibility of the consequences of his or her injury. As the United States passed the Civil War, however, the nature of the economy changed and America was awash in the Industrial Revolution. Populations were shifting to the city and the city dwellers were working in factories. These factories were dangerous places and the amount of injuries increased dramatically both in terms of number and in terms of severity. Where in previous decades a family farm provided shelter and sustenance for an injured family member, now the industrial environment of the cities in and of themselves provided neither housing nor food. Without the ability to earn wages, injured workers became destitute and a major burden upon family and society.
The state of the law in the 1880s was that an injured worker could go into court and sue the employer. The burden of proof was difficult. The injured person had to prove both that the employer was negligent and that the injured person was not negligent. While the burden of proof on the injured worker was significant and difficult, if successful, the rewards could be considerable. The injured worker might recover not only the costs of healing, and lost wages, both past and future, but also an amount to compensate the worker for pain and suffering.
As the economy continued to develop and as it became more and more apparent that this economy would be based upon large scale economic enterprises, it also became apparent that the risks of employee litigation for injuries could generate recoveries of such large amounts as to cause the ruination of individual businesses and to impede the forward march of progress toward industrialization.
The Pennsylvania Legislature was in the forefront of passing legislation that would come to be used in all American jurisdictions as well as in many of the countries of industrialized Europe. Thus was born the first "no-fault" legislation. The Workers' Compensation Act changed the litigation model and provided benefits both to employers and to injured workers.
The employers received the major benefit that it was now illegal for an employee to sue the employer under any circumstances for injuries that arose in the workplace. Henceforth, any recovery for a workplace injury could only be had under the Workers' Compensation system. Further, employers were no longer exposed to the risk of paying jury awards for pain and suffering damages.
The amounts to be paid to employees for loss of wages were limited both in terms of the amount (employees would be entitled to a percentage of their pre-injury wage and not the full wage) and, in terms of duration, in that those injuries that were not totally disabling were only to be compensated for a limited amount of time.
Employers were further protected in that all of the calculations in regard to wage loss were made as of the date of the injury and no matter how long the effects of the injury lasted, the calculated amount the injured worker received in replacement of wages was never subject to increase. Employers made payments for loss of wages on a weekly basis with the result that they would not be required to ante-up large amounts of money at one time for unknown future wage loss.
The injured workers also received significant benefits. No longer would it be necessary for them to meet the rigorous burden of proving negligence and disproving their own contributory negligence. Henceforth, they only needed to prove that there was a work-related injury and that the injury occurred in the course and scope of employment. Obviously, all work injuries were covered under the system: those caused by a co-worker's negligence, those caused by the employee's own negligence, those caused by third parties, and those for which no cause could be determined.
The injured worker was entitled to have all of the medical bills that arose from the injury paid by the employer. The wage loss was paid to the employee on a weekly or bi-weekly basis, thereby ensuring that the injured worker could meet the necessities of subsistence during the time of incapacity. No longer was it necessary to hire a lawyer to go into court to recover damages. Henceforth, all disputes were to be resolved in an administrative hearing designed to quickly resolve cases and bring relief to the injured. Most importantly for employees, the Workers' Compensation Act was passed with the stated purpose of aiding injured workers and therefore any ambiguities in the Act were to be resolved in favor of injured workers.
The new Workers' (originally Workmen's) Compensation System was backed by the requirement that employers purchase Workers' Compensation Insurance to cover the new statutorily defined risk. This enabled the employers to have a high degree of predictability in regard to the costs associated with workplace injuries, and from the employees' side, provided a benefit in that they no longer needed to have any concern about the solvency of those required to make the payments to them.
The system has existed for approximately 120 years and has been tweaked many times by the Legislature to adjust the competing interests of employers, employees, insurance companies and society at large. It has worked well. The Industrial Revolution continued, the employers prospered and the nascent industries of the 1880's became the mighty engines of the twentieth century, and employees had a system that compensated them for all work injuries and saved them and their families from catastrophe.
The lawyers of Wolf, Baldwin & Associates, P.C. have over seventy years combined experience litigating workers' compensation claims in Southeastern Pennsylvania. We welcome you to browse our website, and to contact us with any question you may have about Worker Compensation in Pennsylvania.