Insurance offers consumers quite a few types. There’s auto, life, health, home, and more and more. Some types of insurance, specifically social insurance, consumers don’t buy for themselves. This is a government-sponsored program. There’s one type of social insurance called workers’ compensation that everyone has, whether they know it or not.

Workers compensation is meant to provide funds for people that are hurt on their job. To put it simply, it’s a type of insurance that provides protection for someone risking being injured on their job, to the point that the person is unable to work. This will provide a way for the injured workers’ to still receive pay in order to sustain themselves and their families. The source of this funding is the tax that employers pay. They’re taxed a certain amount which creates a guaranteed source of money that worker’s compensation benefits are paid from. This guarantees that there are always enough funds to available for those who qualify.

Early Workers’ Compensation

Similar to workers’ compensation, the system of employee benefits has been found in ancient China, Rome, and Greece. In those times, the payment schedules were pre-determined to pay workers who’d lost body parts during the stint of their labor. Throughout all of history, there have been systems like that, but they don’t perfectly reflect the kind of benefits for workers’ compensation that employers have to provide today.

Usually historians place the location of the beginnings of present day workers’ compensation in Germany around the mid 1800’s. This was in-line with the height of Germany’s industrial revolution, at the time of which their government passed legislation for protecting railroad- workers if they suffered an accident or injury on the job. They were using the German worker guilds, which gave specific benefits to its guild members, as an example to follow. Germany’s (being a socialist country) main priority regarding their system was offering social insurance programs because this form of workers’ compensation fit best.

Progression Through The Years

During the late 1800’s, Workers’ Accident Insurance spread throughout Europe. Often called Workmen’s Accident Insurance, by the 1890’s it’d even replaced the Employer’s Liability Act in England.

With Maryland being the first state to apply it, America had its own version of workers’ compensation by the turn of the century. However, the early versions of America’s plans were harder for the injured employee than the employer. Rather than employees simply show an employer the injury, he had to provide proof that the injury was work related and a result of the employer’s negligence. After showing proof of his claim, the employee then had to sue the company in order to receive his benefits. This was better than receiving no protection at all, but proving their case was challenging and a lot of workers went through the court process and expenses associated with it, to come out of it without even receiving their benefits. President Theodore Roosevelt came in and identified how one-sided the system was in 1908.

In 1911, Wisconsin took on a new workers’ compensation law which allowed an exchange between the hurt employee and employer responsible for it. Instead of the employee having to find proof of negligence on the employer’s part and suing him for it, the employer would just give replacement wages and medical care to the hurt employee. They did this in exchange of the employee not suing the employer for any other damages. President Roosevelt could be someone to thank for this, but it could very well be the reality of those times as well. A more likely reason for the change is that with the old law if an employee could prove negligence by an employer and then sue the employer, then they would probably receive more money for the damages through the lawsuits, than if the employers simply just paid them for the damages out of pocket. Additionally if the employer won the lawsuit, they would still have the expenses of legal counsel to pay.

Florida was the only state that didn’t adopt the new workers’ compensation legislation. During that time, there were no manufacturing jobs there, and they also had a small population. However in 1935, Florida politicians were aiming to attract more businesses and new residents to the state, so they had to take on the new workers’ compensation model as well.

This new system of workers’ compensation, in which employees forfeit the right to sue employers in exchange for a set wage and medical benefits, still proves to be the most beneficial model for both employees and businesses. It substantially saves time, money, and having to prove an employer’s negligence. Also it shines a good light on an employer that has no problem paying an injured or disabled employee, instead of fighting against them.

If you’re interested in learning more about workers’ compensation or would like to receive a quote on it, contact us today.