Workers’ compensation laws first appeared in the United States in the early years of the twentieth century. It had become clear that the common law tort system did not adequately protect workers and their families against the economic hardship resulting from lost wages and medical expenses caused by on-the-job injuries. In Ohio, a legislative commission conducted a study of industrial accidents in Cuyahoga County between 1905 and 1910. There were 370 fatal industrial accidents included in the study. Only 36% of the families ever received any compensation for their economic losses. The average amount recovered was $838.61. In non-fatal accidents, the commission found that less than 20% of the injured employees recovered any portion of their losses. For the overwhelming majority of families impacted by an on-the-job injury, the result was poverty. Shortly after this study was completed, Ohio enacted a workers’ compensation law designed to assure a measure of financial security to injured workers.
In upholding the constitutionality of the 1912 Workmen’s Compensation Act, the Ohio Supreme Court wrote “…the action for personal injuries by employee against employer no longer furnishes a real and practical remedy … and does not meet the economic and social problem which has resulted from modern industrialism.” It is an inarguable historical fact that workers’ compensation laws were created to protect injured workers and their families against economic devastation in the wake of work-related injuries. This reality was understood through the remainder of the twentieth century. For much of the last century, laws advancing worker safety and economic protection for on-the-job injury enjoyed broad bi-partisan support in Ohio and across the nation. The law creating the Occupational Safety and Health Administration (OSHA) was signed by Republican President Richard Nixon in 1970. In 1971, President Nixon created a National Council on State Worker’s Compensation Laws, and charged that body with the responsibility to study and report on whether the laws of the various states provided adequate protection to employees.
The National Council report, released in 1972, concluded that many state laws were inadequate. The Council recommended nineteen standards with respect to disability benefits and medical expenses which it considered essential to assure adequate financial protection for injured workers and their families. During the next several years, a number of states, including Ohio, revised their workers’ compensation laws to adopt many of the recommended standards. More recently, however, the national trend in workers’ compensation has been in the opposite direction.
In a letter written a few months ago to the United States Secretary of Labor, ten members of Congress, including Ohio Senator Sherrod Brown, stated that since 2003, 33 states have amended their workers’ compensation laws to reduce the benefits available to injured workers, and to make it more difficult for workers to qualify for those benefits. These changes have often been driven by a belief on the part of legislators that reducing workers’ compensation costs for employers would contribute to economic development and job creation. There is no doubt that these changes have reduced employers’ costs for workers’ compensation. Nationally, workers’ compensation premium costs have dropped to levels comparable to those of forty years ago, even though wages and medical costs have seen substantial increases in that period of time.
If the reduction in workers’ compensation costs were due to a correspondingly significant reduction in the frequency and severity of work-related injuries, it would be cause for rejoicing. There is good evidence, however, that employers are paying less for industrial injuries because others are paying more. In 2015, the Occupational Safety and Health Administration reported that on average workers’ compensation benefits cover only 20% of the costs resulting from a workplace injury. Injured workers, their families and private health insurance carriers pay nearly two-thirds of the costs, and the remainder falls to the taxpayers through such programs as Social Security Disability, Medicare, Medicaid and food stamps.
Workers’ compensation laws were enacted throughout the United States in the early years of the twentieth century for the purpose of protecting workers’ and their families from financial catastrophe in the event of an injury on the job. Our political leaders and policy makers have, in too many instances, lost sight of this fundamental objective. The result has been a series of changes in workers’ compensation laws, nationally and here in Ohio, which have tended to favor the interests of employers and insurers to the detriment of injured employees and their families. In future posts, we will examine some of those changes, and look at some of the trends now appearing on the horizon which threaten to further erode the legal and financial protection available to injured workers.