Risk & Business Magazine Hardenbergh Magazine - Fall 2019 | Page 12

WORKERS' COMPENSATION
WORKERS'
COMPENSATION:
WHAT ALL BUSINESS
OWNERS NEEDS TO KNOW
E
mployers have a legal obligation
to exercise reasonable care and
provide employees with a safe
working environment. Still,
workplace accidents happen.
Workers’ compensation insurance, also
known as workers’ comp insurance, pays
benefits to employees who are injured
while performing their jobs. The laws are
in place to provide injured employees or
their dependents timely and adequate
compensation regardless of who was at fault.
Before workers' compensation laws came
into place, employees who were injured
on the job would sue their employer. In
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most cases, the employer was not found to
be completely at fault for the accidents or
injuries, resulting in employees receiving
no compensation in spite of their injuries.
The process was long and arduous, and its
inefficiency became a societal problem.
After workers' compensation laws were
passed, the employee surrendered the right
to sue the employer and accepted workers’
comp benefits as the sole remedy against
the employer. There are rare exceptions to
this compromise. For instance, one such
exception is when an employer’s acts or
conduct is certain to cause injury or death
to an employee.
ORIGINS OF WORKERS’ COMPENSATION
INSURANCE
Workers’ comp insurance has origins that
date back over a hundred years. Maryland
passed the first workers’ compensation law
in 1902, and in 1906, the first law covering
federal employees was passed. Every
state in the nation had passed a workers'
compensation law by 1949.
In their infancy, workers’ compensation
laws were challenged when some
employers argued that mandatory
insurance violated the 14th amendment
of the US Constitution. Their position
was that since the new insurance law
burdened employers with having to pay
benefits without determination of fault or
negligence, it denied employers due process,
a constitutional right provided by the 14th
amendment. In 1917, the US Supreme Court
ruled that an employer’s due process rights
were not hampered by mandatory workers’
compensation laws, and the laws were
upheld.