100 Years of Workers’ Compensation

Did you know that the modern workers’ compensation system in the United States started with pirates?  Before pirates were considered outlaws, many of them were highly prized allies of the colonial government, plundering and sharing the spoils with governors in exchange for safe port.  Due to the inherent dangers of the occupation, a system was developed to compensate those injured as long as they survived their wounds.  While there was no compensation for fatalities, losses of an eye or a finger resulted in approximately 50 weeks of wages for the average colonial American.  Those who lost an arm or a leg were compensated roughly 6 years worth of wages.  In addition, injured crew members were allowed to remain on board with less strenuous duty.

The modern workers’ compensation system began in Germany in the 1880s and spread throughout Europe.  In the early 20th century America joined the social revolution and began developing statutes to protect workers.  In May 1911 Wisconsin passed its workers’ compensation law, the first state to successfully launch a program that survived legal challenges.  By 1920, 42 states plus Alaska and Hawaii had enacted workers’ compensation statutes.  Mississippi was the last state to implement similar statutes, waiting until 1948.

Early programs (1911-1916) involved only voluntary participation, so employers were not compelled to purchase workers’ compensation.  In 1917, the Supreme Court upheld the constitutionality of compulsory insurance requirements, allowing each state to require the purchase of coverage.

From Insurance Journal—National Region, February 21, 2011 Issue, pp. N8-N10, N26.