I) Introduction to Workers Compensation
A) Characteristics of WC
i) Fault and negligence of employer or employee do not matter for the most part
ii) Provides cash benefits and medical care for work connected injuries.
iii) Shifts the burden of compliance to the consumers of the product through higher prices.
iv) Employee gives up right to a common law recovery against the employer.
v) Employer must maintain WC insurance under state law.
B) Comparison of WC and Tort
i) WC is a social program instead of a fault based system
ii) Test of Liability
(a) WC focuses on work connection
(b) Tort focuses on fault
iii) Underlying Social Philosophy
(a) WC
(1) The consumers rather than the workers should bear the cost of these injuries because the consumed products are the root cause of the injury.
(b) It is fair for society to bear the burden of protecting the workers
iv) Defenses Available
(a) The defenses available under tort liability are inoperable in WC
(1) Fellow servant exception
(2) Assumption of risk
(3) Contributory Negligence
(4) Acts of God
v) Compensatory Damages
(a) Only damages for injuries that affect earning power
(1) No pain or suffering
(2) No loss of consortium
(b) Meant to allow the injured person to not become a burden to others.
(1) Not meant to make the injured person whole.
(2) Not to punish the tortfeasor
(c) Not completely owned by the injured person.
(d) Not meant to right a wrong but merely to prevent the person from being destitute.
C) Comparison of WC and Social Insurance
i) Private Character
(a) Benefits keyed to individual’s earnings
(b) Employers make private arrangements for insurance
(c) Government only resolves disputes
ii) Costs not place on the public at large but on a class of consumers
(a) Size of WC insurance premiums vary by hazardous of the job
(b) In England, safe company pays as much as unsafe
iii) Benefits are not based on actual need
iv) Retroactive unilateral employer liability
D) WC Development
i) Before modern WC statutes, the deck was largely stacked against worker recovery because of the unholy trinity defenses available to employers.
(a) Fellow Servant Doctrine
(1) Negligence of a co-employee cannot be impugned to the master.
(b) Assumption of the risk
(1) Ignores the economic realities
(c) Contributory negligence
ii) Origins of Modern Law
(a) Employer Liability acts
(1) Barred fellow servant rule
(2) Barred assumption of the risk
(3) Only allow contributory negligence for computation of damages.
(b) Developed in 19th Century Germany
(1) Otto Van Bismarck is the father of workers’ compensation
(I) Orchestrated the crowning of the first Kaiser.
(II)Was actually not a nice man, but wanted to defeat the socialists.
(III) He created WC to pacify the workers.
(2) 1884- Germany developed the first modern system
(3) Plan required contributions from workers as well as employers
(I) Sickness Fund
A. Employee funded
(II)Accident Fund
A. Employer funded
(III) Old age fund
A. Split funding
(c) US Development
(1) Began with small laws for miners.
(2) Early laws faced serious problems with passing constitutional tests.
(I) Due process
(II)Equal protection
(III) Impairment of contracts
(IV) Loss of jury trial
(V)Privileges and immunities.
(3) Why was there no employee contributions?
(I) There were concerns about the constitutionality of this type of provision..
A. New York Central Railroad Company v. White found the compensation laws to be constitutional
E) What is the trade off?
i) The employee loses the right to sue for money.
ii) The employer loses the right to defend nearly all of the their defenses.
iii) Employee gains expedited and assured benefits.
iv) Employer gains the right not to be sued.
F) General Elements of All Workers’ Compensation Statutes
i) EE is automatically entitled to certain benefits whenever he is injured in the course and scope of his employment
ii) Employee gives up common law rights to sue employer for damages in exchange for modest but assured benefits.
iii) EE can sue third person whose negligence caused the injury, however, the proceeds are usually first applied to reimbursement of the employer for the WC outlay.
iv) System is administered by an administrative agency, often called the Industrial commission rather than the courts.
v) The employer is required to have WC insurance so that the burden of WC liability doesn’t remain upon the employee but passes to the consumer since WC premiums are a part of the cost of production and will be passed on to consumers.
II) General Statutory Definition
A) General Requirement from British Compensation Act
i) Injury by Accident arising out of and in the course of employment
(a) Arising out of
(1) Causal origin
(2) The origin is in a risk connected or incidental to the employment so that there is a causal connection between the employment and the accidental injury.
(b) In the Course of Employment
(1) Time, place and activities of the injury in relation to the employment
ii) At times, if one of the elements is incredibly strong, it might offset a weakness in the other element.
iii) Although arising out of and in the course of are separate tests, each element is part of a single test for work connection and therefore deficiencies in one factor can be offset by the strength of a different factor.
(a) Strong ‘out of,’ but weak ‘in course of: injuries off premises, outside business hours, coming & going from work, injured by hazard distinctly traceable to employment
(1) Strong causal connection but doesn’t manifest while doing active duties of job.
(b) Strong ‘in the course,’ but weak ‘out of’: may also be compensable—positional cases, unexplained falls, and other neutral-cause injuries.
(1) In midst of performing job but weak causal connection
(c) However, courts typically don’t allow both factors to be weak
III)Employment Component
A) General Rule
i) The term Employee includes every person in the service of another under any contract of hire, express or implied.
ii) The rules of common law theories of employment are adjusted somewhat in WC.
iii) The distinction between Employees and ICs is meant to allocate the burden of the injuries to the person who is in the best position to control it and to make it an expense of the services.
iv) Tests
(a) Right to control (Traditional Test)
(b) Relative nature of the work (Larson Test
t
(a) A false statement in an employment application can bar recovery if
(1) The employee knowingly and willfully made a false representation as to his physical condition.
(2) The employer relied on the representation and the reliance was a substantial factor in the hiring and
(3) There was a causal relation between the false representation and the injury.
(b) It does not make the contract invalid though.
G) Lent Employment and Dual Employment
i) General Rule
(a) When a general employer lends an employee to a special employer, the special employer becomes liable for workers’ compensation only if:
(1) The employee has made a contract of hire, express or implied , with the special employer;
(I) Test of whether an express or implied contract of hire existed is satisfied if the employee consents to the special employment relationship
A. If the employee knew he would be hired out to special employers and accepted such employers just as he accepted the general employer – implied contract.
B. Only have to acquiesce to contract
(2) The work being done is essentially that of the special employer, and
(3) The special employer has the right to control the details of the work.
(b) A special employer = borrowing employer
(c) If these are all met, then both employers are liable.
(d) However, if an employee is under contract with two employers, one can be held exclusively liable if the activities on behalf of that employer are severable from the other employer.
(1) Whoever he was working for at the time of the accident.
ii) Illinois Law
(a) 1(a)(4)
(1) If the borrowing employer does not pay WC, then loaning employee has to pay.
(I) The loaner can sue the borrower for the amount plus attorney fees.
(II)The employee has to cooperate.
(2) Evaluating responsibility
(I) Was there a contract for hire
(II)The work being done is essentially that of the special employer, and
(III) The special employer has the right to control the details of the work.
(3) If you recover from one, then you cannot recover from the other in WC or tort.
(b) Tandem Staffing Solutions
(1) The borrowed employees were not permitted to do certain things.
(2) The employee argued that they were not borrowed employers because of these increased restrictions.
(3) The court rejected this.
H) Statutory Employees
i) Illinois
(a) Specific categories of conceded nonemployees are sometimes brought into the act while other times conceded employees are taken out of the act.
(b) Often, contractors are responsible for uninsured subcontractor employees.
(1) This relationship is called statutory employer/employee.
