WORKERS’ COMPENSATION-OUTLINE 2012
I. EMPLOYEES’ REMEDIES PRIOR TO AND APART FROM WORKERS’ COMPENSATION
A. The Need for a Workers’ Compensation System
1. Industrial injuries were a virtual scourge of working people in the nineteenth and early twentieth centuries
2. The law of torts was not a compensation system, but instead, was a means of making wrongdoers accountable for wrongful acts that caused harm
a. Hence, injuries that did not fit within the confines of tort law went uncompensated under it
3. The notion of the welfare state was ill developed
a. Hence, unfortunate victims of injuries of any sort often had recourse only to uncertain and parsimonious charity
B. The Common Law as Applied to Employees’ Workplace Injuries
1. The Fellow Servant Defense
a. The principle of respondeat superior subjecting the master to liability for the torts of the servant does not apply where the suit is by one servant against the master for the negligence of a fellow servant
2. Assumption of Risk
a. The idea that employees impliedly assume the known risks of employment was initially coupled with the idea that employers owed employees no duty of care as to the recognized risks of employment
b. Assumption of risk will not bar recovery unless the worker was both familiar with and conscious of the encountered peril
3. Contributory Negligence
a. The common law defense that an injured party who was contributory negligent cannot recover from a negligent defendant
b. Where the alleged negligence of the employer is failure to provide a reasonably safe place to work or to furnish suitable tools or equipment, an employee who should have been aware of the danger and failed to take reasonable precautions to avoid it may be barred from recourse
4. James Murray v. South Carolina (S.C. 1841)
a. The rule that a master is not liable for injuries to a servant caused by the negligence of a fellow servant, where the master himself is not at fault, is applicable to corporations as well as individuals employing servants
b. A Railroad Company is not liable to one of their agents for an injury arising from the negligence of another competent agent
C. Legislative Reforms Apart From Workers’ Compensation
1. Violation of statute
a. Under general negligence doctrine a court may treat a penal statute or regulation pertaining to safety of employees as particularizing the standard of care employers owe employees, thereby making a violation negligence per se
b. The statute must be intended to protect employees of the claimant’s class against the particular risk encountered
c. The courts have generally held that a violation of OSHA or of regulations promulgated there under cannot serve as the independent basis for a civil suit for damages
II. THE COMPENSATION PRINCIPLE
A. Historical and Constitutional Background
1. The compensation movement originated on the European continent and was first adopted in the German Compensation Act of 1884
2. In Great Britain, following several unsuccessful legislative attempts to rectify the shortcomings of the common law, parliament adopted the Workmen’s Compensation Act of 1897
3. New York Central R.R. Co. v. White (N.Y. 1917)
a. The exclusion of farm laborers and domestic servants from the New York Workmen's Compensation Act does not render the act violative of the Fourteenth Amendment, as denying equal protection
b. The requirement of the New York Workmen's Compensation Act, § 50, that the employer either secure insurance or furnish proof of his financial ability and deposit securities, does not violate the Fourteenth Amendment, U.S.C.A., as denying equal protection of law
4. Notes:
a. Most statutes do not apply to employments with a 3-5 employees. As to these employments, the common law of torts, as amended if at all, continues to apply
b. White upheld the constitutionality of the most extensive tort reform legislation that had ever been enacted
c. Most states require employers to secure the payment of workers’ compensation benefits in one of two ways: either to purchase insurance from a private insurance company or to qualify as self-insurers
B. The Theory of Workers’ Compensation
1. Workers’ compensation rests upon the principle that employers and entrepreneurs who enjoy the economic benefits of businesses should ultimately bear the cost of the injuries and deaths that are incident to the manufacture, preparation and distribution of goods and services
2. In theory, the employer initially absorbs the cost of work injuries, and ultimately passes it down the stream of commerce in the princes of products until it is spread in dilution among the consuming public
3. If the compensation principle is to operate effectively, the costs of industrial injuries and deaths must be predictable and fixable in an amount that will not disrupt the exchange of goods and services
4. Compensation levels must be high enough to provide adequate income to replace lost earnings of injured workers and to create an incentive for employers to adopt injury prevention measures. Otherwise employers would be tempted to take the risk of paying workers’ compensation claims on the cheap instead of making more costly expenditures to avoid injuries
5. Compensation differs from the conventional damage liability in two important respects:
a. Fault on the part of either employers or employees is made irrelevant; and
b. Compensation is made payable according to a prescribed and limited scheme
6. Workers’ compensation represents a compromise in which both employers and employees surrender certain advantages in order to gain others deemed to be more important
7. The constitutionality of any compensation statute will be influenced by a court’s evaluation of the basic point of compromise established in it
C. Compensation as Social Insurance
1. The workers’ compensation scheme contemplates that compensation is to be measured in terms of basic support rather than in terms of the true value of all aspects of a worker’s personal loss
a. To this end, workers’ compensation benefits are usually paid weekly in amounts proportioned to the amount of lost wages, rather than in a single lump sum
2. Furthermore, the scheme is somewhat adversarial in nature even though fault is immaterial; that is, the injured worker attempts to extract money directly from the employer
3. Although some statutes employ courts as the administering agencies, workers’ compensation claims are more generally administered initially by an administrative tribunal
D. The Acceptance of Workers’ Compensation
1. Workers’ compensation is now a stable part of the legal and economic employment enterprise throughout the United States
2. However, the workers’ compensation act was greeted in emotional terms by its supporters and opponents
E. Theory, Policy, and Politics
1. The workers’ compensation theory is one of cost internalization: the cost of workplace injuries and diseases should be internalized by the enterprise and reflected in the price of goods and services
2. The initial prevailing view was that workers’ compensation statutes are remedial in character and, accordingly, are to be liberally construed in favor of providing benefits to injured workers
3. Generally, a workers’ compensation system should:
a. Provide broad coverage of employees and work-related injuries and diseases;
b. Provide substantial protection against interruption of income;
c. Provide sufficient medical care and rehabilitation services;
d. Encourage workplace safety; and
e. Deliver benefits in an efficient and effective manner
III. THE EMPLOYER-EMPLOYEE RELATIONSHIP
A. Introduction
1. Because employment is a particular kind of contractual relationship, whether or not one person is an employee of another ultimately depends upon whether a contract of employment was entered into by them
2. A leading factor has always been whether the purported master had the legal right to control the details of how the purported servant did assigned work. If so, the master-servant relationship existed
3. If the actor was a servant, then the master was vicariously liable under the respondeat superior doctrine
4. If and independent contractor, then the independent contractor, but not the master, was liable
5. In more recent years, the ramifications of the employment relationship have been expanded by the emergence of other pieces of social legislation, such as unemployment compensation, wage and hour legislation, social security, and anti-discrimination legislation, all of which tend to broaden to some extent the meaning of the employment relationship
6. The social welfare goals of these statutes lead many courts to reach beyond the strict tests of the m
erned only a single job, it lasted for a considerable period of time and the work was substantial in nature. The claimant's employment was not fortuitous, uncertain, occasional, haphazard, unsystematic, or irregular. A single employment lasting several weeks or months, or for an indefinite period, did not qualify as causal. The claimant's injury therefore arose out of and in the course of the claimant's employment and was compensable
2. Casual Employment
a. Many statutes exclude coverage of casual workers whose employment is fortuitous and those who are hired for an isolated job of a temporary nature
b. Other courts have found that the term casual relates, not to the contract of hire, but to the nature of the work to be done and the relationship of this work to the business of the employer
c. Most jurisdictions include essential maintenance and repair work as being within the course of the business even where the work is not routine and requires the services of an expert
d. Employment of only a few hours, or even days, is often regarded as casual. Nevertheless, employments that are only periodic in occurrence and in duration are usually covered if they recur regularly
3. Minimum Number of Employees
a. Workers’ compensation statutes commonly exclude employers having fewer than a designated number of employees
b. The most commonly designated minimum employment sizes are there, four, or five
c. Multiple for-profit operations that are conducted simultaneously are sometimes deemed to constitute a single business and all employees are added together for the purposes of the statute
4. Illegal Employments
a. In most states minors employed in violation of child labor statutes are provided compensation by workers compensation statutes either by express statutory provision or, where silent, by judicial interpretation
b. In a few states, an illegally employed minor has the option to claim compensation or to sue for tort damages
5. Agricultural and Farm Employments
a. Most compensation statutes expressly exclude some or all agricultural and farm laborers from coverage, but a few extend coverage to agricultural or dairy laborers while engaged in the operation of designated farm machinery
b. Coverage is usually determined by the nature of the employee’s work, rather than the type of business conducted by the employer
6. Domestic Employments
a. Although most workers compensation statutes entirely exclude coverage of domestic employees in private homes, a few do cover regularly employed domestics and those employed under prescribed circumstances
7. Charitable and Non-Profit Employments
a. Non-profit organizations usually produce no profitable goods and services whose prices would serve to distribute the costs of injuries
b. Compensation is usually denied under statutes of the latter category unless the business has a profit element
8. Public Employments and Officers
a. although employees of a state, its political subdivisions and other public bodies are afforded at least limited coverage by most acts, the statutory variations are no less than bewildering
b. Whether police officers are covered has proved to be particularly disputatious. Several decisions exclude them on the ground that, as officers, they do not serve under a contract of hire
9. Hazardous Business and Employments
a. Early fears that workers compensation statutes would violate constitutional due process clauses prompted many legislatures to restrict coverage to hazardous or ultra-hazardous employments
