The History of Workers’ Compensation

IFWAA BLOG

The History of Workers’ Compensation

The History of Workers’ Compensation

Believe it or not, it is not until recent years that workers’ compensation has been formalized as a modern system for allowing employees to receive benefits as the result of an injury on the job. However, the idea of workers’ compensation goes as far back as 2050 B.C, first emerging in the form of a law in ancient Sumer (present-day Iraq).

Early Beginnings

In 2050 B.C, an early version of what we know as workers’ compensation, known to Sumerians as the law of Ur (named after the city-state of Ur’s king, Ur-Nammu), required that compensation was paid for specific injuries.

In Ancient Greek, Roman, and Chinese laws, the terms of compensation for specific injuries were followed a similar way. Monetary compensation was allotted depending on the type of injury. It was during this time period when a distinction was created between “impairments,” or a loss of function of a body part, and “disability,” the loss of an ability to perform a certain task. This distinction is still followed by modern day workers’ compensation laws.

Early Industrial Revolution

The Industrial Revolution was a time of harsh working conditions within factories. Workers’ compensation laws took a more restricted form, not allowing compensation to workers with job injuries that occurred for these reasons:

  • Contributory negligence – If the worker was responsible for their own injury in any way, the doctrine of contributory negligence did not allow compensation as the employer was “not at fault” in the situation.
  • “Fellow servant” rule – Employers were not held liable if a worker’s injury was caused by a fellow employee’s negligence.
  • “Assumption of risk” – This doctrine held that employees knew the dangers of their job before signing their contracts; therefore, by signing the contract, they “assumed the risks.”

Fortunately, we no longer see these types of restrictive laws in current workers’ compensation laws. This is all thanks to Chancellor Otto von Bismarck of Prussia, who implemented a new system of social insurance in 1871 after he took power. Known as the Employers’ Liability Law of 1871, this system allowed social protection for workers in certain industries. Later, in 1884, Bismarck also established the Workers’ Accident Insurance, which laid the framework for what we know as our modern workers’ compensation program.

Workers’ Compensation Spreads to America

While the Eastern half of the world embraced a new system for workers’ compensation, America did not take on this emerging trend until the 1900s, after the publishing of Upton Sinclair’s, The Jungle—a shocking novel that detailed the horrors that workers in Chicago slaughterhouses experienced. After the general public expressed their outrage over working conditions, Congress passed the Employers’ Liability Acts of 1906 and 1908, which lessened the restrictions of contributory negligence.

Finally, the first comprehensive workers’ compensation law was passed in 1911, requiring employers to provide workers with medical and wage replacement benefits if injured.