Workers’ compensation benefits are neither “welfare” benefits nor discretionary fringe benefits. They are benefits paid to workers by employers as part of a “Grand Bargain” struck by various stakeholders in society (employers, workers, and others). Under the terms of the bargain, workers injured or killed on the job receive statutory benefits: a percentage of the gross wages they were earning at the time of injury or death (usually about 50% to 66 2/3%), for a statutorily pre-determined number of weeks, plus payment for reasonable and necessary hospital, medical, and rehabilitation treatment expenses occasioned by work-related injuries. Whether the employer or the worker is at fault in causing a work-related injury is usually irrelevant. If an injury “arises out of and in the course of employment” it is covered, or compensable, under workers’ compensation law.
Once upon a time, in a very dangerous, early-industrial world, workers were not covered by such a no fault system. To recover damages for work-related injuries workers had to prove in court that their employers were negligent. In other words, workers had to prove that their employers owed them a duty of care, breached that duty, and that the workers’ injuries were in fact and proximately caused by their employers’ negligence. Then, even if workers could prove these things—could establish a prima facie case—their employers could nevertheless escape liability. If workers were contributorily negligent, had assumed the risk of injury, or had been injured by the conduct of a co-worker, they were completely precluded from receiving damages. This “unholy trinity” of affirmative defenses often doomed workers’ court cases, and left them, and any dependent family members, destitute. These circumstances offended the collective moral judgement of many social observers during the first decade of the 20th century.
At the same time, employers could, on occasion, lose negligence cases in court, and could unpredictably be subjected to significant, or even ruinous, negligence damages. Also, courts were beginning to more closely examine the affirmative defenses that had been so lethal to employee negligence lawsuits. Given the development of tort law during the 20th Century, employers were shown to have been right to be concerned in 1910 that the risk of negligence liability might be increasing.
Thus, the Grand Bargain was born. Workers relinquished their right to tort suits; employers paid workers a sum-certain for work-related injuries, which, while substantial, ended the high-stakes, Russian roulette risk of damages employers had been guarding against since the last decades of the 19th century. Workers’ compensation became the “exclusive remedy” for work-related injuries in the vast majority of cases. In short, both workers and employers relinquished something. (A concept we now know as "the Quid Pro Quo"). In early U.S. Supreme Court cases upholding the Grand Bargain, the adequacy or reasonableness of workers’ compensation benefits formed a significant part of the rationale of the decisions upholding the new legal arrangements.
As law professors, it is our hope to explain to students, legislators, and the general public our understanding of this underlying narrative of the workers’ compensation system. Of course, as good academicians and law teachers we also hope to explain and critique the letter of existing workers’ compensation doctrine.