The following article was recently produced by the Workplace Injury Litigation Group regarding the state of workers' compensation laws in America.
In the early part of the twentieth century, the only legal remedy for a worker injured or killed as a result of a work-related accident was to bring a "common-law" action against his employer to recover economic and non-economic losses. The process caused much delay and employers were armed with common-law civil defenses such as "contributory negligence," "assumption of risk," and the "fellow-servant doctrine." Even if an employer ultimately won a suit, the employer's potential risk of liability and cost of defending a claim was great and the litigation delays for employees were devastating with legal assistance unaffordable. Furthermore, at the time there were few other remedies for help available for injured workers or their families, such as public social insurance assistance, or affordable health care for the working class.
"The Grand Bargain" was struck to create in each state a statutory system of "workers' compensation" to provide injured workers and their families compensation for economic losses and medical treatment associated with work-related injuries and deaths, without regard to fault of either the employer or employee. In exchange for this "no-fault" agreement and benefits (aka: the "Quid Pro Quo"), workers were prohibited from suing their employers, which afforded employers protection from large judgments for non-economic losses such as pain and suffering or punitive damages, as well as judicial awards for related future damages . This compromise gave birth to the legal notion that, in most cases, workers' compensation is an "exclusive remedy" providing immunity and exclusivity from tort suits against an employer.
Nearly a century ago, after the State of New York passed one of the first workers' compensation statutes, the U.S. Supreme Court considered the constitutionality of such legislative replacement of a common law tort remedy for work-related injuries, with an exclusive remedy no-fault system with so-called "scheduled" benefits for injured workers. The "Grand Bargain" was upheld by the Court in New York Central Railroad v. White, 243 US 188, 37 S.Ct. 247, 61 L. Ed 667 (1917).
The landmark case in White, holding that the use of workers' compensation laws in place of tort remedies must provide "significant" benefits, was quick to recognize that there was a limit to a state legislature's authority to provide such a statutory remedy that abolished an injured worker's longstanding right to sue his employer for an array of common law damages. Thus, in such an exchange of constitutional rights, any "consideration" for such a Grand Bargain must provide a "reasonable amount, and according to a reasonable and definite scale, by way of compensation for the loss of earning power incurred in the common enterprise..."