John Locke Update / Research Newsletter (Archive)

Labor Day Focus on Workers’ Compensation

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Following on from last week’s newsletter and approaching the Labor Day weekend, I wanted to continue the discussion of Labor.  Another common conversation about labor is around the topic of worker’s compensation.  Labor Day was established to celebrate workers, and with that came legislation to protect workers and their rights when things went wrong on the job.  Workers’ compensation did not start in its present form and, since the early 20th century, it has been ever changing.  It continues to be a top discussion topic at the federal and state levels of government.

America began its research on workers’ benefits around the same time Labor Day became a federally recognized holiday, the 1890s.  After the Department of Labor prepared a report on the topic Compulsory Insurance in Germany, congress passed the Employers’ Liability Acts of 1906 and 1908 which softened the existing law’s contributory negligence provisions — when the employee was believed to have been somewhat at fault for the accident/injury.  Unsuccessful efforts to pass comprehensive workers’ compensation acts were attempted in New York (1898), Maryland (1902), Massachusetts (1908), and Montana (1909).  There was more reaction to this at the federal level, but the matter was believed to be best left up to the states.  The federal government did regulate interstate commerce, however, and what is arguably the first worker’s compensation system in America was proposed by President Taft and put into law in 1908 to cover those workers involved in interstate trade.

This proved somewhat difficult, as the idea and the base for the law came from Germany and the UK.  Those countries were governed much differently than America, and the decentralized nature of labor regulation in the United States slowed down the implementation of state laws.  The argument was that they would create an uneven playing field for unregulated competitors in neighboring states.  According to the Iowa Orthopedic Journal, the most telling example was when phosphorus match manufacturers brazenly testified before Congress that, despite the widespread problem of "phossy jaw" poisoning in their workers, they were unwilling to invest in alternative compounds unless the law in all states mandated it.  In 1910, this problem led to a special conference in Chicago attended by representatives of the industrial states to outline a uniform set of guidelines for compensation law. 

The first comprehensive workers’ compensation law was passed in 1911 in Wisconsin.  In 1929, North Carolina was one of the last states to pass its workers compensation law.  Along with the Workers’ Compensation Act, an agency was created known as the NC Industrial Commission to administer the legislation.

Today the NC workers’ compensation program is under the Commerce Department and provides medical care, rehabilitation, and cash benefits for workers who are injured on the job or who develop work-related illnesses.  The program also pays benefits to families of workers who die of work-related injuries or illnesses.  Unlike most social insurance programs, the workers’ compensation program is regulated by North Carolina, with no federal financing or administration. 

The most recent news regarding North Carolina’s workers’ compensation program was early in 2013, when a performance audit showed that the Industrial Commission had been slack in monitoring data to ensure businesses were keeping workers’ compensation insurance for their employees.  According to a Carolina Journal article,

That act requires most companies doing business in the state to carry worker’s compensation coverage to pay benefits to a worker or a worker’s family if the worker is injured or dies on the job.

The audit recommends that the Industrial Commission work with the N.C. Rate Bureau and the Division of Employment Security to obtain "complete, accurate, and reliable data" to match information across agencies so that noncompliant businesses can be identified. It also recommends that the Industrial Commission implement procedures to follow up with businesses that have allowed coverage to lapse, and consider stricter enforcement of penalties assessed to those that do.

The good news surrounding workers’ compensation is that the National Census of Fatal Occupational Injuries in 2012 was released last week and showed that there were fewer fatal work injuries in the US in 2012 than in 2011 and the second fewest since the census was first conducted in 1992.  See the chart below for North Carolina’s fatal occupational injuries.

Total Fatal Injuries

Event or Exposure for 2012

2011

2012

Violence and other injuries by persons or animals

Transportation incidents

Falls, slips, and trips

Exposure to harmful substances or environments

Contact with objects and equipment

148

138

32

52

18

13

22

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Sarah Curry is Director of Fiscal Policy Studies at the John Locke Foundation. Previously, she worked for the North Carolina State Senate as a research assistant for the chairs of the Senate Agricultural Committee and headed the research efforts for… ...

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