Workers’ Compensation

Workers’ Compensation

How does the cost of workers’ compensation affect construction costs? Is it worth the time and money to have a strict safety program? These are both questions that construction companies have been asking for years. But before these questions can be answered lets look it the history of workers’ compensation.

Construction is one of the most dangerous occupations. In the United States, the construction industry employs about 5% of the workforce but accounts for 11% of all disabling occupational injuries and 18% of all occupational fatalities (Accident, 1993). Using this statistic alone the need is apparent for a good system for workers’ compensation insurance. Prior to workers’ compensation legislation an employee had two choices for collecting lost wages and medical cost due to injury. They could either a) take whatever offer the employer gave them or b) sue their employer. The cost of litigation has always been high and mostly unaffordable to the common man. Even if the employee had the money to take his employer to litigation and found him to be negligent, the employer could often defeat the worker’s claim under one of the three common law defenses: the assumption of risk doctrine, the fellow servant doctrine, or the doctrine of contributory negligence (Newman & Hancher, 1991). In addition to the difficulty of overcoming the common law defenses, the injured worker faced other problems in trying to bring suit against the employer. Filing suit often resulted in the injured worker’s losing his job. The lawsuits were expensive and time-consuming. There was no guarantee that the employee would win the suit or would collect damages sufficient to cover the loss and cost of the suit (Newman & Hancher, 1991). So this meant that the employee pretty much had to take what the employer offered them. This became apparent to employees that something needed to be done to protect their rights. By 1949 every state had enacted an operational system for workers’ compensation (Lencsis, 1998).

The main economic purpose of workers’ compensation insurance is to tie an on-the-job injury or death to an expensive of production and should be paid for by the industry. Strictly from an economic standpoint, expenses from providing protection for employees should be considered a cost of doing business and should be reflected in the selling cost of provide a service(Clough, Sears, & Sears, 2005). The basic objectives of this workers’ compensation system are to

• Provide sure, prompt, and reasonable income and benefits to work accident victims, or income benefits to their dependents, regardless of fault.

• Provide a single remedy and reduce court delays, costs, and workloads arising out of personal injury litigation

• Relieve public and private charities of financial drains incident to uncompensated industrial accidents

• Eliminate payment of fees to lawyers and witnesses as well as time-consuming trials and appeals

• Encourage maximum employer interest in safety and rehabilitation through an appropriate experience rating mechanism

• Promote frank study of causes of accidents (rather than concealment of fault), reducing preventable accidents and human suffering (Workers’ Compensation Crisis, 1991)

History of workers’ compensation leads us back to torts and tort laws. A tort can be paraphrased as a civil wrongdoing that causes someone to take legal action. The tort laws can be broken down into three different divisions. The first division is intentional tort. This division includes assault, battery, defamation, false imprisonment, invasion of privacy, and things of that nature. The second division of tort is strict liability which involves liability for hazardous activities and certain kinds of product liability. The last division is negligence. Negligence is the one that will