Committee on Economic Security (CES)
Volume VI. Social Insurance
G. Workmen's Compensation
NEED FOR AND EXISTING SITUATION OF WORKMEN'S COMPENSATION FOR EMPLOYEES OF COMMON CARRIERS ENGAGED IN INTERSTATE COMMERCE
Olga S. Halsey
To: Dr. Edwin Witte
From Olga S. Halsey
Subject: THE NEED FOR AND THE EXISTING SITUATION REGARDING WORKMEN'S COMPENSATION FOR EMPLOYEES OF COMMON CARRIERS ENGAGED IN INTERSTATE COMMERCE.
I. THE NEED
The need for worker's compensation for employees of common carriers engaged in interstate commerce is essentially what it was when the Sutherland Commission(1) unanimously reported in 1912 in favor of a Federal workmen's compensation legislation for employees of common carriers by railroads engaged in interstate and foreign commerce, for accidents sustained in the course of such commerce.(2) The events of the intervening years have only served to emphasize the superiority of workmen's compensation to employers' liability.
In 1912, the Sutherland Commission reported that the common-law system of employers' liability based upon negligence, with its three defenses was outgrown; it recommended that it be replaced by legislation "based not upon fault, but upon the fact or an injury resulting from accident in the course of employment," - in short, by a law which recognized injuries to workmen as one of the risks of the industry.(3) The Commission found that the costs to employers for compensating accidents under the system it proposed would be increased approximately 25 percent while the returns to the workers would be proportionately greater. (4) In the intervening 22 years, the only comprehensive investigation of railroad accidents and the disposition of the cases which appears to have been made, is that conducted in the office of the Federal Coordinator of Transportation, acting under Section 13 of the Emergency Railroad Transportation Act of 1933. This authorizes the Coordinator to "investigate and consider means - of improving transportation conditions throughout the country, - including, also, the stability of railroad employment and other improvement of railroad labor conditions and relations --." This investigation gives statistical support for the observations of those in close contact with efforts to recover under employers' liability, such as the relatively small number of cases that receive judgment as compared with those settled out of court; the larger average sums paid in judgments as compared with settlements out of court; the larger sums paid on the average in cases of train accidents as compared with nontrain accidents, even in the case of death claims, and the recoveries under employers' liability as compared with workmen's compensation.
Donald Richberg is among those exceptionally well qualified to speak from his personal knowledge of the efforts of railway employees to recover under the Federal employers' liability act. In mentioning the 600 employees killed and 20,000 injured on the railways in 1929, Richberg said, 'It is evident that the total amount of damages they recovered must have been utterly inadequate and only a fraction of the awards which would be paid under a proper compensation act."(5) Moreover, under the Federal employers' liability act, Richberg points out, recovery is impossible in a large percentage of cases; in minor cases, the expense of suing is prohibitive, while in the occasional large awards, one-half may be consumed in attorney's fees and other expenses. On the whole, the few large verdicts, he states, are outweighed by the loses suffered by the great majority of injured employees who receive little, if any, compensation.(6) He concludes that, "*** it is my personal opinion that a right to recover under an adequate compensation act is so far superior to mere right of action under the existing Federal Liability Act that the comparison is hardly debatable.(7)
Data concerning noninsured fatal accidents in Massachusetts support this statement. Routine investigation concerning compensation received in noninsured fatal accidents, in each year from 1929 to 1932, shows that invariably the noninsured fatal cases received less than they would have received under the compensation act of the State. The difference in the amounts received under settlement and that to which the dependents would have been entitled under compensation varies from year to year, because of the very small number of cases covered. Thus, in 1931-32 when the difference was least, eight cases for which information was available, received a total of $31,500 as compared with the $37,400 to which they would have been entitled under compensation. In the year of maximum difference, 1928-29, 38 noninsured fatal cases received but 12.9 percent of that to which they would have been entitled under the Massachusetts compensation act.(8) More significant is the comparison of the experience for the State as a whole under workmen's compensation with the preceding experience. Before the days of workmen's compensation, injured employees, and their dependents of those killed, received annually some $500,000; under workmen's compensation, the annual awards amount to over $10,000,000.(9)
Protection afforded under the Federal employers' liability act is not only inadequate, but as L.F. Loree points out, the exorbitant claims made by attorneys sometimes results in payments by railroads in excess of those which justice requires while the employees themselves receive less than under compensation laws.(10)
Experience under the Federal employers' liability act for interstate commerce has revealed that, in addition to the inadequate recoveries for only a portion of the total injuries at a disproportionate expense, one of its outstanding shortcomings is the uncertainty as to whether the worker is engaged in interstate commerce at the time of the injury, and, therefore, entitled to recover under the Federal employers' liability act or whether he is engaged in intrastate commerce when injured, and therefore, covered by State workmen's compensation legislation. The right to recover under the Federal employers' liability act, depending upon employment in interstate commerce of the injured at the time of the accident, is the result of a decision of the United States Supreme Court. This held the employers' liability act of 1906 unconstitutional on the ground that it included employees of common carriers in interstate commerce who themselves were not engaged in interstate commerce.(11) The Succeeding Act of 1908, the one now in force, was drafted in the light of the decision and limited the right to recovery to injuries sustained by employees while engaged in interstate or foreign commerce.(12)
As Richberg has put it, "The worst feature of this divided authority is not the inequity of different measuring rods for justice, but the uncertainty where the so-called justice will be measured and delivered."(13) Other students of the question have gone so far as to state that any defense of this method "of distributing losses becomes irrelevant when the scheme is distorted by incessant litigation."(14)
The necessity for legal action in order to recover under the act gives rise to numerous injustices to the worker. In the first instance, the expense of suing is prohibitive in minor cases, according to Richberg.(15) In other cases, the necessity for litigation reacts to the advantage of the employer. Richberg reports that railroad employees are under a special handicap in suing, for many railroads forbid employees taking legal action against them upon penalty of forfeiting their position. Under these conditions, workers must accept the indemnity offered or lose their jobs. As a result, suits are limited to those for serious injuries which are permanently disabling.(16)
The necessity for expensive litigation as the only means of recovery has more subtle disadvantages for the injured employee. In 25 years, the Supreme Court of the United States has heard a total of 172 cases involving recovery under the Federal employers' liability act; all of these cases have been appealed by the employer, often on highly technical grounds. This in itself is cited as evidence that the system operates unfairly against the employee.(17) The costs of such litigation not only lessen the amount which the injured employee actually receives, but discourage him from attempting recovery, while encouraging him to accept any settlement when offered, thus, reacting to his possible disadvantage. The railroads, on the other hand, by contesting every claim can "build up a bargaining advantage to a point where the worker's inclination is to take what is offered without effective protest."(18)
From the point of view of governmental efficiency, the courts are clogged with litigation determining, "what is work 'so closely related' to interstate transportation as to be 'practically a part of it.' The Supreme Court of the United States devoted a substantial part of its time each year to the impact of new facts."(19) For the worker, the congestion of the courts means delay in receiving compensation and suspense and uncertainty as to the final outcome.
So much for the needs for workmen's compensation legislation for employees of carriers engaged in interstate commerce and for the defects of the existing employers' liability legislation.
II. REMEDIAL ATTEMPTS
Attempts to remedy this situation have been numerous. The workmen's compensation bill prepared by the Sutherland Commission in 1912 and introduced in Congress failed of ultimate passage, even though it passed both houses of Congress, for the difference in the House and Senate bill were never adjusted.(20) Since then, bills have been introduced into Congress at various times.(21) More recently, Senator Wagner has sponsored such legislation; he introduced such a bill in April 1933,(22) and again in May of 1934.(23)
III. ATTITUDE OF THE RAILWAY LABOR ORGANIZATION
The failure to secure workmen's compensation legislation for this group of employees during a period when the States were rapidly adopting this principle is curious. The failure of the workmen's compensation bill, recommended by the Sutherland Commission and endorsed by President Taft, is due to a variety of causes, according to Lindley Clark, but to use his own words, "the doubtful honor of preeminence in obstructive effectiveness seems undisputably to belong to a group in an honorable profession that is unflattering designated as the 'damage suit lawyers,' or even more slightly as the 'ambulance chaser,'"(24) Lindley Clark traces a connection between these ambulance chasing lawyers and the railroad brotherhoods, -he finds that such lawyers are members of the brotherhoods; that they were once railroad workers; read law; then retained their membership in the organizations, and practice among their fellow union members.
(missing text...page 8 of draft)....organizations to the committee of nine railroad presidents.(25) As a result of the negotiations between the railroad presidents and the representatives of railway labor organizations, it was agreed that:
"*** the subjects of Retirement Insurance, Elective Workmen's Compensation and the Dismissal Wage will be studied by a joint committee composed or representatives of the participating railroads and a committee appointed by the Railway Labor Executives' Association, representing the participating organizations, which joint committee will report its findings promptly."
The parties have been unable to reach any further agreement concerning the proposals of the employees on the foregoing subjects. It is understood that agreement upon a study by a joint committee does not commit either party to accept or to await the results of this study."(26)
In January 1933, the extension of the principle of workmen's compensation was included in the legislative program adopted by the Railway Labor Executives' Association.(27) In November 1933, representatives of the Association of Railway Executives and of the Railway Labor Executives' Association met under the auspices of the American Association of Labor Legislation to discuss amendments to the bill introduced by Senator Wagner.(28)
IV. PROPOSED METHODS OF HANDLING LEGAL TECHNICALITIES
The outlook for legislation is, therefore, more promising than it has been at any time. However, the variety of decisions given by the Supreme Court since the adoption of the Federal employers' Liability act of 1908 have given rise to differences of opinion as to the best method of handling the legal technicalities of insuring employees engaged in interstate commerce. One group holds that because of the litigation involved in determining the distinctions between employees engaged in interstate and intrastate work, when employed by common carriers, any successful legislation must avoid an appeal to the courts for a determination of this issue. But this group holds that, in view of the decision of the United States Supreme Court in the case of Crowell v. Benson,(29) the establishment of an administrative body to determine jurisdiction is beyond the scope of Congress, "unless a trial de nuvo is permitted in the courts."(30) To avoid the litigation involved in this attempted solution, these authors recommend that the problem be turned over to the States to handle under State workmen's compensation legislation, with such amendments as may be necessary.(31)
Another approach is suggested by Lindley Clark. He proposes to incorporate in legislation a definition of employees engaged in interstate commerce, based upon the lines of demarcation as already drawn in the decisions of the Supreme Court.(32) The definition of the service performed by the employee is the device adopted in the Wagner bill. This, however, grants compensation to accidents incurred while employees are engaged in specified services connected with "transportation" and not merely in interstate commerce.(33)
A more adventurous suggestion is made by Donald Richberg. While he admits that well-informed lawyers feel that the Supreme Court decision in the case of Crowell v. Benson(34) precludes any satisfactory solution through a Federal workmen's compensation act and that the subject had best be turned over to State workmen's compensation acts, nevertheless, Richberg urges Federal workmen's compensation on the ground that,
"There are many advantages of a uniform law that should not be yielded without a struggle. It is not optimism, but an obstinate desire to work for something really worth while which induces my personal interest in a Federal Compensation law to cover all employees of a common carrier engaged in interstate commerce."
"In this the liability should be imposed on the basis of the permanent work of the carrier rather than that of the employee at the time of injury."(35) This, Richberg argues, is the basis of the Railroad Labor Act which had been upheld as constitution.(36)
While the discussion has inevitably centered upon employees of common carriers by railroad engaged in interstate commerce, recent developments in transportation should not be overlooked. All employees engaged in any form of interstate commerce should be included, as in the Wagner bill.(37)
A Bill to provide Compensation for Disability or Death resulting from injury to employees in interstate commerce and for other purposes. (S. 3630, 73d Congress, 2nd session.)
Accident Compensation for Interstate Commerce Employees. American
Labor Legislation Review, Dec. 1933, v. 23, pp. 183, 184.
Clark, Lindley D. Workmen's Compensation and the Railroads: Hesitating Revolution. Journal of Political Economy, Dec. 1933, v. 41, pp.806, 819.
The background of the present situation, obstacles to compensation legislation and a consideration of legal possibilities.
Commonwealth of the State of Massachusetts. Annual Reports of the Department of Industrial Accidents, 1929-1932. Boston.
Doak, W.N. The attitude of the Railroad Brotherhoods toward Workmen's Compensation and the Reason for Such Attitude, published in: Proceedings of the Eighteenth Annual Meeting of the International Association of Industrial Accident Boards and Commissions, held at Richmond, Va., October 5-8, 1931. Bulletin, United States Bureau of Labor Statistics, No. 564. Washington, Govt. Print. Off., 1932. Pp. 53-57.
Federal Legislation concerning Railroad Employees. Monthly Labor Review, April 1929, v. --, 738-765.
Johnston, A. The Chicago Negotiation. Locomotive Engineers' Journal, Feb. 1932, v. 66, p. 86.
Legislative Notes. American Labor Legislation Review, Mar. 1933, v. 23, p. 5.
Loree, L.F. Railway Employer Favors Workmen's Compensation. American Labor Legislation Review, June 1933, v. 23, pp. 110, 111.
Message of the President of the United States transmitting the Report of the Employer's Liability and Workmen's Compensation Commission pursuant to Joint Resolution No. 41, (Approved June 25, 1910) together with Hearings held before the Commission. Washington, Govt. Print, Off., 1912. (Senate Document No. 338 62nd Congress, 2nd session.)
Railroad Emergency Transportation Act. (Public - No. 68 - 73rd Congress.)
Report of Committee on Compensation Legislation for Interstate Commerce Employees, in: Proceedings of the Thirteenth Annual Meeting of the International Association of Industrial Accident Boards and Commissions, held at Hartford, Conn. September 14-17, 1926. Bulletin of the United States Bureau of Labor Statistics, No. 432. Washington, Govt. Print. Off., 1927 pp. 39-41.
Results of the Chicago Negotiations. Locomotive Engineers' Journal, Mar. 1932, v. 66, pp. 166-170.
Richberg, Donald. Workmen's Compensation for Railway Employees. American Labor Legislation Review, Mar. 1933, v. 23, pp. 51-55.
Schoene, Lester P.; Watson, Frank. Workmen's Compensation on Interstate Railways. Harvard Law Review, Jan. 1934, v. 47, pp. 389-424.
Able legal analysis of Supreme Court decisions on distinctions between interstate and intrastate commerce with recommendations for handling interstate problem through State workmen's compensation.
Wilcox, Fred M. Separate Interstate and Intrastate Cases, in: Proceedings
of the Seventeenth Annual Meeting of the International Association of
Industrial Accident Boards and Commissions, held at Wilmington, Del. September
22-26, 1930. Bulletin, United States Bureau of Labor Statistics, No. 536.
Washington, Govt. Print. Off., 1931, pp. 42-29.
Workmen's Compensation Act for Railroad Workers. American Labor Legislation Review, Mar. 1932, v. 22, p. 57.
2. Message of the President of the United States transmitting the Report of the Employers' Liability and Workmen's Compensation Commission--. Washington, Gov't, Print. Off., 1912. Senate Document No. 338, 62nd Congress, 2nd session.
9. Parks, Joseph, in: Proceedings of the Eighteenth Annual Meeting of the International Association of Industrial Accident Boards and Commissions --, Bulletin, United States Bureau of Labor Statistics, No. 564, p. 58.
11. Employers' Liability Cases (Howard v. I.C.R. Co., etc.) (1908) 207 U.S. 463; 28 Sup. Ct., 141; cited by Clark, Lindley, D., "Workmen's Compensation and the Railroads: a Hesitating Revolution," Journal of Political Economy, v. 51, p. 812.
21. Ibid., pp. 183, 184; and "Report of Committee on Compensation Legislation for Interstate Commerce Employees," in; Proceedings of the Thirteenth Annual Meeting of the International Association of Accident Boards and Commissions--, Bulletin, United States Bureau of Labor Statistics, No. 432, pp. 40, 41.