Committee on Economic Security (CES)
Volume VI. Social Insurance
G. Workmen's Compensation
November 14, 1934
The desirability of one type of economic and social security-compensation for injury to employees--was recognized more than 40 years ago in the United States.
Radical changes in industry had gradually accentuated the inconsistency and injustice of the common law of negligence, under which it was extremely difficult for an employee to obtain redress for an injury. Attempts to correct the defects by enactment of employers' liability statutes created a very complicated situation and provided numerous rules based upon diversified and conflicting reasoning. Employers' liability legislation afforded the injured employee or the dependents a theoretical opportunity to collect damages for the loss in earning power, but for every case in which comparable damages were received, there were many in which nothing at all was recovered, and a large percentage of all allowable compensation went to the lawyers.
The unsatisfactory experience under the liability laws and the desire find a solution of the problem led in 1891 to a study by the United States Bureau of Labor of the German accident insurance system, which became effective in 1885. Investigations of European systems were also made by individual States, and attempts were made as early as 1898 to establish State laws covering workmen's compensation, but did not result in any permanent act. Under the limitation of Federal authority, independent State action was necessary, and compensation legislation was viewed with suspicion in otherwise progressive States that were afraid of serious competitive injury to their respective industries, through increased cost on production.
The lead was taken by the Federal Government, which already had, in 1882, provided some benefits to employees in the lifesaving service and, in 1900, for injured postal employees. The first permanent official recognition of the workmen's compensation principle in the United States was in 1908, when Congress enacted a Workmen's Compensation Law for civil employees in certain hazardous employments in the Federal service.
This endorsement prompted further attempts for state legislation, and in 1911 Workmen's Compensation Laws were enacted by ten States. Since that time one State after another has fallen in line, so that now only four States, all in the southeastern section of the country, are without any compensation laws. Efforts have been made, and are being continued, to establish acts in these four States.
The fundamental principle of workmen's compensation is to make suitable provision for workers and their dependents in the event of injury arising out of employment, with the expense charge as a legitimate factor in the cost of production, payable in the first instance by the employer but added by him to the selling price of his products, and ultimately paid by the consumers.
This does not mean, as the term compensation might imply, that all of the burden is borne by the employers or, in the final analysis, by the consumers. The payments to the injured employees or their dependents are limited to a specified percentage of the wage loss, in addition to other limitations. Payments received are therefore not adequate compensation, but a limited -indemnity which does not fully reimburse the worker for the financial loss resulting from the injury. Consequently, the workers and their dependents bear a certain share of the cost of industrial injuries.
The advantages of the compensation system is likewise shared by employers, employees, and by society at large.
The employer is relieved of the uncertainty and expense of damage suits. He is also relieved of the necessity of advancing the total loss in any particular case, as he can secure his risk by relatively small annual payments for compensation insurance and distribute direct payments through extended periods.
The worker is assured of certain and speedy relief at a time when it is most needed, and of receiving payments direct and in full, according to a fixed schedule, eliminating delays and reduction of compensation by deduction of legal expenses.
Society benefits through the reduction of the economic waste in the litigation of claims; through the reduction of poverty and destitution of injured workers and their dependents; and through the reduction of preventable industrial accidents--one of the reasons for the requirement that the initial cost shall be assumed by the industry.
Including the three acts under Federal administration and the acts of the possessions of the United States, workmen's compensation legislation is in effect in 51 jurisdictions in this country. Unfortunately, this does not mean that these compensation acts are uniform, nor that model compensation laws have been adopted in each of the 51 jurisdictions.
All of the laws are, however, designed to afford medical, surgical, and hospital service immediately after injury and for a limited time thereafter; and to provide limited financial aid, based upon previous wage income, in order to maintain the worker and the dependents above want until recovery from the injury; or, in the event of death, to provide limited financial aid the dependents until a self-sustaining status is reached.
While workmen's compensation laws are a great improvement over the former employers' liability system, they are still far from adequate. In the first place many employees are excluded entirely from the benefits of the acts. It is of no particular significance to an injured worker that the compensation law in his State has a high scale of benefits if his occupation does not come within the scope of the Act. Various features are responsible for the narrow scope of many of the existing acts.
COMPULSORY OR ELECTIVE LAWS
Compensation laws may be either compulsory or elective. A compulsory law requires every employer within the coverage of the law to accept the Act and pay the compensation specified. An elective act is one in which the employer has the option of accepting or rejecting the act. In case he rejects, the injured employee may sue for damages, and the employer is penalized by losing his right to his common law defenses.
If a compensation law is desirable, then it should apply to all employments. Permitting the employer the option of accepting or rejecting the act defeats in a large measure the intents and purposes of workmen's compensation legislation.
Of the 51 compensation acts, 19 are compulsory for private employment, and 32 are elective. Compulsory compensation is required for public employments in 12 of the acts which permit optional compensation for private employments. Many of the jurisdictions enacted elective laws to overcome constitutional difficulties, but a substantial number have adopted the compulsory system, which has been declared constitutional in several Supreme Court decisions. In most of the jurisdictions having elective laws practically all of the employers who are not otherwise exempted have accepted the act , but in some jurisdictions relatively few have done so.
All compensation laws should be compulsory unless such a provision conflicts with the State constitution.
COVERAGE OF EMPLOYMENTS
The two groups of workers who are most widely denied the benefits of compensation are farm laborers and domestic servants. Only one act covers all employments, including domestic servants. Farm labor is excluded in all but two acts, though in a third act coverage is presumed--unless either employer or employees reject the act. Four other acts cover threshing of grain, or farm labor using machinery. Twelve States limit their acts to so-called hazardous employments, thereby excluding mercantile establishments, clerical occupations, and the professions. Interstate railroad and maritime employments have so far been excluded because of Federal legislation and constitutional limitations. The attention of the United States Congress was recently directed to this omission through the introduction of a bill providing complete and compulsory coverage of railroad employees engaged in interstate commerce, a step in the direction of greater social security.
Other exclusions in a number of acts include casual labor and employments not conducted for gain, such as in charitable and religious institutions. A few exclude also employees receiving above a designated wage or salary.
The almost universal exclusion of farm labor can hardly be attributed to a nonhazardous character. Two of the acts have definitely provided for coverage of all farm labor, while four others have recognized the necessity of protection where the use of machinery is involved. European experience, together with available statistics in this country, indicates that farming is a highly hazardous employment.
Domestic servants and clerical employees are excluded because of a low accident hazard. The same reason accounts for the exclusion of employments not classed as hazardous in the 12 acts where coverage is confined to hazardous or extra-hazardous employments.
Numerical exemptions are also an important factor, excluding workers in small plants from the benefits of the workmen's compensation principle. Employers having less than a specified number of employed are exempt from the operation of the law under 24 acts. The specified number is ordinarily 3 or 5, but ranges from 2 in one jurisdiction to 11 in three jurisdictions and 16 in one jurisdiction. It is alleged that the hazard from fellow workers is low in employments where only a few are employed. Most of the acts permit the exempted employers to come under the law voluntarily, as they do employments otherwise excluded. Voluntary acceptance is, however, not taken advantage of to any extent.
The exclusion of employments or employers on the ground of having a low hazard is indefensible from every point of view and especially from that of the injured worker, whose misfortune is not at all alleviated by the suggestion that the injury was quite unusual or unexpected. An injury received in a mercantile establishment may be just as severe and entail just as much distress as one received in a steel mill. The same condition applies in regard to an injury received in a small plant with a few workers or received in the midst of a number of other workers. Furthermore, if an occupation is in fact only slightly hazardous, the additional financial burden on society would likewise be slight, because of the very fact that accidents are infrequent in these exempted employments.
All industries and employments, including public employees, should be covered under the law, with the possible exception of agriculture and domestic service unless the work involves the use of machinery.
COVERAGE OF INJURIES
Compensation laws are limited not only as to employments covered but also as to injuries covered. As a rule injuries must have been received in the course of employment and must have arisen out of employment, although six acts do not contain the "arising out of" clause. In the jurisdictions covered by these six acts every injury which occurs in the course of employment, with certain exceptions, is presumably compensable. Only two of the acts do not provide that the injury must be received in the course of employment. In 39 of the acts it is stipulated that the injuries must be accidental. Injuries due to willful conduct, intoxication, or gross negligence are ordinarily not compensable. In 15 acts compensation is denied for willful failure to use safety appliances or disobedience of safety rules.
While 39 of the acts stipulate that the injuries, to be considered compensable, must be accidental in nature, 10 of these also provide compensation for occupational diseases, though not for all types. Eight of the other 13 acts also include coverage of occupational diseases, general in 12 but limited in one of them.
Of the 18 acts which recognize that occupational disease should be considered as an injury due to the nature of employment, only 10 cover all types of these, either through direct stipulations in the law or through elimination of the accident requirement. Seven of the acts limit the coverage to specific diseases listed in the law. These lists vary greatly. The highest number of diseases considered compensable is 27 listed in one act. Other acts cover 23, 21, 15, and 10 types. One act recognizes only disease resulting from lead, brass, or zinc, while one other limits the coverage to injuries due to inhalation of gases or of silica dusts. The eighteenth act provides optional coverage for employers with respect to occupational disease.
In all of the other acts, occupational diseases are excluded from the scope of the law by express provisions in the act, by limiting coverage to accidental injuries, or by adverse rulings of commissions or courts. There is no valid reason for not applying compensation to all types of occupational disease. The original idea of workman's compensation was its application for disabilities occasioned by employment. At the time the majority of these laws were enacted, disabilities were in practically all cases the result of accidents. The great changes in industrial activities developed numerous new hazards or accelerated some that previously were insignificant, such as the multitude of chemical processes which are responsible for an ever-increasing exposure of workers to chemical hazards. The additional cost, advanced as an argument against the coverage of occupational disease, had been shown to be only between 1 and 2 percent of the total compensation cost, and that amount should certainly not prove sufficient excuse for depriving the workers of this protection.
All injuries, including occupational diseases, arising out of unemployment should be compensable, unless intentionally self-inflicted or due to the intentional act of another party for personal reasons not connected with the employment.
Another factor restricting the coverage of injuries is the withholding of compensation payments for a fixed period after the occurrence of the injury, the so-called waiting period. This does not apply to payments for medical or hospital relief, which must be paid or arranged for at once. Neither does it apply to fatal cases, in which compensation payments start immediately unless a period of disability intervenes between the day of the injury and the day of death.
Three-fourths of the acts provide a waiting period of 1 week, one act of 10 days, two acts of 2 weeks, while one act requires only 5 days, six acts only 3 days, and two acts have no waiting period. The majority of acts, however, provide for compensation of the waiting period if the disability continues for a specific term, usually 4 to 6 weeks.
The theory of the waiting period originated from a desire to prevent malingering and to avoid the administrative expense involved in paying compensation for every injury causing disability extending beyond the day of occurrence. The importance of the waiting period may be indicated by the fact that 47 percent of all temporary disabilities terminate within one week, and 66 percent within 2 weeks. Figured in terms of days lost this means that a 7-day waiting period eliminates 9.4 percent of the total time loss for temporary disabilities, while a 14-day waiting period eliminates 20.7 percent.
The waiting period should in no case exceed 7 days and a uniform waiting period of 3 days in all acts would be preferable.
All compensation laws provide that in case of injury or death the worker or the dependents shall receive certain stated financial benefits. The amount of these benefits varies greatly under the several acts, even though they have all been determined according to two general factors--loss of earning power, and social need.
The amount of compensation is based upon the earnings of the injured except in two acts which provide a flat monthly pension irrespective of wages. The periods during which the benefits are paid vary considerably, the most common provision in case of death, being 6 years, although 11 acts provide for compensation to widows until death or remarriage. One act stipulates 4 years only, while the period reaches 10 years in another. Another limitation provides that the total compensation shall not exceed a certain fixed amount, ranging from $1,500 to $9,000, but principally $4,000 to $6,500.
In 17 acts the compensation scale, based on the rates for temporary total disability, is 66 2/3 percent of the worker's wages, in 6 acts 65 percent, in 8 acts 60 percent, in 5 acts 55 percent, and in 12 acts 50 percent. In one act the compensation scale is 70 percent of the worker's wages. Two of the acts provide a flat monthly pension, which varies with conjugation and number of children.
The principle that industry, and through industry society, shall bear the burden of industrial injuries is quite generally accepted at present. The theoretical application of this principle would mean that the injured worker should receive 100 percent of the previous earnings in case of injury. There can hardly be any question of the fact that the average worker needs the full amount of previous earnings to maintain a family, and the fact that the injury has deprived the worker of the earnings would lead to the conclusion that the entire amount should be paid.
It may be desirable, both for the prevention of possible malingering and for bringing home to the worker the individual responsibility for the injury, to let the worker assume a portion of the financial burden. This portion should at the most, however, not be more than one third of the compensation cost.
The amount of compensation should equal in case of disability at least 66 2/3 percent of the wages of the injured worker, to be paid during period of incapacity. In case of death the percentage should vary with the conjugal condition and number of children, ranging from 35 to 40 percent for a lone widow until death or remarriage, with 15 percent additional for one child under 18, and 10 percent additional for each additional child, subject to a maximum of 66 2/3 percent of all.
WEEKLY MAXIMUM AND MINIMUM PAYMENTS -
In addition to the percentage deductions from the actual wages of the worker, all acts except two provide maximum and minimum compensation payments, weekly or monthly. The maximum weekly payments for temporary total disabilities range from $9 in one act to $30 in one act.
Two acts prescribe a maximum of $14, twelve of $15, five of $16, one of $16.50, six of $18, one of $18.75, one of $19.50, eight of $20, two of $21, and four of $25. Maximum monthly payments provided in four of the acts are $72 in one, $90 in one, $97 in one, and $116.66 in one. The remaining act provides fixed monthly amounts, according to dependency: $35, if single; $40, if wife or invalid husband; $12.50 additional for one child; $7.50 for second child; and $5 for each additional child.
These maximum payments, beyond which the compensation cannot go, but only limit the amounts, but virtually nullify the percentages. It is absurd to speak of payments of 66 2/3 percent of the wages when the same law limits the weekly payments to $14, $16, $18, or $20. It was evidently the intent of State legislatures when they fixed the percentage system of compensation to divide the cost between the worker and the industry on the basis named. The introduction of the weekly maximums, together with other limitations, compels the injured workers to bear at least two thirds of the cost.
The weekly maximums are unjust to the workers and should be omitted from the acts, or at least raised to a sufficient level to enable the worker to maintain self and family while incapacitated.
COMPENSATION PERIODS -
In most acts it is conceded that permanent total disability constitutes a greater economic loss than a fatal injury. Payments to widows are in most acts limited to a term of 5 years, although 11 acts provide benefits until death or remarriage. The limitation on maximum amount payable in any one case ranges ordinarily from $4,000 to $6,500. In permanent total disability cases, however, 21 acts provide that compensation payments shall continue during the full period of the life of the injured, although four of these acts also provide maximum amounts, $7,500 in two, $10,000 in one, and $15,000 in one. In 27 other acts the period for which compensation is paid ranges from 208 to 1,000 weeks. Maximum amounts are also prescribed in 19 of the acts which do not provide for life payments. These range from $1,500 to $9,000.
Two methods have been adopted for compensation payments in permanent partial disability cases, and usually both methods are provided for in the act. One method is payment based on the percentage of wage loss occasioned by the disability, with payments continued during incapacity but subject to maximum limits. The other method is payments for fixed periods according to a schedule for specified injuries. Two of the acts do not include schedules. The amounts in these schedules vary considerably among the various acts, although the usual provision is from 200 to 250 weeks for the loss of an arm, 175 weeks the loss of a hand, 200 weeks for the loss of a leg, 125 to 150 weeks for loss of a foot, and 100 to 125 weeks for the loss of an eye, with proportionate amounts for minor disabilities. Perhaps the least defensible provision in compensation legislation is the limiting of the periods in which compensation is payable if need still exists at the expiration of these periods. The termination of payments to a widow at the expiration of 300 weeks or less cannot be justified from either a social or an economic standpoint. The older the widow the greater her dependence and need for compensation, unless she has remarried. The same principle holds true with respect to total and permanent disabilities. The longer the worker is disabled the greater will be the need for compensation, and to terminate the compensation benefits while total disability exists violates one of the fundamental principles of Workmen's Compensation Laws. Specific periods provided for loss of or loss of use of members are supposed to roughly represent the loss of earning capacity, but are entirely inadequate for the major disabilities and actually bear little relationship to the loss of earning capacity resulting from such disabilities.
In fatal injury cases compensation should be paid until the death or remarriage of the widow. It seems advisable to award a lump sum, equal to two year's compensation, in the case of remarriage. Children should receive compensation until 18 years of age, or longer if they are physically or mentally disabled.
In permanent total disability cases compensation should be paid during life. In permanent partial disability cases compensation should be paid for temporary total disability during the healing period, and additional compensation paid for the permanent partial disability on a justifiable basis, such as according to the schedule adopted by the International Association of Industrial Accident Boards and Commissions.
In temporary total disability cases compensation should be paid during disability.
MEDICAL SERVICE -
All of the compensation acts provide medical service in case of injury. The usual provision is that the employer shall furnish reasonable or necessary medical, surgical, and hospital service. In 14 of the acts neither period of service or cost of service is limited. Eight other acts do not limit the period, and 12 other acts place no limitation except reasonableness upon the amount of medical service which the employer must furnish. In 19 of the acts the employer's liability is limited as to length of time, ranging from 10 days to 90 days, but with additional service at the discretion of the administration in 12 acts. In 25 of the acts the maximum amount is limited, ranging from $100 to $800, but with additional cost at the discretion of the administration in 11 of the acts.
Four of the acts permit collections from employees for medical funds, $2.50 per month in one, one half cost but not to exceed $1 per month in two, and one half cost in one, while several acts prohibit contributions by employees.
There seems to be no legitimate reason why unlimited medical, surgical, and hospital treatment should not be provided under every workmen's compensation act. Adequate medical treatment is absolutely essential for the rehabilitation and restoration of the earning capacity of injured workers. The cost of this service should not be transferred to the worker, who already carries considerable of the financial burden. It should, like the compensation payments, be absorbed by the industry as cost of production.
The injured worker should be furnished, free of charge, such medical, and hospital treatment including nursing, medicines, medical, and appliances, crutches, and apparatus, including artificial members, as may reasonably be required to cure and relieve from the effects of the injury. Employers should not be permitted to accept contributions from employees to defray medical, surgical, or hospital service for injuries arising out of the injury in the course of employment.
It is manifestly unjust that in case of the loss of a second eye, a worker should receive compensation for loss of one eye only. On the other hand, if he should be awarded permanent total disability it would result in a discrimination against the employment of one-eyed workers. The same problem presents itself in the case of any worker who has lost a leg, or an arm, or any other member of the body. He is industrially handicapped and the possibility of having to pay an award for total disability would make most employers refuse to employ him. The obvious and simple solution of this dilemma is the establishment of a special fund, to relieve the employer of the additional liability, so that in case of a second injury he will be charged with the cost of the single injury only. The injured worker will, however, receive compensation for the disability caused by the combined injuries.
Such funds have been provided under 14 of the acts, and the establishment of a similar fund in each jurisdiction has been urged by the International Association of Industrial Accident Boards and Commissions.
INCREASED COMPENSATION FOR ILLEGALLY EMPLOYED MINORS.
In an effort to advise the social conditions of workers many of the States have adopted child-labor laws prohibiting employment at dangerous work to persons under certain ages, or requiring labor permits for minors.
Such age limitations have also been partly extended to other States where no provisions existed, as a result of the labor provisions in the N.R.A. codes of fair competition. Most of the codes which have been approved prohibit, so far as the individual industry is concerned, any employment of children less than 16 years of age and also the employment in hazardous occupations of children less than 18 years of age.
Fourteen of the compensation acts provide that the employer must pay increased compensation when an illegally employed minor is injured in his service. Other acts cover illegally employed minors without any special provisions regarding indemnity for injuries, and in some acts no coverage is extended.
Double compensation payments are provided in eight of the 14 acts. One act stipulates double compensation to injured minors employed without a labor permit in otherwise lawful employment, and treble compensation to minors employed in prohibited employment. Three acts provide for 50 percent additional compensation, and the remaining act for 25 percent additional compensation but extended to 35 percent under certain conditions.
The welfare of the youth of the Nation is an important social factor, and the application of a penalty for violating the laws which protect the lives and the limbs of the future workers seems fully justifiable. Minors should not be employed on unguarded or dangerous machines, nor in any other hazardous occupations. Provisions should be made in all acts for double compensation--at least, in all illegal employment of minors.
ADMINISTRATION AND PROCEDURE.
Most of the workmen's compensation acts are particularly framed to avoid legal entanglements and the technicalities of law pleading. In the great majority of acts it was determined at the outset that administration by the courts was unsuited to the intent and purposes of the act, and provisions were made for special administrative bodies, making use of existing labor agencies as far as possible or creating new ones to administer the compensation laws. Some of the jurisdictions, however, did not establish administrative systems, and consequently two general types of administration were developed--the commission or board type, of which there at present are 44, and the self-administrative or court type, which was originally adopted by 15 jurisdictions but proved so unsatisfactory in eight of them that the commission type was substituted later, so that court administration now exists in only seven jurisdictions.
In the commission type, a special administrative organization, usually a commission or board of three members, is created to enforce the law. It is granted extensive powers, and ordinarily has three distinct functions, administrative, legislative, and judicial. The administrative function is mainly concerned with activities relating to the keeping of records, regulation of employers coming under the act, and supervision of insurance provisions, involving investigative and clerical work. The legislative function consists in formulating rules of practice and procedure for carrying out the provisions of the act, while the judicial function is exercised in adjusting and settling compensation claims. The commission usually also administers the State compensation insurance fund, if such a fund is created, and in some jurisdictions has the additional function of accident prevention, while in other jurisdictions it administers part or all labor laws.
In the court type the amount of compensation and other questions at issue are settled directly by the parties concerned, the employer or the insurance carrier and the injured worker or the dependents. In case of dispute it may be submitted to arbitration. If this fails, the controversy is taken to the courts for adjudication. The functions of the courts are consequently confined practically to the settlement of disputed claims, and where this system exists a limited supervision over some of the other provisions of the act is exercised by governmental labor agencies or other local authorities.
The need of an authoritative agency to administer the compensation law and direct the procedure is sufficiently demonstrated in those jurisdictions which do not possess them. A large proportion of American workmen, whether native or foreign, are generally unfamiliar with their rights under the law and do not know what action to take in case of injury. The fear of discharge also frequently acts as an effective deterrent in demanding compensation. An administrative commission is practically necessary to insure correct procedure for the injured worker, and the prompt adjudication of controversies without unduly technical entanglements. Compensation acts, in common with most other laws, are not automatically enforceable but require administrative bodies to enforce them.
The administration of the compensation act should be vested in a board or commission, preferably of not more than three members. The board should be granted sufficient authority to determine all detail procedure, to employ necessary assistants, and to administer the act efficiently.
The board should be the sole judge of all questions of fact, with recourse to the court only on questions on law. The expense of administration should be paid by the industry or the insurance carriers.
Under a compensation law the employer is liable for the compensation provided. Many employers, however, in case of serious or fatal accidents, would probably not be able to meet their compensation obligations. All but three of the acts therefore require all employers to secure their compensation payments by insuring their risks in an authorized insurance carrier, or in a State insurance fund where such a fund is provided, or, in the case of self-insurers, to deposit bonds or other collateral security and to furnish a financial statement showing assets and liabilities. Forty acts permit insurance in private carriers. Forty-one acts permit self-insurance. Eleven acts provide for a competitive State insurance fund in which the fund operates in competition with other forms of insurance. Seven acts provide for an exclusive State fund, which becomes the sole insurance carrier, with no private insurance carrier permitted to operate in the jurisdiction.
There has been a great deal of discussion as to the relative merits of the different types of insurance. An investigation made about 10 years ago showed that the State funds could operate more economically than either the mutual or stock companies. Insurance premium rates from that time to date indicate that the same condition prevails at present. One competitive State fund, which is operated on practically the same plan as private mutual carriers, accepts business at 25 percent less than the insurance premium rates charged by stock companies in the same jurisdiction.
The refusal of private insurance companies to underwrite either all of certain industries or at least special risks classed as undesirable presents a problem, which seemingly can only be solved by the establishment of the so-called State funds, a term that is very misleading. It permits the assumption that the State assumes the financial obligation involved in the enterprise, when it is really a mutual fund, supervised by State officials, and the expenses of the fund are paid by the insured.
Self-insurance is usually limited to the larger employers. Sixteen of the acts require that self-insurers must in all cases either furnish proof of solvency or deposit security, while the other acts require this only if their solvency is considered questionable. The larger employers ordinarily prefer self-insurance, especially where insurance premiums are based on schedule rating, which increases the cost for an employer with a low accident record. With insurance furnished at a cost basis this objection would, of course, be eliminated.
Every employer should be required to furnish adequate security to guarantee his compensation obligations under the law. Insurance should be compulsory. The tendency to evade insurance requirements should be met with heavy penalties for failure to insure. The State should provide facilities for insurance for every employer subject to the compensation act, by the establishment of a State insurance fund, either exclusive or competitive.
Where private insurance is permitted, the supervision of solvency of the carriers and the responsibility for the reasonableness and adequacy of the insurance premium rates should be vested in the board or commission administering the act.
One of the important effects of workmen's compensation laws has been the stimulus it has given to accident prevention work. Adding the cost of injuries to the cost of production made the reduction of accidents an economic as well as a social problem. It was realized that it was cheaper to prevent accidents than to pay for them.
Compensation acts generally provide for the reporting of injuries, a primary factor in accident prevention. Reports explain where, when, how and why accidents occur, information which is necessary to avoid similar mishaps. Many of the acts also provide for the establishment of safety regulations and inspection of industrial work. Some of the commissions which administer compensation laws are performing excellent safety work.
These duties, however, are in some jurisdictions assigned to other officials, and as a result the commissions are not always interested in accident prevention. They regard themselves as judicial rather than administrative officers. Since the problem of accident prevention is intimately connected with the whole theory and system of compensation it would seem that this important work should logically be undertaken by the same agency that administers the compensation provisions.
Insufficient appropriations are often responsible for the neglect of the safety movement. It costs money to save money, and energetic accident prevention work will soon pay large dividends, both social and economic. Adequate funds should be provided to permit inspection of workplaces, instruction of both employers and workers in safe methods, and other assistance to eliminate unnecessary and preventable accidents.
The fact that some changes are desirable in existing compensation is evident from the amount of legislation proposed yearly in the various jurisdictions. During 1933 more than 400 bills relating to workmen's compensation were introduced in 43 State legislatures. Some of the measures proposed radical changes in present systems but, as usual, the majority of them failed to pass. A total of 83 were enacted. Special commissions were active in different States, by legislative or other governmental direction, investigating the compensation acts or certain phases of these.
1. Compensation: Compulsory
2. Coverage: All industries and all employees, including State and municipal, but exempting possibly agriculture and domestic service. No exemptions of small employers or "nonhazardous" industries. The right of the employee to waive compensation prohibited. Extra territorial workers to be included. In this connection reciprocity and cooperation between States is very desirable.
3. Injuries: Define injuries to include occupational diseases. "Blanket" coverage of occupational diseases rather than "schedule" coverage.
4. Waiting period: Not more than 7 days nor less than 3.
5- Percentage: For nonfatal cases, not less than 66-2/3 percent of the injured employee's wage. In case of death, 35 percent for widow, without children, plus additional amount for each child, the total not to exceed the percentage for permanent total disability.
6. Weekly maximum and minimum compensation: Maximum should recognize the rights of the higher-paid workers to a standard of living above the subsistence level, and minimum should be not less than the subsistence level.
7- Compensation period: Fatal cases: benefits until death of widow or remarriage, in which case 2 years' compensation at time of remarriage; children to 18 years, and thereafter if physically or mentally incapacitated.
Permanent total disability: During life
Temporary total disability: During disability
Permanent partial disability: Compensation should be calculated on the basic percentage of permanent total disability and should be payable in addition to compensation for healing. period (that is, temporary disability).
For administrative simplicity, there should be a schedule of permanent partial disability benefits based upon the foregoing principle.
8. Medical service: Unlimited medical and hospital service without cost to injured employee. Choice of physician by employee from panel. Impartiality of testimony re: extent of disability.
9. Second injuries (for instance, loss of second eye); second-injury fund; rehabilitation fund: Employer charged as though for first injury and balance to be paid out of special-injury fund, both amounts not to exceed permanent total disability. Fund secured from death benefit where there are no dependents, and from payments in first major injury cases.
10. Increased compensation: Double compensation for illegally employed minors injured during course of employment.
11. Administration procedure: Commission, not court. Informal, "administrative," with adequate provision in law for the commission to have the power to check "ambulance chasing," regulate attorney's, and doctor's fees, etc. Appeals to be permitted to appellate courts only on questions of law.
12. Insurance: Two methods possible (first method recommended):
(a) state insurance fund, exclusive or competitive
(b) Private insurance carriers
Severe penalties on employers not complying with insurance requirements desirable.
13. Accident prevention: Adequate provision. Reporting of all accidents compulsory
14. Uniformity: Steps to be taken to insure uniformity of workmen's compensation laws in all jurisdictions.