The first video in daisyBill’s new Essential Basics Explained series details the historical development of workers’ compensation in California.

Video Summary

When injuries occur in the workplace, both businesses and their employees face several challenges. The History of Workers’ Compensation covers the key rights of injured workers and their employers that arose out of the historic Grand Compromise and how those rights are managed within the system we know today.

California Workers’ Comp Grand Compromise

California’s approach to workers’ compensation protects employers and their employees alike while maintaining focus on addressing the problem of the injury rather than allowing it descend into finger-pointing and drawn-out court cases. This compromise has three key features that foster a solution-friendly environment in place of mutual suspicion.

No Fault - AOC/COE

First, the workers’ compensation system is established as a no-fault system—in other words, no matter how the accident has occurred, no single party shoulders the blame, as long as the employee’s alleged injury was work-related and happened in the course and scope of employment (AOC/COE - Arising Out of Employment / Course of Employment).  This no-fault system streamlines the process considerably by preempting the discussion of whether an employer is responsible for the injury. It also helps businesses to protect their brands following an accident; if paying compensation is the norm, it’s less likely any one company will suffer bad publicity for doing so.

Exclusive Remedy

Second, injured employees may not pursue additional damages from their employers, unless the employer is uninsured. This is known as exclusive remedy. Even if employers are grossly negligent, they are protected under California Labor Code: 4208. This is a huge benefit to employers who have workers’ comp insurance, but also helps to ensure employees are protected.

Assured and Fixed Benefits

Third, benefits in California’s workers’ compensation system are assured and fixed. Instead of relying on the courts to settle cases, the workers’ comp system guarantees compensation for injured workers. This means that cases are settled more quickly, benefits are clearly defined, and payments are equitable for all injured workers. The alternative would mean that settlements take much longer to process and a few injured workers would get large payouts, while most would get very little or nothing. This also protects businesses from unexpected expenses. If they pay the reliable, relatively low-cost fees for proper insurance, then they are not likely to pay out expensive settlements that might threaten their bottom line.

1913 Workers’ Comp Mandated

The California approach to worker’s compensation evolved over time. After a disastrous fire in New York City in the early 20th century brought national attention to the need for worker protections, California established a voluntary insurance system. Workers’ compensation was mandated two years later in 1913 under the Boynton Act, which also established the State Compensation Insurance Fund.

Historically, changes to the California workers’ compensation system were positive, in that they added protections for workers; like consideration of an injured workers ability to compete in the labor market. More recently though, policy changes have centered on service delivery and cost-reduction; like the addition of Medicare Geographic Price Indices to account for the differences in costs for practitioners from place to place in the state. Overall, the system helps protect employers and employees alike from hardship and volatility in the unfortunate circumstance of worker injury.

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