1939: Workmen's Compensation

The Social Security Act was passed to alleviate the economic insecurity arising out of unemployment and old age, but as yet there is no Federal legislation providing for the insecurity arising out of industrial accidents and industrial disease. Legislation providing protection for this phenomenon is left to the individual states and the degree of social responsibility accepted by each state. To be sure, Senator Robert Wagner introduced a bill during 1939 providing for a Federal system of workmen's compensation covering 2,000,000 workers employed in interstate commerce who are still without this type of protection. The bill was first introduced in 1932.

The system of workmen's compensation is a great improvement over the old damage-suit method of settling occupational accidents. There is a serious drawback, however, and that is the large number of states which still permit commercial insurance companies to make a profit out of the injuries of workers. There are only eighteen states having state compensation insurance funds which offer insurance at cost. Private commercial insurance companies have offered bitter opposition to the establishment of state insurance funds, and yet employers have suffered fully as much as workers when these companies with whom they were insured failed. Even in those states having state workmen's compensation funds there is provision for insurance by commercial insurance funds. Only seven states have exclusive state compensation funds.

'The primary purpose of workmen's compensation is to insure to injured workers certainty of payment of their awards in order that they and their dependants may be saved from destitution. . . . It appears as a matter of record that not a dollar in compensation payments has been lost to a worker protected under any of the eighteen state funds. The same security against monetary loss has likewise been afforded to employers as policyholders.' (Bulletin No. 30, Division of Labor Standards, United States Department of Labor, by John M. Andrews.) However, millions of dollars are lost by injured workers and their dependants annually, not only because of the failures of private casualty companies but also because employers have neglected to insure against accidents. In New York State, which has competing insurance compensation systems, almost $100,000 awarded annually as accident compensation is not paid to workers who are victims of uninsured employers. In the state of Ohio, which has an exclusive state fund law, the same total of uninsured awards is paid annually to injured workers and is charged to industry.

As a result of the sessions held in forty-four state legislatures this year a number of accomplishments in the field of workmen's compensation are to be recorded. Arkansas adopted a workmen's compensation law which remains inoperative until a state-wide referendum is held in 1940. This law necessitated an amendment to the State Constitution. Montana passed a law making workmen's compensation compulsory instead of elective. Compensation benefits were greatly liberalized in California, Connecticut, Illinois, Kansas, New Hampshire, and Wyoming. California extended compensation privileges to household domestic workers, while Nevada and Oregon extended the employer's right to merit-rating under the exclusive compensation laws of these states.

Connecticut increased its maximum weekly benefits from $21 to $25 and extended its coverage to include employees of the State Police, correctional, penal, and mental institutions. It also extended from three to five years the time for which a claimant may file claims for occupational diseases contracted while employed. Delaware also extended its coverage to include state employees injured while temporarily out of the state but on the job. Illinois increased its compensation benefit by 10 per cent after July 1, 1939. This increase does not apply to death benefits. Maine, likewise, broadened its scope of coverage to include police and firemen. The state of Washington added to its list of extra-hazardous industries the installing and servicing of radios and electrical refrigerators. It also expanded the definition of employer to include the independent contractor who is really an employee.

At its convention in Cincinnati, this year, the American Federation of Labor came out for a strong program of Federal standards to govern workmen's compensation laws and to prevent insurance companies operated for private profit from participating in such a program.

'In reorganizing and enlarging the whole program of social security the states need to improve the workmen's compensation laws, especially in expanding their scope to all industrial diseases, in eliminating private-profit companies from the compensation business, and in placing administration of the laws under State departments of labor or industrial commissions on which Labor is represented.'

There are all too few states which recognize occupational diseases as fully as important a social responsibility as industrial accidents. In New York State, compensation for silicosis was eliminated from the state compensation law in 1936. Since that time futile attempts have been exerted to restore this clause. In 1939 the Associated Industries of New York State again defeated a bill to restore silicosis to the list of occupational diseases covered by the insurance laws.

Ohio increased its coverage this year to include all occupational diseases peculiar to a particular industrial process and reduced the required period of exposure to silicosis from five to three years. It also increased the benefits to silicosis sufferers to the equivalent of industrial accident compensation.

A reactionary legislature in Pennsylvania in 1939 wiped out most of the gains made in 1937-38. It restored some of the common-law defenses to employers who elect not to be covered by the compensation laws. It reduced the weekly maximum benefit and also the number of weeks during which compensation might be paid. Also, payment for an occupational disease will be made only after it has developed within one year of employment instead of two. The claimant must have been employed in a hazardous occupation for at least four years, instead of two, of the last eight years. Although the employer is made liable for a larger percentage of the silicosis benefits than previously, the responsibility will not be completely recognized until Oct. 1, 1949.

In New York State the drastic cut in appropriations to the State Labor Department impaired its system of notifying injured workers of their rights to benefits and of hearings on compensation claims.

There is no doubt that the exclusive state fund insurance makes possible far-reaching economies in workmen's compensation. In these states employers report accidents to the compensation commission which investigates claims, determines benefits, and makes payments. In states where there is competition with private insurance companies, there is great duplication of work and increased cost of administration. Furthermore, it is conceded that under an exclusive state fund system like Ohio, the worker is protected even if the employer has failed to pay premiums.

It is recognized that a Federal-state system of workmen's compensation similar to that existing under the Social Security Act would tend to eliminate many of the evils of the haphazard state legislation which now exists.