Workers’ Compensation Law Prof Blog

A Major Event: Complete Papers from Rutgers Law Symposium, "Demise of the Grand Bargain" Published, Available Free Online

            The complete papers of the September 23, 2016 Rutgers Law School Symposium, “The Demise of the Grand Bargain: Compensation for Injured Workers in the 21st Century,” have now been published. They appear in the Rutgers University Law Review, Volume 69, Issue 3 (Spring 2017) a quarterly which can also be read free online: http://www.rutgerslawreview.com/home/current-issue/.

            I have already summarized the lead article, by Professor Emily Spieler, and noted my effort in this blog. That article, (Re)assessing the Grand Bargain: Compensation for Work Injuries in the United States, 1900-2017, is a tour de force and shouldn’t be missed. (See my summary at www.davetorrey.info.)

            The other major articles, which follow that of Professor Spieler, are:

• Alison Morantz, Julia Bodson, Sarah Michael Levine, & Marcus Vilhelm Palsson, Economic Incentives in Workers’ Compensation: A Holistic, International Perspective;
• Robert F. Williams, Can State Constitutions Block the Workers’ Compensation Race to the Bottom?; and
• Robert L. Rabin, Accommodating Tort Law: Alternative Remedies for Workplace Injuries.

            Commentaries featured in the issue include:

> George W. Conk, Deadly Dust: Occupational Health and Safety as a Driving Force in Workers’ Compensation Law and the Development of Tort Doctrine and Practice; and 
> Charles R. Davoli, Challenges of the Changing Legal Structure of Workers’ Compensation and the Changing Workforce

            This special Symposium issue also includes four shorter commentaries and two transcripts of remarks – one by Professor Mike Duff, who heads this blog.

More Contractual Opt-Out: The Gig Race to the Bottom Rolls on to Georgia and Back to the 19th Century

Updated: I have learned from Georgia attorney Tom Holder that this legislation was not brought to the floor. It appears there was the right kind of pressure at the right time. In this lawyer's opinion, this is a very good outcome.

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I have recently analyzed a Tennessee statute purportedly originated by Handy, Inc. and currently enacted in almost identical form in five other states throughout the country: Indiana, Utah, Kentucky, Florida and Iowa. Tennessee made six.  And now Georgia is about to be seven. I will not bother analyzing the Georgia bill (it is essentially the same as the other transparently coordinated laws), but you will find its text here.

Reduced to its essence the situation boils down to this. Suppose I run my business “online” and direct workers to a customer. If those workers agree in writing that they are independent contractors, and if I am not personally on site to supervise the workers, the workers are deemed independent contractors as a matter of law.

The impact of the laws is obvious. Given the fast and loose way in which they are written, any company that dispatches workers and supervises them remotely has effectively been permitted to opt out of workers’ compensation regulation. To confirm my claim, simply imagine any company that uses online dispatching (of virtually any kind) to route workers to customers. Then read any of these statutes and tell me why all such workers of that company could not be classified as independent contractors.

Proponents of such legislation say the laws will simplify the independent contractor analysis. They sure will!  As an aside, I doubt very much that the spread of these laws is being funded by a handyman company. So, I invite my readers to “follow the money.”  Let me know what you find out.

The universal salve for the wounds occasioned by this species of de-regulation seems to be that the employer and employee have agreed to a de facto waiver of rights. Freedom of contract, it seems, cures all ills. It was precisely struggles over “contracting out” that lead to abandonment of employer liability statutes and establishment of the English Workmen’s Compensation Act of 1897. The labor movement of that day, having only recently obtained the widespread right to vote (the U.K.'s embrace of anything resembling democracy came later than many imagine), would only agree to allowance of contracting out under the liability laws if an employee received adequate additional consideration beyond mere employment. David G. Hanes, The First British Workmen's Compensation Act, 1897 37-41 (Yale University Press 1968). So fractious were the debates over contracting out that the door to workers’ compensation was opened and has remained open in Anglo-American law for almost 120 years. Remarkably, we are having--under the guise of opt-out, compulsory arbitration, independent contractors, and gig laws--a debate that raged, and was apparently not resolved, in the late 19th century.

Mark my words – if the pulverizing of the expanding class of contract workers continues, large consequences will follow. This is a bona fide race to the bottom.

Michael C. Duff

The Road to Workers’ Compensation: How Vicarious Liability Killed the Fellow Servant Rule in 1893

In the 1880s, English tort law had a doctrinal problem. A third-party could sue an employer vicariously for the tort of the employer’s employee committed within the scope of employment, a rule so familiar now it is nearly ubiquitous to us. But the rule was relatively new in the late 19^th century and, what is more, the employer’s employee did not have, in the same manner, a vicarious cause of action against his or her employer for the negligent acts of a second, co-employee, committed within the scope of that employee’s employment.  American lawyers recognize this principle as the “fellow-servant rule,” a major historical spoke in the “unholy trinity” wheel of employer affirmative defenses that routinely defeated negligence cases filed by employees in the mid-19th to early-20^th centuries. What is less familiar to American lawyers is how the fellow-servant rule emerged under tort law in the first place. 

By the mid-19^th century, the English courts had fashioned a doctrine known as “common employment.” If the employer-principal worked among his employees, he was able to commit a negligent act because he was working with them. But if the same employer-principal was not physically present at the workplace, he could not be negligent. Why? Because he could not “directly” act negligently. In other words, vicarious liability did not apply in the workplace in the context of the master-servant relation. The fellow-servant (co-employee) effectively acted as a superseding cause blocking attribution of negligence to the employer-principal. “Common employment” was the doctrinal support for the fellow-servant rule. Ultimately, the doctrine probably derived from Priestly v. Fowler, decided in 1837, but its origins are not clear and it was confusingly mixed, even in Priestly itself, with elements of assumption of the risk. It is interesting that that Priestly’s author, Lord Abinger, failed to cite a single opinion in support of the rule. Wilson & Levy, Workmen’s Compensation (Oxford University Press 1938), Vol. I, p. 25, n.2.

In the debates preceding enactment of the English Employers Liability Act of 1893, Henry Asquith, then-Home Secretary and future Prime Minister, advocating on behalf of the Gladstone Government’s proposed bill, utilized to great effect the rhetoric of non-discrimination. Employees were not, as some contended, being afforded preferential treatment by the stripping of the employer “common employment” defense. On the contrary, employees were being placed in the same position as third-parties by preventing the unfair denial to them of a cause of action premised on vicarious liability. Asquith, in other words, argued for non-discrimination. Opening-up of workplace vicarious liability necessarily decimated what we would call the fellow-servant rule. But events need not have moved in this direction. Many lawyers were opposed to the entire concept of vicarious liability, and it, rather than the doctrine of common employment, might have been eliminated. But as injury occasioned by intensifying industrialism expanded—inside and outside of the workplace—constriction of liability was already, by the early 1890s, broadly politically unacceptable.

It is also interesting to note that at the time of the practical elimination of the fellow-servant rule there was not (yet – it would come a mere four years later with passage of the first English workers’ compensation act) a broad movement for eliminating contributory negligence or assumption of the risk (volenti non fit injuria). These, of course, were the other two defenses making up the unholy trinity. The reason seems to have been that English employers had been voluntarily contributing (often significantly) to worker “friendly societies,” cooperative organizations created and run by employees – a kind of collective, but private, self-insurance (a very interesting subject in its own right). The Government (and others) were concerned that ramping up liability by eliminating defenses would cause employers to stop contributing to these societies. (The lines of argument sound, to my ears, much like arguments that are made against subjecting voluntary employee benefit plans to excessive regulation: employers might drop the plans altogether in response—the risk, of course, is that something mandatory might fill the gap).

Thus, the evisceration of the unholy trinity was underway under Anglo-American tort law before workers’ compensation arrived in the United States. And even before workers’ compensation arrived in England.     

Michael C. Duff

Kentucky’s Proposed Assault on Permanent Partial Disability Benefits

Many readers will know of the significant workers’ compensation reforms being proposed in Kentucky. I would characterize the suggested modifications, when viewed in the aggregate, as significantly retractive. What most quickly caught my eye, as someone who is not a Kentucky lawyer, were the following provisions (this is just a sampling—though an important one—of the proposals):

• All indemnity benefits would normally terminate when an injured worker reaches the age of 67
• Employees would have the burden of proving that intoxicants did not cause their accidents
• Permanent Partial Disability benefits would be capped at 15 years, but injured workers would be allowed to file for an additional 104 weeks of benefits with the Kentucky workers’ compensation agency, within 75 days before termination of the 15-year period. As I read the bill, the injured worker would also have to convince an administrative law judge that medical treatment remains necessary at the end of the permanent partial disability period, whether that be 15 or 17 years. In other words, medical benefits could be cut off.

With respect to the third bullet point (I think the first two speak for themselves), one does not have to be especially adept to imagine a 25-year old who is very seriously injured on the job. Again, stupendous sophistication is not required to understand that the same 25-year old, although very seriously hurt, may not be totally disabled in the sense of being physically incapable of doing anything. I repeat that I am not a Kentucky lawyer. But I can see clearly enough that “permanent total disability” means, under Kentucky law, “the condition of an employee who, due to an injury, has a permanent disability rating and has a complete and permanent inability to perform any type of work as a result of an injury.” Kentucky Revised Statutes §342.0011(11)(c) (emphasis mine). That sounds pretty demanding to this Maine lawyer. (As an aside, some quick research suggests to me that the odd lot doctrine has been cited only once ever in the reported Kentucky cases). This all seems to lead to the conclusion that the 25-year old worker may be in serious trouble at age 42. Not to worry, one might suppose – the cost of the injury after age 42 will simply be shifted to the Social Security Administration. (An approach that placed the Kentucky Supreme Court and the Kentucky legislature at loggerheads in the not distant past).

Tyler White, the president of the Kentucky Coal Association, asserts, in defense of the proposed law:

“The workers’ compensation system is designed to compensate injured workers in [an] attempt to get them back to work, benefiting themselves and their employer, . . . The system is not designed to sustain claims that extend well beyond the career span of an injured worker.”

Leaving to one side the questionable absoluteness of the effective claim that the career span of a worker is a mere 17 years, I am inclined to protest (with due respect) that Mr. White fails to make mention of the actual legal and constitutional basis of the workers’ compensation quid pro quo. As readers of this blog well know, workers in the U.S. originally obtained workers’ compensation rights, about a century ago, in exchange for foregone tort rights. The system was “designed” in such a way that the exchange of rights was to be reasonable. Kentucky courts took full cognizance of the arrangement a long time ago. Phil Hollenbach Co. v. Hollenbach, 181 Ky. 262 (1918). This bill does not from my vantage point look reasonable. One can only hope that the Kentucky Supreme Court will subject the bill – should it unadvisedly become law – to the scrutiny it deserves. My late grandfather, a Harlan County Kentucky coal miner, who suffered with and died from black lung in Kentucky, would expect no less.  

Michael C. Duff

New Tennessee "Gig" Law: “Handyman Special” or New Flavor of Opt-Out

Tennessee has just passed a law (HB 1978/SB 1967) that will undoubtedly make it significantly easier for companies to classify their workers as independent contractors rather than employees, thereby lowering their operating costs and creating a class of individuals with fewer legal protections when suffering on-the-job injuries. Although styled a law applicable only to retired handymen, and similar part-time workers, the text is much broader than this innocuous characterization suggests.  When many employees may be excised from a workers’ compensation statute, it is hard for me not to see the innovation as a species of “opt-out”–a law that, as a practical matter, allows de facto employers to avoid, or opt out of, background law of general applicability.

Under this so-called “gig” law, a “marketplace contractor” working for a “third party” at the direction of a “marketplace platform” is an independent contractor as a matter of law if (1) the platform and contractor agree that the contractor is an independent contractor; (2) the platform does not unilaterally prescribe specific hours of work (if the platform posts the contractor’s hours of work—at an unspecified location—that is not prescribing hours of work); (3) the platform does not prohibit the contractor from using other platforms; (4) the platform does not restrict the contractor from engaging in any other occupation or business; (5) the platform does not require contractors to use specific supplies or equipment; and (6) the platform does not supply on site supervision to the contractor.

(1) For purposes of this bill "Marketplace contractor" means any individual, corporation, partnership, sole proprietorship, or other business entity that:

(A) Enters into an agreement with a marketplace platform to use the platform's online-enabled application, software, website, or system to be given an assignment, or otherwise receive connections, to third-party individuals or entities seeking its services in this state; and

(B) In return for compensation from the third-party or marketplace platform, offers or provides services to third-party individuals or entities upon being given an assignment or connection through the marketplace platform's online-enabled application, software, website, or system; and

(2) "Marketplace platform "means a corporation, partnership, sole proprietorship, or other business entity operating in this state that offers an online-enabled application, software, website, or system that enables the provision of services by marketplace contractors to third-party individuals or entities seeking the services.

Now, imagine a situation in which a contractor is subject to discipline if he or she does not comply with a work schedule “voluntarily” posted (somewhere); imagine a contractor who does not in fact use other “platforms”; imagine a contractor who does not in fact engage in any other occupation or business; imagine a contractor who in fact uses platform-provided supplies or equipment; and imagine a platform that in fact supplies offsite supervision to the contractor. Is the contractor described in this paragraph an “employee” for purposes of traditional workers’ compensation law if he or she suffers on-the-job injury (as will inevitably happen)? He or she very well might be—especially if the (handyman?) company is providing “off-site” supervision (a.k.a, control)—if one was utilizing a traditional control test, or an economic realities test, or the relative nature of the work test. But it seems almost certain that the individual would not be deemed an employee under the new Tennessee test, which would be applicable to workers’ compensation cases (and as I read the text of the law is not limited to “handymen” despite the protests of legislators to the contrary), and which media accounts suggest may be in the process of being implemented in other states. Hence, we encounter the latest in a series of race-to-the-bottom gambits meant to facilitate employers’ opting-out of the workers’ compensation regime.

I think of “opt-out” as any mechanism allowing the employer the choice of whether to be bound by workers’ compensation legislation. Opt-out can be statutorily or contractually based. Statutory opt-out, as I conceive it, occurs when a state passes a law authorizing, and even facilitating, employers not to participate in workers’ compensation. It is jurisdictional in nature. Once an employer is “approved” for release the employer is de facto no longer under the jurisdiction of the state workers’ compensation agency. Oklahoma was the prime example of this model. It is somewhat puzzling to onlookers why a state would both maintain a workers’ compensation system and provide employers with the legal means of escaping it. My suspicion is that it is simply not feasible, even in the 21^st century, for a legislature to announce that it is abandoning a workplace injury system that has been continuously on the books in the Western World since 1884.     

Contractual opt-out is easier for a legislature to defend. The argument here is that the government is simply honoring the mutual desire of parties not to be bound by background law. It is an argument based on waiver, not jurisdiction, and is nothing more than warmed-over Lochner. Appeal to freedom of contract is why the Tennessee law solemnly recites that the “contractor” and “platform” agree that the contractor is an independent contractor. Such “agreements” have been looked upon with suspicion since the late 19^th century. (I’ll discuss that fact in a later post).

One might see stautory independent contractor directives as a hybrid of the stautory and contractual opt-out model: it is created by statute but derives energy from a fictional contractual relationship.

Paring the Tennessee law down to its essence leads to the realization that any business providing virtually any service by way of “online-enabled application, software, website, or system that enables the provision of services” is exempted from workers’ compensation regulation. This is no longer a “gig” law. The breadth of the bill betrays either its expansive intentions or its frightening mis drafting. In either event, we have come a long way from Silicon Valley coders and putatively unclassifiable tech workers. I can classify a handyman

According to some media accounts (paywall), the law was drafted at the request of Handy, Inc. This makes me wonder whether it may at some point be challenged by some unfortunate injured workers under the Article XI, Section 8 of the Tennessee constitution:

The Legislature shall have no power to suspend any general law for the benefit of any particular  individual, nor to pass any law for the benefit of individuals inconsistent with the general laws of the land; nor to pass any law granting to any individual or individuals, rights, privileges, immunitie  [immunities], or exemptions other than such as may be, by the same law extended to any member of the community, who may be able to bring himself within the provisions of such law. No corporation shall be created or its powers increased or diminished by special laws but the General Assembly shall provide by general laws for the organization of all corporations, hereafter created, which laws may, at any time, be altered or repealed, and no such alteration or repeal shall interfere with or divest rights which have become vested.

I sense the potential for a substantial Special Laws argument of the type that toppled a different flavor of opt-out in Oklahoma.

Michael C. Duff

Driverless Cars and Workers’ Compensation: Into the Wild Blue Yonder

Very early in the morning today, Monday, March 19, a vehicle operated by an Uber driver struck and killed 49-year-old Elaine Herzberg, who may have been walking, or riding, a bicycle across a major road. The colliding vehicle was, according to Tempe, Arizona police, in “autonomous” mode at the time of the crash, but a vehicle operator was nevertheless behind the wheel. Uber apparently began experimentation with autonomous, driverless cars in Arizona following a ban in California (pending further study). The Governor was reportedly elated at their arrival.

Workers’ compensation issues in connection with the tragedy quickly surface. Was the Uber driver an employee of Uber or an independent contractor?  While that’s also a torts question, it is certainly possible to imagine a non-driving, working “driver” being injured in such circumstances. Perhaps the bicyclist/pedestrian was on her way to work (it was 5 a.m.).  What is the significance of the car having been in autonomous mode?

I read about this sad incident just after reading a story at WorkCompCentral (paywall) about an increase in traffic fatalities over the last decade. According to the story,

Motor vehicle fatalities in the U.S. surged to 40,327 in 2016, then dropped about 1% last year to 40,100, the National Safety Council reported. The 2016 total was 7% higher than in 2015, which in turn was 7% higher than 2014.

About 4.57 million people were injured seriously enough to require medical attention in motor vehicle crashes in 2017, according to NSC. That figure that was down about 1% from 2016.

At the same time, transportation incidents were the leading cause of work-related deaths in 2016, accounting for 40% of fatalities, the U.S. Bureau of Labor Statistics reported.

The Brookings Institute has opined that “automation will dramatically increase safety on the highways by reducing both the number and severity of accidents.” On the other hand, some worry that, for those who are injured, manufacturer-mandated compulsory arbitration (agree, or buy your car elsewhere) may result in dramatic under-compensation of victims. Brookings argues that, with respect to products liability, significant modification of substantive tort law would be unwise. One wonders whether states like Arizona will agree.  

As injury lawyers realize, compensation of traffic accidents involves a complicated bundle of remedies. It is very hard to predict whether driverless cars will be safer than human-piloted automobiles, especially when they achieve very high volumes on the highways. I think driverless cars very likely will be safer. One thing is certain: the mixes of liability are going to change dramatically. If car crashes are handled to any substantial degree in arbitration, recovery for injury is likely to be quite limited (which is why safety advocates are concerned). It stands to reason that when third-party recoveries are limited, the stakes will rise in workers’ compensation litigation.

None of us can be sure where all this is going. It reminds me very much of the history of the emergence of railroads in the 19^th century. Somewhat surprisingly, for much of the latter part of that century, railroads were in bankruptcy. Train engines burnt down towns. Workers were grievously injured. Railroad labor and management disputes led to the Great Upheaval of 1877. Courts thereafter became much more involved in labor disputes. In other words, railroads changed everything. None of the episode was foreseeable. Much of it is difficult to comprehend even in hindsight.

My 12-year-old son—who is, as he will eagerly tell you, deeply knowledgeable of futuristic trajectory—would probably insist that it is the flying cars that will matter (he assures me they are just around the corner, so to speak), and he may be right. But every workers’ compensation specialist will feel compelled to acknowledge that “something” big seems to be coming—a something that may have a tremendous impact on the workplace. I will repeat the statistic: transportation incidents were the leading cause of work-related deaths in 2016, accounting for 40% of fatalities.

Michael C. Duff

Before American Workers’ Compensation Law: We Were Not the First

According to a document published by the Department of Labor, Bureau of Labor Statistics, in 1917 (there were a couple of earlier versions), the following countries and/or their provinces enacted workers’ compensation prior to any U.S. states having done so (Wisconsin enacted the first such U.S. state law in 1911):

 

Germany:1884                                                Austria: 1887                                                 

Norway: 1894                                                 Finland: 1895                                                 

Great Britain: 1897                                         Denmark: 1898                                              

Italy: 1898                                                       France: 1898                                                  

Spain: 1900                                                     New Zealand: 1900                                       

South Australia: 1900                                     Netherlands: 1901  

Greece: 1901                                                   Sweden: 1901                                                            

Luxemburg: 1902                                           Western Australia: 1902                                

British Columbia: 1902                                  Russia: 1903   

Belgium: 1903                                                Queensland: 1905                    

Cape of Good Hope: 1905                              Mexico-Nuevo Leon: 1906  

Venezuela: 1906                                             Hungary: 1907

Transvaal: 1907                                              Newfoundland: 1908

Alberta: 1908                                                  Bulgaria: 1908

Quebec: 1909                                                  Manitoba: 1910

Nova Scotia: 1910                                          Liechtenstein: 1910

Serbia: 1910                                                    New South Wales: 1910

 

At some point in the not distant future I intend to create a chart comparing the major vital features (exclusivity, forms of benefits, etc.) of these laws.

Michael C. Duff

White May Not be the Case to Cite for the Workers’ Compensation Quid Pro Quo; but it was All About the New York Act

I (and many others) have argued that, in the Supreme Court’s decision, New York Central Railroad Company v. White, 243 U.S. 188 (1917, the Court implicitly held that a state’s workers’ compensation benefits regime must be “reasonable” to avoid triggering heightened constitutional scrutiny. More narrowly, the Court said that what was not at issue in the case was the sweeping away of common law tort remedies in exchange for unreasonable workers’ compensation benefits. Logically, of course, that meant (and appears still to mean) that inadequate benefits might not pass constitutional muster. But it also seems to mean that the workers’ compensation system the court had before it in White—the version of the New York statute reenacted in 1914—was reasonable and adequate. Before looking at what the New York Act provided, however, it is worth mentioning that participation in that iteration of the Act was entirely voluntary both for “nonhazardous” employers and for many employees. Thus, it is difficult to say whether the limited scope of the scheme then at issue influenced the Court’s view of it. The same can be said of the Court’s companion opinion in Mountain Timber Co. v. State of Washington, 243 U.S. 219 (1917). Thus, I think the case to cite for the “signing off” on the quid pro quo may be Ward & Gow v. Krinsky, 259 U.S. 503 (1922), decided under a later version of the New York Act. Krinsky is the first Supreme Court case of which I am aware approving a broad compulsory workers’ compensation scheme (binding all employers employing more than four employees). And Krinsky cited White with approval. So, implicitly, the question is why the White court deemed the 1914 Act adequate or reasonable with respect to the employee benefit side of the equation. (Virtually all forms of compulsory workers’ compensation were upheld against employers against 14^th Amendment challenges under the theory that the laws were within a state’s “police powers.”)

So, you say, what did the New York Act provide? I’m glad you asked:

Here is a brief summary: 

Total permanent disability: 66 2/3% of average weekly wages during the continuance of total disability. Loss of both hands, or both arms, or both feet, or both legs, or both eyes, or of any two thereof generally constituted permanent total disability. In all other cases permanent total disability was determined in accordance with the facts.

Temporary total disability: 66 2/3 % of the average weekly disability wages during the continuance thereof, but not in excess of $3500. (about $88,000 in 2018 dollars).

Permanent partial disability: 66 2/3% of the average weekly wages paid to the employee for a period of time named in the schedule as follows (most but not all scheduled injuries reflected here). For loss of a:

Thumb. 60 weeks; First finger. 46 weeks; Second finger. 30 weeks; Third finger. 25 weeks; Fourth finger. 15 weeks; Phalange of thumb or finger. One-half of the amount above specified for those digits. Great toe. 38 weeks; Other toes. 16 weeks; Hand. 244 weeks; Arm. 312 weeks; Foot. 205 weeks; Leg. 288 weeks; Eye. 128 weeks.

Loss of use. Permanent loss of the use of a hand, arm, foot, leg, eye, thumb, finger, toe, or phalange was considered as the equivalent of the loss of such hand, arm, foot, leg, eye, thumb, finger, toe, or phalange.

Amputations. Amputation between the elbow and the wrist was considered as the equivalent of the loss of a hand. Amputation between the knee and the ankle was considered as the equivalent of the loss of a foot. Amputation at or above the elbow was considered as the loss of an arm. Amputation at or above the knee was considered as the loss of the leg.

In case of an injury resulting in serious facial or head disfigurement the commission could, in its discretion, make an award not exceeding $3500. ($88,000 in in 2018 dollars).

Benefits for non-scheduled injuries were calculated by multiplying 66 2/3% times the difference between average weekly wages and wage-earning capacity thereafter in the same employment or otherwise payable during the continuance of the disability, but subject to reconsideration without explicit textual limitation.  

Temporary partial disability: Calculated in the same manner as for permanent non-scheduled injuries with the caveats that any combination of earnings from work and disability payments could not exceed the average weekly wage at the time of injury and maximum partial benefits were limited to $3500.

In most cases, the maximum weekly benefit obtainable under any species of disability was $15. ($377.26 in 2018 dollars). 

Death Benefits. An abbreviated account of death benefits is that the surviving widow received 30% of the average wages of the deceased until remarriage.  Each surviving child received 10% of the average wages until attaining the age of 18.

Medical Benefits. The employer was required “to promptly provide for an injured employee such medical, surgical, or other attendance or treatment, nurse, and hospital service, medicines, crutches, and apparatus as may be required or be requested by the employee, during 60 days after the injury.

One of the more notable aspects of this scheme was that, outside the contours of specific scheduled benefits, there was no time limitation for receipt of permanent partial benefits. With respect to scheduled benefits, however, the amount provided was the sole remedy. The 60-day window for provision of medical benefits is striking to our eyes. It seems clear enough, however, that the employee was unlikely to get a better deal elsewhere.  A tort suit, even if theoretically available, would take much too long.

Thus, the quid pro quo question (to the extent it is historically couched in terms of White and its progeny) boils down to an assessment of the degree to which any proposed modification of workers’ compensation benefits is worse than the New York scheme (The Supreme Court has never commented on the question of adequacy since White).  

Michael C. Duff

Historical Investigations: The English Workmen’s Compensation Act of 1897

I have had the great pleasure of exploring this morning Bradbury’s Workmen’s Compensation Treatise of 1917 (a rare book – the Larson’s-type treatise during the period of workers’ compensation’s revolutionary expansion). The purpose of my investigations is to get a better understanding of what the U.S. Supreme Court of 1917 might have had in mind when concluding that the negligence-for-workers’ compensation quid pro quo was acceptable, if reasonable. I intend to assess all the major statutes in existence up to that time to create a kind of historical res gestae touching on “reasonableness.”

This morning I also detoured from Bradbury a bit to read a Seldon Society compilation of English law, included in which is the English Workmen’s Compensation Act of 1897. As a former law clerk at the Massachusetts Department of Industrial Accidents, it did not take me long to note striking similarities between the original English Act and Massachusetts law. Extended discussion on that point is for another day. But I thought I would take a moment to comment on a few items that caught my eye.

First, under Section 2(1) of Chapter 37 of the English act, notice of “accident” was to be provided “as soon as practicable after the happening thereof and before the workman has voluntarily left the employment in which he was injured . . .” In the same provision, it is stated that claim was required to be filed within six months but  “any defect or inaccuracy in such notice shall not be a bar to the maintenance of such proceedings, if it is found in the proceedings for settling the claim that the employer is not prejudiced in his defence by the want, defect, or inaccuracy, or that such want, defect, or inaccuracy was occasioned by mistake or other reasonable cause.” This strikes me as a surprisingly forgiving notice and claim provision.

Also, under the 1897 Act, which applied solely to enumerated hazardous employments, indemnity benefits equaled 50% of weekly wage loss—this was clearly a wage-loss statute—capped at 1 pound per week (after all conversions amounting to $167.80 in 2017 dollars). First Schedule, Section 1(b). Death benefits were the greater of the preceding’ three years wages or 150 pounds ($25,000 in 2017 dollars). Under Section 2 of the same schedule, there did not appear to be any limit on the length of time a wage-loss benefit could be received, though under Sections 11 and 12 it appears that continued incapacity for work could be tested by the employer at any time (and of course, the cap was also continuous). Under Section 11, the employee had the right to get second opinions from physicians appointed by the Secretary of State and paid by Parliament. Second Schedule, Section 13. Moreover, “the certificate of that medical practitioner as to the condition of the workman at the time of the examination shall be given to the employer and workman, and shall be conclusive evidence of that condition.” First Schedule, Section 11. Employers and employees could settle cases by lump sum settlement and public officials could order employees to deposit the lump sum proceeds in a (one presumes conservative) Post Office Savings Bank. Weekly benefits were not subject to the claims of creditors. First Schedule, Sections 13 and 14. It appears that the nitty-gritty details of workers’ compensation cases were decided by court-appointed “arbitrators” under an interesting arbitration system that I intend to discuss in a later post.  Second Schedule.

My preliminary impressions are that indemnity benefits have been set historically at between 50% and 60% of wage loss, and that trial-by-jury was not a feature of the English system. Importantly, however, my investigations have not yet persuaded me that any durational limit on receipt of partial benefits was a feature of early workers’ compensation systems.  Finally, IME structures have been with us for a long time. More to come.   

Michael C. Duff

The Interplay Between Vicarious Liability and Workers’ Compensation in Independent Contractor Debates

What do employers fear more, being bound by the costs of paying workers’ compensation premiums, or being potentially liable for the tortious acts of their employees committed against third parties while within the scope of employment? I found myself musing over this question while reading a very entertaining volume on the origins of the first British workers’ compensation Act. David G. Hanes, The First British Workmen’s Compensation Act, 1897 (Yale University Press 1968). This little volume of a hundred pages or so is a treasure trove of fascinating analyses and accounts of the legal doctrine of personal injury leading to enactment of the first workers’ compensation statute in Britain. As an aside, I should mention that approximately twenty international workers’ compensation statutes pre-dated the c. 1910-11 statutes emerging in the United States.   

As many readers will know, employers are, with certain important limitations, liable for the negligent acts of their employees committed against third parties while in the scope of employment under a principle of vicarious liability known as respondeat superior. Thus, if a delivery driver negligently (or in some cases even intentionally) injures me, I, at least in the abstract, have a legal cause of action against both the driver and the “dispatcher” of that driver, if the two of them are indeed in an employer-employee relationship. Recent news demonstrates that such a fact pattern is not beyond the realm of the imagination.

It is interesting to note that the whole idea of vicarious liability was hotly contested by common law judges throughout the 19^th century. Indeed, the earliest English precedents fail to cite authority for the proposition that vicarious liability exists; and no less a luminary than Oliver Wendell Holmes thought the construct a fiction derived from Roman law: if my servant (a chattel) harmed you, you had the right to kill or maim my servant. To avoid this result, I could pay you compensation. Over time, some links in the chain were lost, and it became the rule that I could simply approach you for compensation, even though you were in no sense at fault. Hanes, supra., at 9. Fascinating.

The rather large microeconomic question at play is whether modern companies resisting the Restatement Second of Agency analysis of employee versus independent contractor status do so primarily to avoid tort liability or rather to avoid labor/employment/Tax/ERISA statutory liability (including workers’ compensation obligations). I know that in the real world the answer is probably “both,” but it is simply not the case that modification of the employee definition in one statutory regime will resolve questions, once and for all, in every legal regime. Thus, beware piecemeal proposals for reform. For example, I can virtually guarantee that enactment of a partial “portable benefits” regime—where certain protected industries may, in effect, designate their workers as quasi-employees—will complicate, rather than simplify, the issue of what happens when quasi-employees injure or kill third parties.  One hopes that quantitative analysis could make even a brief appearance in legislative deliberations.

Michael C. Duff