Workers' compensation

On July 6, 1884, the German Reichstag passed the Accident Insurance Law (Unfallversicherungsgesetz), establishing the world's first comprehensive workers' compensation system.¹ Chancellor Otto von Bismarck had proposed the legislation as part of a broader social insurance program that also included health insurance (1883) and old-age pensions (1889). His stated goal was to bind the working class to the state and undermine the appeal of the Social Democratic Party.

Under the 1884 law, employers were required to contribute to industry-wide insurance funds that covered medical treatment, rehabilitation, and wage replacement for workers injured on the job. Workers gave up the right to sue their employers for negligence in exchange for guaranteed benefits regardless of fault.² The "grand bargain," as it became known, removed workplace injuries from the courts and placed them within an administrative system.

1884, The year Germany passed the first workers' compensation law.

Other European nations followed. The United Kingdom passed the Workmen's Compensation Act in 1897.³ In the United States, the first state workers' compensation law was enacted in Wisconsin in 1911, and by 1948, every state had adopted some form of the system.⁴

Before these laws, an injured worker had to prove in court that the employer was negligent, a process that was expensive, slow, and frequently unsuccessful. Employers could invoke three common-law defenses: that the worker assumed the risk of the job, that a fellow worker's negligence caused the injury, or that the worker's own carelessness was partly to blame.⁵ The system Bismarck designed replaced that adversarial process with automatic coverage, a structure that remains the foundation of workplace injury law in most industrialized nations.

Timeline

• 1884, Germany passed the Accident Insurance Law, the world's first comprehensive workers' compensation system.
• 1897, United Kingdom enacted the Workmen's Compensation Act, extending injury protections to British workers.
• 1911, Wisconsin became the first U.S. state to enact a workers' compensation law.
• 1948, Every U.S. state had adopted some form of workers' compensation legislation.

Endnotes

1. E.P. Hennock, The Origin of the Welfare State in England and Germany, 1850-1914 (Cambridge: Cambridge University Press, 2007).
2. E.P. Hennock, The Origin of the Welfare State (2007).
3. Workmen's Compensation Act 1897, 60 & 61 Vict. c. 37 (United Kingdom).
4. Price V. Fishback and Shawn Everett Kantor, A Prelude to the Welfare State: The Origins of Workers' Compensation (Chicago: University of Chicago Press, 2000).
5. Price V. Fishback and Shawn Everett Kantor, A Prelude to the Welfare State (2000).