The Grand Bargain. The Purpose of Modern Worker's Compensation Laws.
Before modern workers compensation laws, the only remedy available for someone hurt on the job was to file a lawsuit in “commonlaw” against the employer and wait for the lawsuit to work its way through the legal system. From the perspective of the injured worker, this method was not ideal, primarily because it could take years for a lawsuit to work its way through the courts. Even if the injured worker won their case, the employer might appeal the award which would result in a further delay, up to a decade or more in some cases! Also, to the detriment of the inured work under the commonlaw system, the employer could take advantage of all sorts of legal defenses to avoid responsibility for the injury.
As a solution, lawmakers devised a new system of law, called workers compensation. These new laws have come to be known as the “Grand Bargain.” In theory, these laws were created as a compromise between employees and employers to efficiently and quickly resolve claims for work-related or industrial injuries, though an administrative process.
The intended compromise is essentially this: the workers compensation system is supposed to provide for the resolution of workers compensation claims, outside of formal litigation, and provide benefits to the injured worker and their families for economic losses (like lost wages and future loss of earning capacity) and medical treatment. The key benefit for the injured worker is that this new system is a “no-fault” agreement, meaning that the compensability of a workers compensation claim does not require the injured worker to prove fault, and the employer cannot use the fault of the employee as a defense. Essentially, under this system the injured worker is required to prove that his or her employer did anything wrong to contribute to the injury, or, in other words, prove negligence. Under commonlaw, proving employer negligence was a prerequisite to compensation, and was often difficult to prove.
What did employers get out of the Grand Bargain, you might ask? In exchange for these benefits, injured workers gave up their right to file lawsuits in commonlaw against their employers. This protected employers from large awards for pain and suffering, punitive damages, and future damages. Basically, the Grand Bargain made it easier for injured workers to prove their cases and receive benefits, but relieved employers from exposure to large jury verdicts arising from workplace accidents. Under workers compensation laws, as long as employers carry workers compensation insurance, they are immune from lawsuits brought by their employees for workplace injuries (in most cases).
For a very long time, the Grand Bargain has been a good compromise for the employers and workers alike. However, in the last few decades, American workers compensations system has been chipped away by special interest groups representing large corporations and insurance companies. This has resulted in a swing towards laws that favor employers and large private insurance companies, to the detriment of the injured worker.