A Hundred Years of Excellence: But Is the Past Prologue? Reflections on the Pennsylvania Workers’ Compensation Act

Abstract

This article repeats themes advanced in my address to the PBA Workers’ Compensation Law Section on October 7, 2015 as part of its centennial commemoration of the state’s workers’ compensation statute. The workers’ compensation statutes of Pennsylvania and of most other states emerged out of a remarkable period of cooperation between employers, employees, insurers, and progressive reformers. The statutes have been surprisingly durable, surviving for more than a century, and there is good reason to celebrate their effectiveness in remedying the scourge of workplace injury. On that point Judge Torrey and I agree. The workers’ compensation statutes did not appear out of thin air. They were in effect a product of the failure of both tort law and of various voluntary, non-legal measures created by private actors to combat inadequate compensation of injured workers. The historical conditions under which the broad social consensus of the need for workers’ compensation statutes developed were unique. But driving the entire discussion were two factors which I contend are paramount. First, society writ large believed it had a moral obligation to remedy workplace injuries and accidents. Second, employers understood they could recoup the cost of mandatory workers’ compensation participation by lowering wages. I question herein whether these factors continue to hold true and, if not, whether the workers’ compensation model will endure. My question is informed by recent developments that are under national discussion. In brief, a number of employers are petitioning state legislatures to authorize employers to opt-out from coverage by workers’ compensation statutes. In lieu of statutory coverage, employers would be permitted to substitute lightly regulated “alternative benefit plans.” I question whether these initiatives are prompted in some manner by a low wage economy in which the cost of mandatory workers’ compensation benefits are not so easy to recoup. I also wonder whether employer flight from the workers’ compensation regime represents a kind of moral retreat from what had been thought an uncontroversial duty to provide workers with a safe workplace and with adequate remedies for injury. I issue a warning: although Pennsylvania has always done the right thing and may continue to want to do so, a widespread “race to the bottom” by states abandoning the workers’ compensation model may test Pennsylvania’s moral compass.

Keywords: workers' compensation history, opt-out, race to the bottom, centennial

JEL Classification: D61, D63, I12, J28, J32, J33, N31, N32