Click Here To ViewWorkers’ Compensation Book: Development of the Workers’ Compensation Act
- Development of the Workers’ Compensation Act
- The Employer and the Insurance Company
- Back to Table of Contents
I. Development of the Workers’ Compensation Act
In 1915, the Pennsylvania Legislature passed the Pennsylvania Workers’ Compensation Act. The Act provides an exclusive remedy for injured workers and holds employers and co-workers immune from direct liability. In other words, an employee cannot usually bring a lawsuit against his or her employer even if the employer was providing an unsafe work environment or if the injury arose due to the employer’s failure to properly train workers. Prior to 1975, an employee’s agreement to coverage under the Act was presumed but at the time of hire an employee could take steps to decline coverage under the Act. After 1975, the statute was amended to make the Act mandatory. Constitutional challenges regarding denial of access to courts based on this portion of the Workers’ Compensation Act failed. Therefore, an employer is only responsible to pay lost wages and medical benefits related to the work injury.
Act 57 was legislated in 1996 and created a number of significant changes to the Workers’ Compensation Act. These changes included an impairment rating system after two years with a percentage of disability and limitation of benefits, treatment with the panel physician for 90 days rather than the previous 30-day period, and the ability to completely settle a workers’ compensation claim. These changes also brought about changes that favored the employer and as a result the system became skewed more toward the employer.
Act 147 was enacted in 2007 and produced some positive changes to the Workers’ Compensation Act. These changes included a more comprehensive system for the Bureau of Workers’ Compensation to deal with uninsured employers and a fund for payment to injured workers of those uninsured employers. In addition, the legislation spells out a more clear edict for the Workers’ Compensation Judges to move cases forward in a timely manner with checks and balances in place and mandatory mediation so that the parties are brought together to discuss the case in a more meaningful way.
The language of the Workers’ Compensation Act is further defined by case law, which arises from the interpretation of the appellate courts and judges over the years. As a general principle, the Act is to be liberally construed in the employee’s favor.
The Employer and The Insurance Company
Under Pennsylvania state law, employers must carry workers’ compensation insurance. Therefore, unless an employer is self-insured, an insurance company is responsible to pay workers’ compensation benefits when an employee sustains an injury while working.
If an employer is uninsured then a notice must be filed with the Bureau of Workers’ Compensation within 45 days of the employee discovering that the employer is not insured. Once this notice is filed, the injured worker may have recourse for his lost wages and medical benefits from a fund that is set up specifically for such injured workers if the employer will not pay these benefits. There is also the possibility that the employer will be prosecuted for their failure to maintain workers’ compensation insurance benefits.
Often, employers will offer incentives for employees who have reported no lost time injuries or employers develop internal administrative procedures, which require injured workers to follow certain rules that are not spelled out in the Workers’ Compensation Act. These employers do this in part to keep their premiums for workers’ compensation insurance coverage low. The Workers’ Compensation Act is governed by Pennsylvania Statute and not by the employer’s internal procedures unless those changes are agreed upon in an employment contract or collective bargaining agreement.
