Workers’ Compensation Handbook
Section One: Workers’ Compensation Act
- Development of the Workers’ Compensation Act
- The Employer and the Insurance Company
- Back to Table of Contents
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. Adherence to this general principle is a challenge to the entire Workers’ Compensation system as it currently exists.
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.
Often, employers will offer incentives for employees who have no lost time injuries despite the severity of the injury and the need to miss time from work. Additionally, employers often develop internal administrative procedures, which require injured workers to follow certain rules that are not contained within the Workers’ Compensation Act. Although these employers do this in part to keep their premiums for workers’ compensation insurance coverage low, be mindful that the Workers’ Compensation Act is governed by Pennsylvania Statute and not by an employer’s internal procedures unless those changes are agreed upon in an employment contract or collective bargaining agreement.