Why Is Workers’ Compensation Important And How Will It Change After Covid-19?

Jul 16, 2020 | Business Insurance

How Vital is Workers’ Compensation in a Business? 

Given the global effect of COVID-19 across all industries, with many businesses closing, is getting workers’ compensation after COVID-19 still relevant?

To understand this coverage, let us define it further:

“Workers’ Compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.”

(Source: Wikipedia)

Workers’ compensation aims to cover injured employees by compensating them with lost wages and medical care, including vocational rehabilitation, as needed. But the question now is, is this still relevant? Given the challenge posed by this pandemic, how can business owners still cope?

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A Journey in History

It is fascinating to know that compensating workers is an age-old concept. There was a widespread belief that laborers in the ancient world were mostly “slaves” with only as many rights as their owners’ livestock. The truth is much more than that. It’s not all about building the great pyramids of Egypt.

Workers’ compensation dates back to 2050 B.C. in ancient Sumer or Iraq. Old Sumerian law has a law compensating for a worker’s injury on specific body parts. An example is placing the thumb’s value with a value of half a finger. Other cultures have their take on this also. Ancient civilizations like the Chinese and Romans also had similar systems compensating a worker based on the disability incurred while performing his task. It’s noteworthy that some of these are still being applied today.  

The Renaissance paved the way for developing a framework leading to the early Industrial Revolution in Europe and America. To help determine the types of injuries they need to compensate for, they make use of the following principles: the “Contributory Negligence Principle,” the “Fellow” Servant Principle,” and the “Assumption of Risk Principle.”

The first is “Contributory Negligence.” When the injury occurred due to the worker’s negligence or failure to follow safety protocols, you can use this to remove any responsibility from the employer.  

More Information on the History

The “fellow servant” rule would remove liability from the employer if the worker’s injuries were due to the negligence of a fellow worker.

The “assumption of risk” rule was “worker’s death contracts” or “worker’s right to die back then.” These are often in jobs with obvious high-risk or occupational hazards. It is a work-in-your-risk case. Their employees will provide the minimum required and considerable safety measures. The downside is that by signing up, he agrees to the conditions of the contract. Therefore, he won’t be able to sue his employers if he obtains injuries or even dies on the job.

They made these rules to protect employers and workers; however, the process tends to get too tedious. Most workers had to use tort or non-observance of a person’s right to get his compensation to get a claim. From then until now, legal matters for personal injuries tend to be too expensive for the worker. It was also rare for a typical worker to win cases because of these hefty fees. Thus some private organizations offer workers the option to get their disability insurance to protect themselves.  

Adapting Workers’ Compensation in America 

As the influence of social media in the 21st century, so was the effect of most literary materials in the 1800s and early 1900s. Literary pieces in the likes of Uncle Tom’s Cabin have launched many societies to fight for their civil rights. 

The cause of Workers’ Compensation was championed by an unlikely author Upton Sinclair in 1906. He authored “The Jungle,” a novel that graphically narrated the horrid conditions a Lithuanian man experienced in Chicago slaughterhouses. The book became popular because it pushed the public to clamor for reforms.

The Food and Drug Act of 1906 and the Meat Inspection Act of 1906, which paved the way for the Modern Food and Drug Administration, was the first reform after that public clamor. Congress soon passed the Employers’ Liability Acts of 1906 and 1908, dealing with the contributory negligence rule.

Workers’ Compensation

They made efforts to pass comprehensive workers’ compensation acts in New York (1898), Maryland (1902), Massachusetts (1908), and Montana (1909). Due to the different stances of the representatives, these had to be left according to what will work best and fit per state. Later, the first compensation system protecting workers in interstate commerce was eventually put into law in 1908 upon the proposal of President Taft.

Wisconsin was the first to pass a comprehensive workers’ compensation law in 1911. The same year, nine other states followed: California, Illinois, Kansas, Massachusetts, New Hampshire, New Jersey, Ohio, and Washington. In 2012, the following states followed: Maryland, Michigan, and Rhode Island. In 1913, ten more followed: Arizona, Connecticut, Iowa, Minnesota, Nebraska, Nevada, New York, Oregon, Texas, and West Virginia. 

By 1914 Louisiana and Kentucky also passed the program. By 1915, eight more states followed: Colorado, Indiana, Maine, Montana, Oklahoma, Pennsylvania, Vermont, and Wyoming. The list was followed by Idaho, New Mexico, South Dakota, and Utah in 19017. Virginia was the only state to pass the law in 1918, followed by the states in 1919: Alabama, North Dakota, Tennessee, and Missouri. Georgia followed in 1920, and North Carolina in 1929. Two more states followed in 1935, Florida and South Carolina. The last two states to pass this law was Arkansas in 1939 and Mississippi in 1948.

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The Importance of Workers’ Compensation after COVID-19 and Other Endemics, Epidemic and Pandemics

The workers’ compensation program provides coverage for medical and wage benefits for the worker in case of injury. Without this protection, workers used to file lawsuits against their employers under negligence liability. Due to the tedious processing and high costs of filing these complaints, many employees could not get what was due to them. This was inconvenient to employers as well. With this program in place, both parties can meet their needs. The employee, in effect, frees his employer from any liability once he accepts the policy. This is also a requisite for employers across most states – whether their employees work full-time or part-time. It provides a safety net for both the employee and the employer. 

This policy can also provide further benefits for his dependents if the employee obtains injuries or they die on the job. This also frees the employer from lawsuits arising from any such incidents. 

An additional feature of this policy is the employer’s liability insurance which protects the employer from possible litigation. On top of this, the employer can also benefit from this policy by applying the same benefits to themselves. 

Understanding Outbreaks, Endemic, Epidemic and Pandemics

The US is no stranger to diseases that halt everyday living or put everything at a standstill. It differs from an outbreak, epidemic, or pandemic. To understand it better, let’s define these terminologies:

  • EPIDEMIC refers to a disease affecting a large or significant number of people within a community, population, or region.
  •  A PANDEMIC is an epidemic spread significantly over multiple countries or continents.
  •  ENDEMIC refers to a condition specific only to a particular people group or country.
  •  AN OUTBREAK is when a condition starts to spread significantly within a population or group of people. An outbreak can become an epidemic if authorities cannot control it fast enough.

Below are some of the epidemics and pandemics that have plagued the country over the years:


This disease infected Native Americans when European settlers brought it with them to North America between the period of 1633-1634. The infection continued to spread until the disease reached the West. High fever, chills, severe back pains, and rashes characterize it. By 1721 in Boston alone, 6;000 out of the 11,000 population were reported infected, and around 850 people died from smallpox. Edward Jenner developed the vaccine in 1770, effectively stopping the disease’s spread. In 1970, this was eradicated after a massive vaccination initiative in the United States. 

Yellow fever

This disease was unfortunately carried by refugees from the Caribbean Islands into Philadelphia in 1793. Yellow fever is characterized by the yellowing of the skin, fever, and vomiting with a flood. Around this time, approximately 10% of the population succumbed to the disease, and a mass evacuation followed to escape the virus. It was only in 1953 that a vaccine was finally developed and licensed to fight the virus. The spread of the disease was found due to mosquito bites. This was the same in the cases of Central America, South America, and Africa. They eradicated the illness with the destruction of the mosquitoes’ breeding ground.

Cholera virus 

This virus came to the United States between 1832 to 1866 in three waves. A severe intestinal infection characterizes it. It traveled from India and spread worldwide through trade routes. New York was the first state to be hit, which immediately hit about 5-10% of its population. Many also died during the infection. It ended by the early 1900s with surprisingly no precise treatment to be attributed to it. Immediate treatment for infected patients includes antibiotics, zinc supplements, and rehydration. Some say it could also be due to changes in the weather or quarantine efforts. Sadly, it also left more than 95,000 deaths. To prevent contamination, wash your hands with soap and water and avoid drinking unclean water. 

Scarlet fever

In 1858, a new virus emerged in waves again. It’s a bacterial infection and affects children from 5 to 15 years old. According to studies, scarlet fever or strep throat disease eventually declined due to better nutrition and, most likely, because of improved public health. Treatment includes antibiotics. 

Typhoid Fever

This is the most unassuming but one of the deadliest viruses on this list. It is considered one of the biggest epidemics ever, from 1906 to 1907. Mary Mallon was a cook in New York in an estate and a hospital unit. She was asymptomatic, and because of this, she unwittingly spread the virus directly to 122 New Yorkers, 5 of which died with the virus. Over time, there were about 13.160 deaths in 1906 and 12,670 deaths in 1907.

The disease is characterized by red spots forming on the chest and abdomen and can cause serious illness. Not surprisingly, it is highly contagious and may be spread due to direct contact with an infected person or consuming contaminated food and drink. The vaccine was eventually developed in 1911, while an antibiotic for it only became available in 1948.   

H1N1 Flu

This is a type of flu strain that has been active until now. It was the virus behind the influenza pandemic, also known as Spanish Flu. What’s disturbing about this virus is its capability to mutate – making previous treatments or vaccines less effective for the succeeding strains. Aside from vaccination, the treatment includes bed rest, hydration, and antiviral medication.  


This is characterized by enlarging the mucous membranes like the throat, obstructing the patient’s breathing. If the bacteria enter a patient’s bloodstream, it can cause adverse damage resulting in fatal and nerve damage. It wreaked havoc between 1921-1925 and, during this time, left behind around 206,000 cases. Only by the mid-1920s, when the vaccine was introduced, cases started to go down.


is also a viral disease that damages the nervous system resulting in paralysis. This is a highly contagious disease. It spread in the United States between 1916 and 1952. There were around 3,145 deaths out of the 57,628 reported in 1952. The vaccine developed by Dr. JOnas Salk was finally approved in 1955, resulting in a significant drop in cases in 1962. By 1979, the country had been declared polio-free already. 

H2N2 Flu Virus

Next on the list is the H2N2 Flu virus in 1957. This was considered to be a significant flu outbreak back in 1957. The H2N2 virus, or avian flu, was first discovered in Singapore and Hongkong and reported in the United States by the summer of the same year, 1957. Although around 116,000 deaths in the United States and another 1.1 million worldwide were attributed to H2N2, it didn’t spread much more. A vaccine was developed quickly from the initial vaccine used to treat H1N1. It does not affect humans anymore and is still lethal to birds and pigs. 


Another outbreak spread between 1981-1991 is considered to be another recurrence. Considered to be another contagious virus spread by air. It is characterized by fever, runny nose, cough, red eyes, and sore throat with rashes all over the body. It affects children primarily because inadequate vaccines result in the second round of vaccines for everyone. Eventually, by 2019, cases have dropped significantly already.  

Milwaukee water contamination. In 1993, a bacteria known as cryptosporidium contaminated the water treatment plants of Milwaukee. 403,000 people became seriously ill, and 69 reportedly died due to the parasite. Victims reported dehydration, fever, stomach cramps, and diarrhea. To date, this bacteria remains an annual concern. Although predominantly waterborne, it also spreads through soil, food, water, or fecal contamination. 

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H1N1 version 2009

The virus, now known as the “swine flu,” was again reported in the United States and worldwide. About 60.8 million reported cases were reported, with around 274,304 hospitalizations and 12,469 deaths in the United States alone. Worldwide, it affects primarily individuals less than 65 years old. The vaccine was finally made available in December 2009. This, in effect, reduced severe cases significantly.  

Whooping Cough or Pertussis 

This was reported in the U.S. between 2010 and 2014. It is characterized by coughs that could last for months. It is considered to be life-threatening, particularly for infants who are too young to be given vaccines. About 10 infants already died in the early days of the outbreak. 

One of the most, if not the most, controversial outbreaks is AIDS/HIV. It was first reported in 1981 initially as a rare lung infection. Later it was found to damage the body’s immune system leaving it weak to fight even the most uncomplicated infection. It is transmitted either sexually or through blood transfusion. Also, it can be passed on from mother to unborn child if untreated. It is also considered one of the leading causes of death among people 25 to 34 years old. No vaccine or medicine is yet to be developed to cure AIDS. On the other hand, you can use some medications to keep HIV from developing further into AIDS. 

COVID-19 and Is Workers’ Compensation a Must?

The most controversial of all pandemics listed here is COVID-19. The first case was reported in Wuhan City, Hubei Province, China, by the last quarter of 2019. It has since resulted in an almost global shutdown due to the high incidents of infection. Technically, this global pandemic has compromised the economy of almost all countries in the world. The world was caught unprepared. There was no vaccine or medicine. The virus closed down almost all borders, resulting in a quarantine mechanism in many areas of the world.   

As of July 5, 202, the current record shows about 11.2M confirmed cases worldwide, 6.03M recovered cases and 528K deaths. The United States has a history of 2.89M confirmed cases, 872K recoveries, and 132K deaths. Vaccines are still being tested for viability, although many claim certain vaccines are ready for mass production. Until everything is up already, can we say COVID-19 is done?  

Addressing the Needs of Employees and Employees During COVID-19 with Workers’ Compensation

The United States has a proven track record of caring for the interest of its citizens. This is not her first time facing an epidemic or pandemic. Unfortunately, it’s different from COVID-19.

Many companies are forced to furlough workers or close their businesses to minimize further losses. Can their workers’ compensation coverage fill in the gap for their losses?  

The Current Situation of Covid-19 and Workers’ Compensation for Businesses

Many industries are now forced to classify their business between essential and non-essential. Companies classified as non-essentials, including leisure and tourism, must halt operations due to the virus. With airline and luxury liner operations on halt, there are simply no visitors to attend to. Some employees can return to their job while working from home and are blessed with few. Some had to go back to the front lines to do their jobs. They are essential workers at risk of getting infected by the virus.   

Workers’ compensation insurance systems for COVID-19 are designed to cover such. The essential provision of this insurance is designed to provide coverage and benefits for any illness or injuries resulting from their employment. It is effective as long as their employers pay their premiums.   

Can the system continue to operate under these circumstances? This pandemic is considered an emergency. Legislations are currently addressed to meet this need amidst COVID-19 already. This balances the interests of businesses, employees, insurance premiums, and consumers’ welfare. It is essential to manage these expectations since workers’ compensation is not a government benefit program. It is social insurance shouldered mostly by employers.  

Legal measures to address the need of both employers and employees are currently being drafted by legislators like those in California and Colorado. These conditions are especially being considered because of the essential workers who might have a claim due to their exposure to the virus:

  • Presumed to have arisen out of and in the course of employment; and
  •  A compensable accident, injury, or occupational disease.

In hindsight, using this mechanism may result in these consequences: 

  • Higher Insurance Premiums. Workers’ compensation insurance is already expensive in many states. This may prompt “insurance carriers to adjust the costs of their policies.” The cost of workers’ compensation coverage will almost certainly increase to account for a payout of benefits on covered COVID-19-related claims.
  •  Overloading Existing State Program. Some states have unemployment insurance systems, which they use to assist employees through enhanced unemployment insurance benefits. This is coverage for potential loss of income. Due to the current situation, however, this still needs to be seen. 
  •  Discouraging Businesses From Allowing Employees to Return to Work. As in many states, essential business employees remain working despite the pandemic threat. With the possibility of opening non-essential businesses, the risk of employees getting infected is also high. However, coverage may not apply to those working from home. This may discourage business owners from opening soon. 
  •  Protection In Civil Lawsuits. Similar to other cases, COVID-19-related claims coursed through the workers’ compensation may continue to protect employers against employee civil lawsuits. Simply put, an employee who gets his claim from the said policy cannot sue his employer further for civil damages due to COVID-19. 


Getting Workers’ Compensation Insurance for COVID-19 is a good investment and protection for the part of the employer. It will work for him in two ways. One, he will be able to provide coverage for his staff; two, he will also be able to protect his business. For this part, the employer is protected from further financial loss in his company when a claim is necessary. During the COVID-19 pandemic, adjustments must be made, especially for the front liners or “essential” workers and employees. However, they can still adjust the coverage should the business need to return to operation and not be considered essential. The threat of getting infected is still there. Even without the adjustments in legislation, there’s always a workaround.

One good way to start is to compare our company’s coverage for workers’ compensation for COVID-19 or any other reasons in Denver, CO, or any other U.S. State. We can help you design your coverage based on your need. Call us today here at Team AIS and start protecting your business and your team. 

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