The Fellow-Servant Rule and Workmen's Compensation

THE FELLOW-SERVANT RULE AND WORKMEN'S COMPENSATION

Changing Workplace

Between 1910 and 1919 the method of compensating employees who suffered injuries during their employment was fundamentally altered. In many respects this transformation was triggered by changes both in the nation's workplaces and in the relationship between labor and management. In times past, when a worker was hired to perform some service for the person hiring him, the arrangement was considered a simple contract. The employer assumed no responsibility for the safety of his employee other than what would be expected of anyone else: that he not deliberately do anything to the employee that would cause harm. Every worker was expected to be held responsible for his own mistakes or negligence, and common law absolved the employer from any responsibility for an injury to one employee caused by the carelessness of another. That, in essence, was the "fellow-servant" rule. But by the beginning of the twentieth century the growth of a complex industrial system had introduced processes of manufacturing, technologies, and scales of operation that far exceeded anything those who first conceived of this rule had ever contemplated. The consequences of such a rule, clearly foreseeable by 1900, were, from the vantage point of a growing industrial society, both costly and entirely unsatisfactory. It was estimated that in the first years of the new century, thirty-five thousand deaths and two million injuries occurred in the nation's workplaces each year. It was estimated further that one-quarter of the annual injuries resulted in the loss of one or more weeks of work. Although the great majority of the workers who suffered injuries could not be blamed for their accidents, the only way they could obtain compensation for their losses was to sue. This was not an option many could afford, given the expense involved in hiring a lawyer and the likelihood that whatever compensation the worker did recover would be far from adequate.

Changing Needs and Attitudes

By the turn of the century the failure of the law to provide for injured workers had become a national scandal. Along with the alarmingly high number of accidents, there were other reasons that encouraged workers to challenge the fellow-servant rule and the protection it afforded the employer. For one, if an injury were severe enough, it often resulted in an employee's discharge, leaving him with little to lose by filing a lawsuit against his former employer. Second, the rising popularity and availability of the contingent-fee arrangement, under which a plaintiff's attorney received a percentage of the settlement, made legal services accessible to more and more workers. As a result, larger numbers of significant recoveries were being recorded, encouraging workers to exercise their right to litigate the issues surrounding their injuries. Finally, in the trial courts themselves, judges and juries were increasingly finding in favor of injured workers and against their corporate adversaries. Whether for reasons of sympathy with individual plaintiffs, or with the working class in general, courts and juries found more and more ways of circumventing the formal and rigid rules of common law.

Common Law in Decline

Many suspected that these doctrines had been designed to preserve the status quo; to protect, under the guise of due process of law, the rights of property holders. When the courts and the legislatures began to find reasons for numerous exceptions to the rules, the respect with which applicable provisions of common law were once regarded began to slip even further. No longer could common-law rule be relied on to restrict the liability of the businessman and industrialist. The rules still prevented many plaintiffs from recovering damages, but the tide was turning, if only gradually. In fact, the chances of businesses losing in such cases had increased to a point where the risks involved began to be taken far more seriously than before. Increasingly, the nation's business and industrial concerns found themselves mired in litigation, facing the costs of settlement, the costs of liability insurance, the expenses associated with the administration and investigation of claims, legal fees, and even the salaries of staff lawyers. This was also a time when the principles of scientific management were becoming more widely accepted, when the benefits of efficiency and planning were becoming more clearly apparent.

Employers Tire of Litigation

Slowly at first, and then with increasing momentum, businesses began to develop a greater receptivity to the idea of workmen's compensation as a system that might offer them the order and systematization they wished to bring to their operations. Clearly, the advantage the legal system had originally provided employers had become far less certain; and it was increasingly apparent that the system in existence was exacting a price industry no longer wished to pay. In the same year the commission released its report, the president of the National Association of Manufacturers, with the full support of his organization, appointed a committee to study the possibility of compensating injured workers without the burdens of time-consuming and costly litigation. By 1911 the association had come to believe that some compensation system was inevitable, and that wisdom dictated that business play a positive role in designing the relevant law. Workers' compensation statutes would eliminate, it was felt, the process of fixing civil liability for industrial accidents through litigation, and the courts could therefore be avoided altogether. Instead, compensation would be based on predetermined schedules, and the responsibility for evaluating claims would rest entirely with an administrative agency.

Workmen's Compensation

The problem of labor unrest also had to be considered. Workers and their unions, already dissatisfied with many aspects of factory management, were especially angered by the relative unconcern with which the issue of workers' safety was treated. In a world where reports of mine, transportation, and industrial accidents were commonplace, issues concerning worker safety invariably affected all facets of labor-management relations, and the lack of compensation for industrial accidents was one obvious weakness in the relationship. Despite the fact that the fellow-servant rule had been seriously weakened over time, most efforts to obtain compensation for industrial-related injuries were still meeting with tenacious resistance on the part of employers. When an employee did recover, the amount paid was often inadequate to meet the needs of the worker and his family. In 1910 the New York Employers' Liability Commission found that in the forty-eight cases of fatality studied in Manhattan, eighteen families received no compensation at all. Only four received more than $2,000, and the remainder were given less than $500. In many instances the cost of supporting the litigation consumed the better part of the recoveries made. This situation was clearly not designed to produce an acceptable outcome for anyone.

Courts Begin to Act

As the courts developed methods to avoid the more unjust outcomes of the common-law tort rules, they began to experience a loss of direction that was aggravated by their deviation from established precedent. Having considered evidence of employer negligence or misconduct and having increasingly adopted many exceptions to the fellow-servant rule, the courts were more and more often at a loss to knowr what new standard should replace the traditional rule. Clearly, their uncertain approach did not resolve the simmering crisis. Mixed results, primarily because of differences of opinion among various judges, not only added to the confusion but slowed the development of a uniform procedure. As expected, the issues surrounding workers' injuries eventually entered the state appellate courts, many of which were sensitive to the weaknesses of the applicable rules, and thus inclined to legitimize the exceptions the lower courts had carved out. But which exceptions should they favor? The variety of judicial exceptions dramatized the extent to which the courts remained uncertain about where the community's true interests lay in the relations between employer and employee. Even where state legislatures had passed laws addressing this matter, the liability statutes enacted were often ineffective in developing a cohesive body of rules.

PRISONS AND CONVICT LABOR

One of the issues that rose repeatedly during the first half of the decade concerned the use of convicts as contract laborers. At a time when conditions in penitentiaries throughout the country were being severely criticized, prison administrators found themselves under fire for a time-honored practice that had originally been welcomed as a means of putting idle inmates to work.

In 1912 the Bureau of Labor completed a study of some 296 state prison facilities, noting that of the eighty-six thousand men and women then under confinement in these institutions, fifty-one thousand were employed by private contractors and industry. Almost all of those who were in a position to earn wages were paid below the prevailing rate; none were entitled to set the terms or conditions of their employment; and all were at risk of suffering severe punishment should their performance prove unsatisfactory. Many others were forced into work arrangements designed to benefit the institutions to which they had been committed, a situation ripe for corruption and other abuses. Instances were recorded of prisoners being deprived of food by contractors bent on achieving the greatest savings possible, often with the knowledge of the guards' superiors and the highest officials of the states involved.

Arrayed in opposition to these arrangements were groups representing many different interests: manufacturers who could not compete with those employing this cheap form of labor; labor organizations who viewed such arrangements with disdain and some fear for the security of its membership; and the American Prison Association, which believed nonessential convict labor undermined discipline, fostered ill will, and generally worsened conditions for which prison officials were responsible. It would, however, take a long while before this practice could be eliminated altogether; the contracting for convict labor continued until just after the outbreak of World War II.

Sources:

Editorial, Outlook, 94 (16 November 1912): 562-563;

Editorial, Outlook (25 November 1914): 663;

Roger Sawyer, Slavery in the Twentieth Century (New York: Routledge & Kegan Paul, 1986).

And So Do the Legislatures

By 1911 twenty-five states had adopted laws abolishing the fellow-servant doctrine for railroad employees. Their intent had been to impose some form of safety regulation on the railroads, specifically by removing the employer's strongest legal defense—the fellow-servant rule—while weakening if not discarding such defenses as assumption of risk and contributory negligence. Real progress in this regard, however, began in 1913, after the Interstate Commerce Commission developed an interest in the problem of transportation safety and after Congress had acted to temporarily preempt the field with the enactment of legislation requiring interstate railroads to equip themselves with safety equipment.

Setback and Reaction

In 1909 the state of New York enacted one of the country's most watched workmen's compensation laws. The bill as passed made the employer responsible for any accident that might befall one of his employees if the latter were injured while engaged in his employment. In effect, this law rejected the older tort concept completely and replaced it with a theory of liability that was considered somewhat revolutionary in legal circles. This opinion was shared by the state's highest court, which, in its decision in Ives v. South Buffalo Railway Company, ruled the law an abridgment of the state's constitution. The new law, the court said, had made the employer liable for losses for which he might not have been responsible, since he may have done nothing to have caused them. For that reason, it concluded, the law constituted a taking of property without due process. To what extent the court had been influenced by the Supreme Court's opinion in Lochner v. New York (1905)—in which state laws governing wages were found to be an interference with the freedom to contract—was uncertain; but the decision surprised many and seemed blatantly to contradict legal developments elsewhere: that same year, the Supreme Court of Wisconsin had found a similar statute constitutional, and a New Jersey statute modeled after New York's law had survived an early test of its constitutionality. In the following years the Ives decision came to be regarded not as the rule but the exception, as other states adopted plans that provided for uniform adjudication of worker claims and also provided for the transfer of the cost of maintaining such insurance to the employers, who were in the best position to control or eliminate the conditions that made such insurance necessary.

Worker's Compensation Comes of Age

The processes adopted in the 1910s for adjudicating worker's claims varied from state to state, but shared many features. Most states made such plans the exclusive remedy for an employee injured on the job. The fellow-servant rule and certain other defenses were eliminated in most statutes, and any employer who did not enroll in the program of insurance established for his workers' benefit was deprived of the protection afforded by many legal defenses. Gradually, such compensatory plans became a common feature in industry, so much so that by 1917 the courts accepted the inevitable, giving constitutional sanction to the changes in the legal doctrines that marked their adoption and enforcement. In that year the Supreme Court upheld state workmen's compensation laws recently passed in New York, in New York Central Railroad Company v. White, and in 1919 the Court upheld a similar Arizona statute (Arizona Employers' Liability cases), prompting recalcitrant state courts, including those in New York, to follow suit. Upholding such laws, however, was generally as far as the courts were prepared to go in permitting legislative regulation of relations between employers and workers. The reasoning of the Ives case continued to command respect in the nation's courts. The due process clause of the Constitution was still seen as defining liberty in a manner deemed immutable and absolute, particularly where property rights were concerned. The Supreme Court's decision in Hammer v. Dagenhart (1919), invalidating a statute outlawing many forms of child labor as undue interference with the economy and the rights of contract, served as a testament to the strength of conservative judicial views as the decade ended.

Sources:

Lawrence M. Friedman and Jack Ladinsky, "Social Change and the Law of Industrial Accidents," Columbia Law Review (1967): 50-82;

Editorial, Outlook, 99 (23 December 1911): 924-925.