United States vs. Europe: Differences in Workers’ Compensation Laws

The history of compensation for workers in the western world started in 19th century Europe with the advent of industrialization. Germany was the first to introduce a legal doctrine for employer liability, followed by Switzerland and England. The US didn’t enact its first workers’ compensation laws until the early 20th century. The last state to enact workers’ compensation laws (Mississippi) did so in 1948—more than 75 years after Europe’s first legislation was introduced. Since US workers’ compensation laws have been heavily influence by Europe, here’s a brief comparison:

Two Approaches to Workers’ Compensation

Workers’ compensation laws in Europe vary by country. They fall generally into two categories: Bismarckian and Beveridgean. Bismarckian workers’ compensation systems are based on employer contribution to the insurance program. Beveridgean systems are financed through taxes. Eastern Europe primarily follows the Bismarckian approach, whereas the UK and southern European countries such as Italy, Portugal, and the Scandinavian countries lean more towards the Beveridgean approach.

The US approach to workers’ compensation at the federal and state level descends largely from the Bismarckian approach.

Similarities and Differences Between Workers’ Compensation in the US and Europe

• Injury and illness coverage. In most European countries and in the US, all occupational injuries are covered under workers’ compensation insurance. Occupational illness coverage varies slightly from country to country but generally requires some form of proof that the illness was caused from a workplace hazard. Most European countries have a set list of occupational-related illnesses associated with workplace hazards. The US has a list of common occupational illnesses, but any American employee who can prove a direct association between an illness and the workplace can typically secure benefits.
• Commute-related accidents. The treatment of commute-related accidents is a notable difference between most European countries and the US. Aside from the UK and Denmark, most European countries compensate employees injured in transit to and from work.
• Fault and the extent of coverage. In both the US and Europe, coverage is provided regardless of fault, and most claims compensate employees for economic loss (medical expenses and living costs) rather than non-economic loss, such as pain and suffering.
• Public vs. private insurance. Another significant difference is the source of insurance. In the US, insurance is provided either directly through the employer or through a private insurance provider. The federal and state governments dictate terms for workers’ compensation but leave the actual insurance policy purchasing to the employer. In many European countries, public organizations control workers’ compensation insurance policies. Depending on the country, the national government or a regional/local government may control public insurance.

In Practice

While the concepts of workers’ compensation are generally very similar in most Western countries, the rate of actual compensation varies widely. In a report released by the Bureau of Labor Statistics in 2011, the United States ranked below countries including Sweden, Belgium, France, Italy, Austria, and Spain.

In Europe, each workers’ compensation program exists at a national level. Regardless of the system approach, all employers must abide by the legislation. In the US, however, our federal and state laws vary widely. Federal laws cover government employees and tend to offer comprehensive coverage after an accident or illness.

State laws, on the other hand, have a history of benefit inconsistency and injustice. Each state has a different set of laws, and some put the majority of injury and illness costs on the shoulders of injured workers. Some reform proponents believe a public health model could remedy the vast differences between federal and state healthcare.

For further questions regarding California’s workers’ compensation laws after an injury or illness, contact the skilled legal team at DiMarco Araujo Montevideo today.