1917 Top Court Case Found Workers’ Compensation Laws Constitutional

Caselaw Curriculum

An early challenge to New York's workers' compensation law challenged the new statute on due process and equal protection grounds under the 14th Amendment, but the U.S. Supreme Court found no problem. Simply Research subscribers have access to the full text of the decision.

Case

New York Central Railroad Company v. White, 243 U.S. 188 (1917)

What Happened

Under a very-new workers' compensation law in the State of New York, a widow filed a claim for benefits related to the death of her husband, which occurred through an accidental injury arising out of and in the course of his employment for a railroad company.

The state commission awarded compensation, and the award was affirmed in the appellate court and New York's high court before, on the basis of constitutional questions, the case ended up in the U.S. Supreme Court, with the company arguing that the award compensation under workers' compensation law would deprive the company of its property without due process and in denial of equal protection.

Rule of Law

The newly enacted New York "Workmen's Compensation Law" provided an exclusive system to govern the liabilities of employers and the rights of employees and their dependents in respect of compensation for disabling injuries and death caused by accident (not due to the willful intent or the intoxication of the employee) in certain employments, classed as hazardous; the duty of employers to compensate was "made absolute."

What the U.S. Supreme Court Said

The Court found no challenge with the law.

"The statute under consideration sets aside one body of rules only to establish another system in its place," the court wrote. "If the employee is no longer able to recover as much as before in case of being injured through the employer's negligence, he is entitled to moderate compensation in all cases of injury and has a certain and speedy remedy without the difficulty and expense of establishing negligence or proving the amount of the damages."

Behind the legislative scheme were the principles of the Grand Bargain.

"Instead of assuming the entire consequences of all ordinary risks of the occupation, he assumes the consequences, in excess of the scheduled compensation, of risks ordinary and extraordinary," the court wrote. "On the other hand, if the employer is left without defense respecting the question of fault, he at the same time is assured that the recovery is limited, and that it goes directly to the relief of the designated beneficiary."

Ultimately, the Court found that the bargain element of the Grand Bargain prevented the law from falling into questionable constitutional territory.

"It is obvious that this case presents no question as to whether the state might, consistently with the Fourteenth Amendment, compel employers to effect insurance," the Court wrote. "There is no such compulsion, since self-insurance under the third clause presumably is open to all employers on reasonable terms that it is within the power of the state to impose."

Similarly, workers were "not injuriously affected in a constitutional sense by the provisions giving to the employer an option" to choose insurance coverage or to self-insure because there was "no presumption that either will prove inadequate to safeguard the employee's interests."

Verdict: The U.S. Supreme Court affirmed the New York Court of Appeals ruling.

Takeaway

The system of trading common law actions for exclusive remedy in New York's workers' compensation law posed no constitutional problems.

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