Meanwhile, the industrialization of Europe reached the shores of the United States fueled by the aftermath of the Civil War from 1861-1865. The northern states geared up for the war through the building of factories to produce various products with the iron and steel industries taking the lead. However, it was the garment industry in the New York/New Jersey area that brought attention to the plight of the injured worker. These "sweatshops" paid very little to employees and demanded high production. They became the target for the earliest litigation on behalf of injured workers, who were usually paid nothing when injured on the job.

Through the 1880's to the turn of the century, the legal profession in the United States was also growing and the increase of lawsuits had the same effect on the judicial system in the United States that it had in England and Germany. The first problem was the crowded dockets, which led to too few judges handling cases, and finally judgments were rendered in favor of the worker at a steadily increasing rate. By 1908, the workers were winning in nearly 15% of all cases. The American concept of "workmen's" compensation was now based on that of Germany and England's philosophy, that industry is responsible for the costs of injuries inherent in industrial occupations.

The first "workmen's" compensation law passed in the United States was the Federal Employer's Liability act. This law covered certain employees of the Federal Government. It was adopted in 1908 at the urging of President Theodore Roosevelt. He pointed out to congress that "the burden of an accident fell upon the helpless man, his wife and children" and that this was "an outrage".

Prior to 1908, there was an attempt by several states to do something for at least some workers. These attempts were in the form of legislation of employer liability acts. These acts were based on the theory that the employee must bear his own economic loss from an industrial accident unless he could show that some other person was directly responsible because of a negligent act or omission. Georgia passed their act in 1855 and by 1907, 26 states had passed employer liability acts. None of these state acts embodied an actual compensation principle and most simply said, "prove it" and sue.

The year 1911 is most significant in the history of workers' compensation in America. Wisconsin was the first state to adopt the controversial "workmen's" compensation law. The employers lobbied the state legislator for what is now known as the "great trade-off". Through this legislation, the employer agreed to provide medical and indemnity (wage replacement) benefits and the injured employee agreed to give up his/her right to sue the employer. It was clear that the growing success of litigation was beginning to be felt by the business community. This same year, 1911, ten more states enacted "workmen's" compensation laws. Four more states adopted laws in 1912, and eight more passed laws in 1913. By 1948, all the states had at least some form of "workman's" compensation in effect including the territories of Alaska and Hawaii. Workers' compensation today has become the exclusive remedy for the injured worker. It also protects employers from damage suits filed by the injured worker as well as provides employers with a basis for calculating production costs.