Beware Workers’ Compensation Opt-Out

Every company wants to save a little (or a lot) of money here and there to help the bottom line. But it is also possible to take cost cutting too far. One area where I see this happening is with workers’ compensation. There’s a disturbing trend on the rise, and it’s important to examine it closely to make sure your company is doing the right thing by its employees.

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It wasn’t until well into the Industrial Revolution that workers’ compensation appeared on the radar screen of the American public. Interestingly enough, it was Upton Sinclair’s 1906 novel The Jungle that played a big part in raising awareness in the public’s mind through its portrayal of the horrifying conditions workers experienced in the slaughterhouses of Chicago.

It soon became common practice for states to require that employers participate in workers’ compensation insurance. The idea is that employees give up their right to sue an employer for any injuries sustained on the job because the employer, through the workers’ compensation insurance, would pay the medical bills and enough compensation to sustain the injured worker during recovery.

Even though workers’ comp benefits vary wildly from state to state, it’s a system that has worked fairly well for many years. But over the last 10 years, more states have begun dismantling their workers’ comp systems, and the results often leave workers in disastrous situations.

Labeling these actions as “reform,” many states are drastically reducing workers’ comp benefits to their lowest levels since the 1970s, cutting off benefits at arbitrary levels, denying benefits de facto based on the opinions of doctors who have not even seen the patients in question, and taking away people’s autonomy to choose the medical professionals who treat them. And these issues aren’t even receiving national attention because the federal government stopped monitoring workers’ comp laws more than ten years ago.

Even worse, some states are allowing employers to opt out of the system altogether. Instead, workers are covered by workplace injury plans that are largely unregulated and are controlled by the employers. Not surprisingly, these plans offer even fewer benefits to the people who need them most.

Oklahoma and Texas are the worst offenders at this point. In both states, the new normal makes it very easy for companies to deny workers the benefits they deserve for injuries sustained on the job, all in the name of corporate interests to cut costs and remain competitive in tough economic times. Companies in these states are saving literally billions of dollars collectively, but they’re doing so at the expense of real people who deserve more than what they’re getting under these shoddy plans. Both Tennessee and South Carolina are considering adopting similar opt-out schemes.

It’s true that these opt-out schemes also open companies up to lawsuits, a key protection for businesses under traditional workers’ compensation programs. The issue, therefore, could be addressed by injured workers suing the company that’s not properly taking care of them. But consider this: The people most often injured on the job tend to be those who don’t have the wherewithal, financial or otherwise, to get the legal help they’d need to take on a corporation. The cards are stacked against them in every way possible, and it’s not fair.

I’ve written in the past how important it is that companies treat their workers fairly and equitably if they want a happy, productive workforce. The current trends in workers’ compensation fly in the face of such a notion. I am convinced that continuing down this pathway will only hurt all parties concerned, both employers and employees in the long term.

For more information on these disturbing trends, see the following stories and reports:

https://www.propublica.org/article/inside-corporate-americas-plan-to-ditch-workers-comp

http://www.npr.org/2015/10/14/448544926/texas-oklahoma-permit-companies-to-dump-worker-compensation-plans

https://www.propublica.org/article/osha-report-echoes-propublica-and-nprs-workers-comp-findings

http://www.npr.org/2015/03/06/391149235/as-workers-comp-varies-from-state-to-state-workers-pay-the-price

December 8, 2015   Updated :November 16, 2016   opting out, workers compensation   

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