The Oklahoma Workers’ Compensation Commission ruled that a portion of a new state workers’ compensation law is “unconstitutional.”
The Oklahoma Employee Injury Benefit Act enacted in 2013 allows employers in the state to opt out of the state’s Workers’ Compensation system and provide an alternative benefit plan for workers injured on the job.
The commission’s written decision states that “at first blush,” the new workers’ compensation law appears to require opt-out plan benefits to be as good or better than traditional workers’ compensation benefits, but “this is decidedly not so.”
“A closer look. . . reveals that the benefit plans permitted to be used to opt-out establish a dual system under which injured workers are not treated equally,” states the commission’s order. “The appearance of equal treatment under the dual system is like a water mirage on the highway that disappears upon closer inspection.”
For more than a century, workers’ compensation has provided workers with a safety net to protect them from the loss of income due to job related injuries.
But in the most recent decades, employers have been looking to fray the workers’ compensation safety net and shift its remaining costs onto workers and the taxpaying public.
State legislators in most states have been willing to help them.
“Since 2003, legislators in 33 states have enacted changes to workers’ compensation laws that either reduce benefits or make it more difficult for workers to qualify for it,” states a letter from ten US lawmakers to the US Department of Labor urging the department to start paying attention to this trend.
The lawmakers write that these states have been engaged in “a race to the bottom.”
The latest leg in this race to the bottom came in 2013 when Oklahoma passed its opt-out law.
Efforts organized by the Association for Responsible Alternatives to Workers’ Compensation (ARAWC) to pass similar opt-out laws are underway in Tennessee, Mississippi, Alabama, Georgia, Florida, and South Carolina.
Mother Jones reports that Walmart, Lowe’s, Safeway, and other large corporations are funding ARAWC.
The idea for creating an opt-out alternative to workers’ compensation originated in Texas.
Texas in 2001 overhauled its workers’ compensation laws.
Texas never required employers to purchase workers’ compensation insurance, but those that did purchased their coverage through a traditional workers’ compensation system.
In 2001, the state allowed employers to opt out of the traditional workers’ compensation system and set up alternative benefits plans for those hurt on the job.
Since then, 119,000 Texas employers, about one-third of the state’s employers, have opted out of traditional workers’ compensation and established their own company-controlled benefit plan.
A recent analysis of Texas’ opt out plans conducted by NPR and ProPublica shows that opt-out benefits are substantially lower than those paid by traditional workers compensation plans.
For instance, the average benefit paid by opt-out plans for the loss of a hand is $98,000; the national average is $145,000.
In addition, opt out plans give more control to employers. Employers can choose which doctors can examine a patient, which treatments will be approved, and which disabilities can be denied compensation. Employers also can terminate benefits at their discretion.
While the opt-out alternative is the latest attempt to weaken the workers’ compensation safety net, it has been preceded by others.
A report from NPR and ProPublica entitled the Demolition of Workers’ Compensation describes the impact of these efforts.
“Over the past decade, state after state has been dismantling America’s workers’ comp system with disastrous consequences. . . The cutbacks have been so drastic in some places that they virtually guarantee injured workers will plummet into poverty,” write the report’s authors, Michael Grabell and Howard Berkes.
Workers haven’t been the only ones to feel the sting of these so-called reform efforts. Taxpayers are paying more too. Workers without adequate workers’ compensation protection often end up relying on Social Security Disability Insurance, Medicaid, Medicare, food stamps, and other public assistance.
In their letter to the Department of Labor, the ten concerned lawmakers note that as a result of the dismantling of the workers’ compensation safety net, “employers now cover only 20 percent of the overall cost of a workplace injury” while workers, private health insurance plans, and taxpayers cover the rest.
“The magnitude of the cost shift to taxpayers from employers coupled with a race to the bottom in substandard benefits should not be ignored any longer,” write the lawmakers.