Just Compensation?

Just Compensation?

Just Compensation?
January 19, 2015

In early 2007, New York officials announced a deal to overhaul of the state’s costly workers’ compensation system. Gov. Eliot Spitzer and legislative leaders touted a groundbreaking compromise with business and labor groups to improve the laws, saying the new reforms would reduce premiums for employers and increase maximum payments to injured workers.

“We are delivering on our promise to reform workers’ compensation in ways that both reduce costs to employers and increase benefits,” Spitzer said later that year. “This reform is an essential part of reviving the state’s economy and encouraging businesses to create more jobs here.”

But over the years, complaints and concerns about workers’ compensation in New York have continued—and this year lawmakers are poised to take another look. State Sen. Diane Savino, who has served as chair of the Senate Labor Committee in recent years, and Assemblyman Carl Heastie, who chairs the Assembly Labor Committee, both said that exploring the issue would be a top priority in 2015.

“One of the things that we’re definitely going to be looking at on the Labor Committee this year is workers’ compensation,” Savino told City & State several weeks ago. “In 2007, the state adopted what is called the workers’ comp reform package that was supposed to accomplish a few things: reduce premiums for employers, improve access to treatment for workers, etc. Depending on who you’re talking to, it has not lived up to its stated goals.”

Workers’ compensation takes away the right of workers to sue when they are injured, but the tradeoff is that they are then guaranteed swift access to healthcare—or, in some cases, payments to cover lost wages—in order to help them quickly return to their jobs. Employers, which are required to have workers compensation insurance, are then protected from expensive lawsuits.

In 2012, Gov. Andrew Cuomo announced that workers’ compensation premium rates had fallen for the first time in four years, dropping by 1.2 percent. However, business groups have focused on how much claims have risen, noting that New York’s rates are far higher than in many other states. A 2012 study from the Public Policy Institute of New York State, an affiliate of the Business Council, found that the 18.8 percent assessment on premiums was nearly five times the average imposed in other states.

The study’s author write that the 2007 reforms were intended to balance increased benefits to injured workers with policy and administrative reforms that provide premium reductions for employers.

“However, concerns have been raised by the business community that this legislation has been too slowly implemented and that the measures intended to result in tangible cost savings to employers, estimated at over 10 percent at the time of the reform, have not been realized,” the author concludes. “In fact, the only post-reform years to show any cost savings to employers have been those in which the loss cost rate was established in spite of actuarial findings.”

Others have complained of bureaucratic delays, longer wait times for injured workers to get access to treatment and stagnant or reduced reimbursements and a growing amount of paperwork for doctors, which is prompting some of them to leave the system.

“So I’m going to take a look at that, because the workers comp system is supposed to be about doing two things: one, if workers give up their right to sue, and in exchange they should entitled to have access to treatment quickly so they can recover and get back to work,” Savino said. “That’s what workers comp is supposed to be about.”

Of course, Savino has yet to be assigned to chair the Labor Committee again this year, and it’s an open question whether she’ll keep the role—and whether she’ll be able to spearhead the legislation in the Senate—now that the Republicans have an absolute majority. For the past two years Republicans shared power with the Independent Democratic Conference, of which Savino is a member. Assuming she does stay on, the lawmaker said she would hold hearings and explore the issue before introducing legislation.

“In 2007 … there were a whole bunch of stakeholders that had an investment in the reform, so those are the people that I’m going to want to hear from now,” she said. “That was then, this is now. Has it worked? If it didn’t, what doesn’t work, what did work, and let’s see what we can do moving forward.”

Organized Labor Issues

The state is already implementing an increase to its minimum wage, which will rise to $9 an hour at the end of the year. Some lawmakers have called for a further increase, while a proposal to allow municipalities to raise it up to an additional 30 percent above the state level—a key issue in places like New York City with a higher cost of living.
State Sen. Diane Savino said she would monitor the effectiveness of the 2011 law, which required employers to provide written notice to their workers of their rate of pay and other key information. Some business groups have called the legislation burdensome, and a deal was struck to drop the written notification in exchange for tougher penalties for underpaying workers.
A perennial issue in Albany is the controversial law governing settlement payments for workers hurt on the job. Supporters say the legislation is necessary to protect workers and incentivize employers to ensure safe working environments, while critics say it needlessly drives up costs.
Assemblyman Carl Heastie said he would be focusing on unemployment and underemployment, which continue to plague pockets of New York even as the overall unemployment rate gradually declines.
Jon Lentz
is City & State’s editor-in-chief.