Thursday, July 31, 2014

North Carolina Avoids Rewarding Employers Of Undocumented Workers (For Now)

North Carolina has stripped out a provision of a recent bill that would have precluded Workers Compensation benefits for undocumented workers. But, they promise, they will take up the idea at some future legislative gathering.

Sigh. So the bad penny of Workers Compensation law may yet return again. Because if undocumented workers are prohibited from actually being compensated when they are maimed or other injured at work, it means that those employers who hire them would get a big advantage over employers who employ legal workers.

If undocumented workers can't get compensated under the law, this means the experience modification factor for employers who hire them will end up significantly lower than the mods for law-abiding competitors. After all, if the worker who loses some fingers, or a hand, or has a should go out, can't actually make a claim, there's nothing to report for the experience modifier. So this ill-conceived "reform" would actually create a significant financial incentive for employers to hire undocumented workers.

Not exactly what the legislators of North Carolina likely had in mind. I suspect the sponsors of this provision were mainly interested in making sure that desperate people could more easily be exploited and injured by employers without financial consequence to those employers, and at the same time provide a convenient platform for political grandstanding and fundraising.

South Carolina also recently considered, and then abandoned, such a change in their law. But the idea keeps cropping up, and some benighted states have actually enacted such restrictions.

Given the current state of our politics, and the desire by certain lawmakers to curry favor with the most fanatic of our nativist crusaders, I am sure this idea will keep coming up for consideration. And if and when enacted, it will be an object lesson in unintended consequences, by rewarding employers who hire undocumented workers with financial gain.

As for all those shorn fingers, mangled toes, blown-out shoulders and backs of undocumented workers, well, that's really not the concern of certain politicians and their allies. They don't allow blood and body parts on the floors of most state legislatures, it might upset the delicate digestions of the lawmakers.

New York Rating Bureau Gets Some Unwelcome Publicity

The New York Workers Compensation rating bureau, known as the New York State Compensation Insurance Rating Board, is getting some bad publicity and maybe some regulatory review after a rating decision causes a Brooklyn factor to shut down.

This kind of economic shock to an employer isn't all that uncommon--we here at Advanced Insurance Management get calls and emails on a regular basis from employers facing similar price shocks after decisions by an insurance company or the rating bureau (NCCI in most other states, but some states like New York, California, and a few others operate their own).

This article illustrates not only the often unappreciated danger employers can face from these sorts of unexpected rate increases, it also carries another lesson. This Brooklyn factory started this whole problem by requesting a review by the NY board, after their insurance agent said they could be eligible for a lower rate.

That blew up in the faces of this small factory, and drives home the point that you really need to make sure you are working with knowledgeable experts when it comes to things like Workers Comp classifications, audits, and experience mods. Otherwise, like this unfortunate Brooklyn company, you might inadvertently begin something you ultimately regret.

Wednesday, July 9, 2014

WTF in Arizona Workers Comp

Arizona is kind of an odd state when it comes to the regulation of Workers Compensation insurance. Odd, in that it appears to essentially have no regulation or oversight of insurance companies regarding Workers Compensation insurance. The Department of Insurance says they don't get involved in Workers Comp insurance, no sir, no way, you have to talk to the Industrial Commission. And the Industrial Commission says no, we don't get involved in regulation or oversight of the insurance companies, we just provide oversight and regulation of employers in regards Workers Comp.

Wait, it gets better (well, worse, actually.) Arizona allows workers to legally waive themselves out of Workers Comp coverage. But it's supposed to be their own idea--no, really. The employer isn't supposed to suggest it or ask for it or pressure them or anything like that--wink, wink, nudge nudge. No potential for abuse here, I'm sure.

So basically, if an insurance company decides to impose some rule or policy that they just made up regarding how they compute Workers Comp insurance premiums, , the employer really doesn't have anyone to turn to. They could hire a lawyer, I suppose, and try to fight in court, but for lots of employers that recourse is too expensive and unsure to be a viable option.

I try not to let politics enter into this blog much--but really? I know Arizona politics is dominated by Republicans, but I thought the GOP also championed small business, and not just the big guys like the insurance companies.

In Arizona, not so much, it appears.

Tuesday, July 1, 2014

California Decision: Per Diem Payments Are Wages

In a significant court decision in California, it has been affirmed that per diem payments made to workers are to be used in computing Workers Comp premium charges. In ReadyLink Healthcare, Inc. v. State Compensation Insurance Fund, the Ninth Circuit Court of Appeals let stand an earlier decision that held per diem payments to wages, for purposes of calculating California Workers Compensation insurance premiums.

The per diem payments in this case were not tied to particular expenses of workers, but were instead a flat daily amount.

It should be noted that this ruling pertains only to California, where a separate rating bureau operates with its own unique manual of rules governing Workers Compensation insurance premium calculation. In most other states, the NCCI manual of rules would govern. NCCI rules in most states allow for the exclusion of per diem reimbursements from premium calculations, subject to some limitations.