Breaking News on DOL “Threats” to Federalize Workers’ Compensation

On Wednesday, October 5, 2016, a much-anticipated report generated by the NASI (National Academy of Social Insurance) was released. The report had been shrouded in secrecy, with even supposed “insiders” complaining of having been shut out of the process. Then, over the weekend, the Department of Labor held a “State of Workers’ Compensation Forum” to discuss the report findings with a wider audience. Early analysis of the NASI report indicates that the report bashes state workers’ compensation programs for shifting costs away from employers and onto injured workers, their families and other social insurance programs. This analysis was widely anticipated within both the regulatory stakeholder community and others who work with the laws day-to-day since Social Security Disability Insurance is rumored to be looking for other funding sources as funding for all of Social Security is going to run out very soon. A National Public Radio/Pro Publica joint investigative series published a year ago that was highly critical of the insurance and employer sector of the workers’ compensation industry, mostly based on anecdotal evidence of a shocking nature, gave someone in the government the idea of looking to state workers’ compensation programs as a possible new funding source. The Texas Opt Out program and Oklahoma’s recent attempt to institute an Opt-Out program also gave NASI fuel to claim that state-level workers’ compensation is broken.

However, the industry and regulators, who met just two weeks ago in Portland, Maine for the IAIABC, all feel that a federal takeover is unlikely. First of all, the accusations of abuse of injured workers is grossly exaggerated. There are situations where injured workers have been denied benefits to which they are entitled, but the vast majority of situations is quite the opposite. Additionally, the DOL is busy enough with the existing federal programs, including Unemployment, Social Security Disability and the like and not staffed to take over workers’ compensation on a national level. State’s rights and a general dislike of federal control also factor into the sentiment that federalization in the near term is most unlikely. Most importantly, however, is the fact that many in the workers’ compensation industry are hard at work trying to reform parts of the system that have failed injured workers. We’ll continue to keep readers informed as the federalization dialogue continues, but for now, to paraphrase, reports of the demise of state workers’ compensation systems is grossly exaggerated.

Navigating the complexities of employment law is difficult, but it is what we do here at the Verrill Dana Employment Group. Contact a member with any questions you may have related to your ability to manage your workforce and reduce the impact of work-related injuries in your work place.