Department of Labor Wants Changes to Workers’ Compensation

Under the current workers’ compensation system, each state more or less makes its own set of laws. These laws vary wildly between states. For example, Texas allows companies to opt out of workers’ compensation insurance while our state of California provides harsh civil and criminal penalties for failure to carry the mandatory insurance. Meanwhile, the United States Department of Labor is weighing in.

The Department of Labor recently released a statement urging changes to the spotty, state specific approach currently in force for workers’ compensation insurance. The Department of Labor recognized that workers’ compensation is a key protection for employees. The statement called workers’ compensation insurance a “key component of the country’s social benefit structure” and expressed concern that it has no federal oversight and a lack of federally mandated minimum standards. The Department of Labor recognized that other social benefit programs have grown, citing the Affordable Care Act, Social Security, and Medicare, while the benefits provided to workers under workers’ compensation system have failed to keep pace, and have sometimes eroded.

The Department of Labor further expressed frustration  that the actual cost of a work-related injury is often borne in large part by the employee, and not by the actual employer. With high insurance premiums and constantly rising medical costs, this puts injured employees in very real danger of financial disaster and bankruptcy. Recent changes in workers’ compensation benefits were recognized, and that the result of these changes was often a diminished amount of benefits and security to a worker.Specifically noted were denial claims that were previously compensable, discouraging workers from filing a claim at all, and a decrease in the cash benefits awarded. Higher evidentiary bars, opt out systems, and exclusion of certain injuries also made the list of concerns.

Ultimately, the Department of Labor concluded that a dramatic overhaul is necessary in order to prevent the continued trend of erosion to benefits provided to workers. These changes would include increased benefits to the worker while decreasing costs to the employer. The Department of Labor also did not overlook the fact that the first step would be continuing efforts to reduce the incidence of work-related injuries in the first place. The Department of Labor goes on to explore whether the federal government should step in to provide more oversight, and whether it may be important to expand other social programs such as Medicare and social security.

In today’s political climate it is clear that change is imminent to many programs, including workers’ compensation. I can discuss with you what changes are likely to happen and how to make sure your business is ready for the future. Contact me today at 714-516-8188 for an appointment.

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