A recent article from NPR and ProPublica titled, Inside Corporate America’s Campaign to Ditch Workers’ Comp, investigates how companies are opting out of the workers’ compensation system, specifically in Texas. The lawyer leading this trend is Bill Minick, and he believes corporations should be able to opt out of state workers’ compensation law, and write their own rules.
State Laws on Workers’ Compensation
Most states in the U.S. have a system of workers’ compensation pursuant to state laws, as is the case in Colorado. However, some states, like Texas, allow for companies to opt out of the state system. Oklahoma recently passed a law, which Minick co-wrote, that also allows companies to opt out. According to the ProPublica article, Tennessee and South Carolina are seriously considering similar measures.
So what does that mean? Well, if a company opts out of the state system, then they are providing different services for their injured workers. Is this better for the injured workers? If the company is really generous, it could be, but that doesn’t seem to be happening.
What Does Opting Out Mean for Workers?
ProPublica and NPR were able to obtain the injury benefit plans of nearly 120 companies who have opted out in either Texas or Oklahoma. They even put together a pretty extensive chart regarding these benefit plans including compensate rates, notification requirements, and exclusions. The article states that the investigation “found the plans almost universally have lower benefits, more restrictions and virtually no independent oversight.”
Specifically, the article notes that the investigation discovered that unlike most traditional workers’ comp benefits, which can guarantee lifetime medical care, the Texas plans cut off treatment after about two years. Many injured workers are still recovering after that time period; therefore, this time limit drastically affects the fair compensation an injured worker should be entitled to.
These plans in Texas and Oklahoma allow for the employers to have almost complete control over the medical and legal process after an employee is injured, with no oversight. One of the most problematic things: the employers can choose to settle at any time. Workers must accept whatever is offered to them or they lose all benefits.
And what about appealing? Well, the worker could do that, but they just appeal to a committee set up by their employers as opposed to an outside organization. This clearly creates an unfair bias.
Texas has always allowed employers to opt out of workers’ comp; however, in recent years there has been a serious shift to opt-out on in Texas. In the 1990s, Mr. Minick, mentioned above, struck out on his own forming the consulting firm, PartnerSource, which assists companies looking to drop workers’ comp and creating new benefit plans. These separate plans cover nearly 1.5 million workers in Texas and Oklahoma, and PartnerSource drafts about 50 % of these plans in Texas, and 90% in Oklahoma!
The Fine Print
The ProPublica piece also highlights on how the “fine print” of opt-out plans contains multiple opportunities for companies to deny benefits. This can, for example, include terminating workers’ benefits for being late to doctors’ appointments, failing to check in with the company or even consulting with your personal doctor.
Some companies, like Home Depot and McDonald’s, exclude coverage of injuries caused by safety violations or failure to obtain help with a certain task.
How about suing your employer?
Under the concept of workers’ comp, employees give up their right to sue their employers, and in return they are guaranteed compensation for their injury, including care and wages. In Texas where there are the opt-out programs, if the employer has one of these plans then an employee can still sue for negligence, potentially winning millions. Thus, Minick and others, argue that because of the threat of a lawsuit, companies are incentivized to keep their workplaces safe.
However, even if an injured worker wants to file a lawsuit, you have to remember that fine print in the benefit plans. Many opt-out plans contain an arbitration clause, meaning the injured employee and employer must go to arbitration to resolve the negligence issue as opposed to court. Corporations are often in favor of arbitration where there is no jury.
Reading this entire investigation makes me glad that Colorado has not allowed employers to opt out of the workers’ compensation system. Learning what an employee can lose out on, and how this can dramatically affect their recovery, future earnings, and family is troubling.
For more on NPR and ProPublica Investigations regarding workers’ comp check out our other blogs: