COLUMNS


Workers' Compensation

By John Hibma


Workers' compensation insurance allows employees to receive medical benefits when injured on the job and to collect some portion of their wages while unable to work. Under workers' compensation laws, an employee injured on the job is not liable for the cost of medical treatment and can receive additional compensation for permanent injuries.

In the U.S., workers' compensation programs in all industries except agriculture fall under the jurisdiction of the U.S. Department of Labor (DOL). The DOL leaves agricultural workers' compensation specifically to the jurisdiction of the individual states. This arrangement leaves many farmworkers excluded from receiving workers' compensation benefits. Currently, there are 17 states that do not require employers in agriculture to provide workers' compensation to employees. The other states require it, but coverage is limited in several of them. A comparison of state coverage from Farmworker Justice is available here: http://bit.ly/1n6wqme.

Each state has a different set of statutes relating to agricultural workers' compensation. Businesses must become familiar with the specific laws in their state. In New York, for instance, a farm employer must provide workers' compensation insurance for farmworkers if the employer paid $1,200 or more in wages during the previous calendar year. However, farm employers are not required to provide disability benefits insurance for their farm laborers. In Wisconsin, there is no wage threshold for farmers. The requirement for workers' compensation insurance is based on the number of employees. Farmers are not required to obtain insurance unless they have six or more employees for at least 20 days during a calendar year.

In addition, some states are beginning to follow a 2002 U.S. Supreme Court decision that limits or eliminates benefits for undocumented workers. For example, in Michigan and Pennsylvania, courts have ruled that injured undocumented employees can receive medical benefits but not replacement wages. In Maine, the legislature has gone even further, prohibiting undocumented workers from receiving any workers' compensation benefits.

Workers' compensation originated in the U.S. in the 1850s. Some of the earliest statutes enacted by states merely allowed an employee the right to sue an employer for injuries. However, it fell on employees to prove they were injured on the job, and they were required to take their employer to court to collect damages. Over time, both the need for litigation and the burden of proof were reduced, making it easier for employees to collect compensation.

During the early 20th century, the system remained controversial and confusing. Employers claimed they were being deprived of their constitutional right to due process by being forced to pay compensation regardless of fault or negligence on their part. In 1917, the Supreme Court ruled that the constitutional rights of employers were not being violated, which led to most states enacting compulsory workers' compensation laws to protect employees. Today, most employees in nonagricultural industries have an absolute right to medical care for injuries sustained on the job, and in many cases they are eligible for monetary payments for injuries or permanent disabilities. Once again, this does not necessarily apply to the agricultural sector.

Unquestionably, providing workers' compensation insurance is an added - and sometimes onerous - expense for all businesses. While the intent of workers' compensation insurance is to provide employees who are injured on the job with financial assistance, the employer or business owner bears the burden of managing the insurance as a business expense, while at the same time keeping injuries and claims to a minimum so the cost of insurance doesn't become excessively high. Workplaces with a high number of injuries and claims in the past will pay more for their policies.

Like all insurance policies, there are premiums that must be paid, and the more claims made against a policy, the more expensive the insurance becomes. The amount of insurance that an employer must carry is based on individual state requirements, and the cost for that coverage varies from industry to industry. The premiums are based on the payroll of the company, the level of risk associated with working in that industry, and the amount of claims made against the policy. Within a company, jobs are also rated differently based on level of risk. For example, the cost of insurance for clerical staff will be lower than for a forklift operator or an employee who is required to work with chemicals.

A goal for all businesses should be to reduce the workers' compensation experience modification rate (EMR). The EMR is used in the insurance industry to adjust the premium of a policy. It represents a debit or credit to a policy premium based on the history of claims made against the policy. The EMR, as well as the total cost of insurance, is a complex calculation based on the injury statistics in a given industry and is also derived from the claims of the previous three years of the policy. If fewer claims are made against a policy, this will lower the EMR over time and help reduce the cost of insurance for a business.

Agriculture is infamous for being a dangerous profession. Injuries abound when working in fields and around farm equipment or animals. We all know someone who has fallen off a ladder, been run over by a tractor, or sustained a back injury by picking up too much weight. Since workers' compensation insurance is required for many agribusinesses, and in the future will most likely be required for all agribusinesses in all states, owners and employers should develop worker safety programs where applicable and encourage workplace safety. It will save them money in the long run.

The author works for Central Connecticut Cooperative Farmers Association in Manchester, Connecticut.