July 2 , 2019
It’s Time to Fix Workers’ Comp in New York
By James A. Parrott and Nicholas B. Martin
New York was the first state to adopt workers’ compensation and was once a national leader in safeguarding the interests of workers injured on the job. However, these protections have seriously eroded. Despite having one of the highest costs of living and the highest statewide average wage in the country, New York’s workers’ comp minimum and maximum benefits rank poorly compared to neighboring states.
The state is also seeing troubling workplace safety trends. More than 200,000 workers are injured annually in New York State, and workplace fatalities, particularly in construction, have soared in the past 20 years. Three-fourths of injuries in the private sector resulting in lost workdays occur in predominantly low-wage industries or in industries, like construction, that hire many low-wage workers. Immigrants, some of whom may experience language-access problems navigating the workers’ comp system, hold over one-third of all jobs in many higher-than-average injury-prone industries with large numbers of low-wage workers, including construction, transportation, hotels, and hospitals.
In light of these developments, as our recent report on workers’ comp details, New York needs to update income replacement payments to injured workers, improve access to benefits, particularly for low-wage workers, and ensure that businesses responsibly invest in enhancing worker safety.
Fair compensation used to be the guiding principle in workers’ comp; recent changes, here and nationally, have instead been geared to minimizing employer costs rather than minimizing injuries, compensating injured workers, or fostering return to work. Employers now pay a small and dwindling share of the costs of workplace illness and injury. The resulting medical and other costs have steadily been shifted to workers, their families, and the taxpayer even as high-hazard employers have been taken off the hook for improving workplace safety, and as the profits of insurance company profits providing workers’ comp have climbed.
(In fact, data from the National Association of Insurance Commissioners indicate a pronounced shift from workers’ indemnity and medical benefits to insurance profits in recent years. The actual dollar amount of worker benefits fell 15 percent from 2014-17 while insurance profits rose by 92 percent. Workers’ comp insurance profits topped $1 billion in New York in 2017. Benefits paid to or on behalf of injured workers were only 55.5 percent of premiums, while workers’ comp insurance companies reaped 17.3 percent in profits.)
Divergence 2014-17 in New York Workers’ Compensation Benefits Compared to Insurance Expenses and Profits (levels indexed to 2014 =1.00)
Compounding these problems, recent New York State workers' comp reforms have gone in the wrong direction. A 2007 law raised indemnity benefits for high-wage workers, did nothing for middle-wage workers, and provided a slight benefit for some, but not all, low-wage workers. However, it also wiped out permanent partial disability benefits for any injured worker after 10 years – more than offsetting indemnity benefit gains for partially disabled high-wage workers. A 2017 State law further reduced benefits for all workers not fully recovered within a few years. For example, a worker injured for more than 10 years faces a wage replacement rate cut of 20 percent.
Fixing the system requires action on two fronts.
First, benefit levels need to go up, not down. Losing a third or more of wages is standard in every worker’s comp case. For low-wage workers this can be financially devastating, and lead to indebtedness and the possible loss of their cars or homes. New York State’s minimum and maximum workers’ comp benefit levels trail those of all neighboring states (Massachusetts, Vermont, Connecticut, New Jersey, and Pennsylvania). If minimum weekly benefit were raised to the average of these states ($339), over 40 percent of workers would stand to see higher minimum temporary disability benefits.
In addition, calculations of indemnity benefits should reflect a worker’s future earning potential, including promotions and periodic wage and longevity pay increases, rather than being pegged solely to pre-injury wages.
Second, the workers’ comp system needs to be made more worker-friendly. Currently, injured workers face a host of barriers to accessing benefits – including an all-too-often justified fear of employer retaliation. That’s one reason many injured workers, especially immigrants and those in low-wage jobs, never apply for workers’ comp. Another is the increasing complexity of claim forms, medical reports, and other paperwork required by the 2007 State law. And while the Workers’ Compensation Board offers translation services, a vanishingly small 0.3 percent of claims filed in New York in 2015 were made in a language other than English.
Worker protections against employer retaliation can and should be strengthened. Administrative procedures in the workers’ comp system need to be made more accessible, especially to non-English speakers. Enforcement should be bolstered against misclassification of workers as independent contractors – a practice that allows some employers to evade workers’ comp payments and that puts workers in serious jeopardy in the event of workplace accidents. And more resources should be invested in return-to-work programs and in measures to reduce workplace injury and illness.
Last month, the New York State Legislature adjourned after a session widely praised for protecting tenants’ rights, safeguarding reproductive freedom, addressing climate change, and other reforms. But there’s more to be done. Now the governor and legislature should go to bat for workers across the state, reforming a workers’ comp system needing a major overhaul.