Until the first half of the 20th century, workers injured on the job often faced job loss with no opportunity for compensation or recourse. Employers benefited greatly from this system – their employees were all replaceable, so it was of little concern to them if their employees were injured while working. Today, almost every state in America has a state-regulated workers’ compensation system. While the details of this system vary by state, the concept is uniform: if an employee suffers from a work-related injury, they are entitled to compensation from their employer for lost wages and medical bills. These systems are meant to be “no-fault.” In exchange for not having to prove fault, employees give up their right to sue the employer for negligence.
What are workers’ compensation “opt-out” laws?
Most workers’ compensation benefit systems are state-regulated, requiring all employers to obtain workers’ compensation insurance and setting minimum standards of coverage. These laws ensure a certain level of benefits for injured workers. However, 2 states have laws that allow employers to opt out of the state-regulated system: Oklahoma and Texas. Texas has always had this law; Oklahoma recently adopted a variation of it.
What are some general problems with opt-out laws?
When a state law allows an employer to opt out of a state workers’ compensation system, state regulations that ensure minimum benefit levels do not apply. Practically speaking, this gives employers enormous discretion to decide under what circumstances to compensate an injured worker. For example, an employer can decide whether a worker qualifies for any benefits. It can handpick the doctor who examines the worker. It can refuse to approve any treatment. It can completely deny compensation for certain kinds of disability. It can have full discretion to terminate benefits. Depending on the law, an employee may retain the right to sue an employer for negligence. However, as a condition of employment, the employer can force the employee to sign a contract so all cases are resolved through an employer-designed, secret arbitration system rather than in court.
Why are some in the insurance industry concerned about “opt out” laws?
The insurance industry expressed several concerns about Oklahoma’s “opt-out” law. For example, under the state-regulated system, if an insurer becomes insolvent, claims will still be paid by a guarantee fund. However, the same is not true under ERISA-like disability insurance, which “opt-out” employers purchase. Also, industry consultants in Tennessee, which ultimately rejected a similar “opt out” plan, stated that if an employer adopts a disability plan in conformity with ERISA standards, federal regulations would pre-empt the state’s oversight. Said the consultants, “In such cases the state would lose practical enforcement control over benefit amount, eligibility or delivery mechanism.”
What does Texas law provide?
Texas has the only law in the country where providing workers’ compensation coverage is not mandatory and where employers can “go bare” with no coverage at all. As as result, “At least a half-million Texas workers have no occupational insurance coverage.” According to state Rep. René Oliveira, “That’s a lot of Texans out there without any protection, without any help, having to resort to public assistance and all the rest of us supporting them instead of these bad actors. I think we have to look at this as fraud, as a punishment to honorable businesses that are being outbid.”
Solutions:
- Require all workers compensation plans give employees 30 days to report an accident
- Amend the Texas constitution so that the state average weekly wage is equal to 100% of the average weekly wage in covered employment computed by the Texas Workforce Commission under Section 207.002
- Amend the Texas constitution so that the average weekly wage begins earlier than 13 weeks
- Amend the Texas constitution so that the maximum weekly benefit amount is higher than 47.6 percent of the average weekly wage
- Amend the Texas constitution to strengthen the rights of workers that report work injuries so they cannot be fired from their job
Texas Constitution
Code – Labor Code
Chapter – 406 Workers Compensation Insurance Coverage
Chapter – 408 Workers Compensation Benefits
Chapter – 451 Discrimination Prohibited
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Salon – Corporate America’s unforgivable new swindle: Leveling workers’ compensation to nothing
Houston Chronicle – House panel: Change workers’ comp rules that leave thousands uncovered
Houston Chronicle – What Is a Workers’ Comp Waiver of Subrogation?
NPR – Opt-Out Plans Let Companies Work Without Workers’ Comp
NPR – ‘Darker Possibility’ For Workers When Employers Opt Out of Workers’ Comp
NPR – Federal Workplace Law Fails To Protect Employees Left Out Of Workers’ Comp
NPR – Injured Workers Suffer As ‘Reforms’ Limit Workers’ Compensation Benefits
NPR – As Workers’ Comp Varies From State To State, Workers Pay The Price
NPR – Oklahoma Commission Declares Workers’ Comp Alternative Unconstitutional
NPR – Companies Can’t Set Own Rules For Injured Workers, Oklahoma Supreme Court Says
PBS – The Myth of Workers Compensation Fraud
PBS – State cuts mean workers’ comp isn’t working for many who need it
Truth Out – Workers’ Comp Industrial Complex: The Middlemen Silencing Injured Workers
Truth Out – The War on Workers’ Compensation
Truth Out – Inside Corporate America’s Campaign to Ditch Workers’ Compensation
Truth Out – Disease Victims Often Shut Out of Workers’ Comp System
Truth Out – Tyson Foods’ Secret Recipe for Carving Up Workers’ Comp
Ballotpedia – Washington Workers’ Comp Insurance Reform, Initiative 1082 (2010)
Sacramento Bee editorial says Texas is last in workers’ compensation coverage
Houston Press – Texas Companies Save Millions by Opting Out of Workers’ Comp, Study Finds
Houston Press – Don’t Fall Down on the Job in Texas: Employers Don’t Have to Provide Injury Coverage
Dallas Morning News – Texas workers’ comp ruling is two-edged sword for employers
Dallas Morning News – Editorial: How Texas’ workers’ comp laws endanger many workers
Houston Chronicle – How to Opt Out of Workers’ Compensation Insurance as a Business Owner
Forbes – What Happens To Uber Drivers And Other Sharing Economy Workers Injured On The Job?
Pew – California Overhauls Workers’ Compensation
Pew – Workers’ Comp Systems Getting Stricter
The Oklahoman – Oklahoma workers’ compensation opt-out provisions spark judicial questions
The Oklahoman – Oklahoma Supreme Court upholds new workers’ compensation law
Oklahoma Passes Bill Allowing Employers to Opt Out of Workers’ Comp System
Worker Compensation Opt-out: Can Privatization Work? The Texas Experience and Oklahoma Proposal
Workers compensation exclusive remedy provisions under attack
Chicago Tribune – It’s time to get special interests out of workers’ comp
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