Workers' Compensation Systems

By Southerners for Economic Justice

Vol. 2, No. 5, 1980, pp. 26-27

Workers' compensation systems across the country have fallen short of real worker compensation and often come closer to employer compensation, according to a report of the Southerners for Economic Justice. Originated only partly in response to the increased dangers workers were facing in the industrializing workplace of the early 1900s, the laws were also the result of industry's need to rationalize and predict production costs. Current analyses show that over the years compensation programs have served the needs of employers far better than workers and that workers are in fact carrying a double burden the physical and psychological risks of the workplace and the economic costs when those risks become reality. The South, in particular, falls short of adequate and just compensation in several important ways.

In 1972, each state's compensation system was evaluated by the National Commission on State Workman's Compensation Laws. Even though members of the Commission were picked from agencies like insurance companies and the AMA, their analysis labelled workers' compensation "inadequate and inequitable". The Commission published a list of 19 minimum requirements that should be met by each state. To date, no state has met even the minimum requirements.

From the beginning, the compensation system set a twoto seven-day waiting period for filing a claim. Under the system if the injured worker is off the job for less than the prescribed waiting period, he is not compensated for lost wages. Most Southern workers lose a full week's wages before they are eligible for reimbursement. In 1978, eight out of ten Southern states had a waiting period of seven days, compared to 14 out of 40 for the rest of the country.

Reimbursement, when it comes, is only a portion of the pre-injury wage. In 1978, the maximum percent of pre-injury wage to be given as compensation was 66 2/3 in all Southern states except Florida, where it was 60 percent. Compensation systems tend to undercompensate for lost earnings, while not taking inflation or the worker's future earning potential into account at all. With prices rising at a yearly rate of over 10 percent, fixed benefits soon lose much of their buying power. All states set maximum limits on weekly wage benefits (based on the state's average weekly wage), so the pre-injury wage percentage is irrelevant after a point. The maximum weekly wage benefit in 1978 in all 10 Southern states averaged $133.65, as compared to $202.94 for the rest of the country.

Another way this system shortchanges the worker is by using private insurance companies, which add profit to the expenses paid by workers. Private insurance companies' expenses and profits absorb from 40 to 50 percent of the cash flow from premiums. In the 10 Southern states, all insurance carriers are private. When you compare the state-run companies with the private ones, you can see just how much the workers stand to lose For example, Ohio, where a state-run insurance scheme is required, has some of the lowest premium rates for industry, and yet delivers 100 percent of the state's average weekly wage ($241) as the maximum weekly wage benefit. On the other hand, South Carolina, the state in the South whose figure comes closest to Ohio's, requires low premiums for industry - in fact it ranks third nationally and yet delivers only $185 or two thirds of the state's average weekly wage.

A widespread and serious problem in Southern compensation laws is the lack of


Page 28

any wording in the statutes that would keep an employer from firing workers who have filed workers' compensation claims. Of the 10 Southern states, only one has any prohibition of such retaliatory firing. In Arkansas, the offense is a misdemeanor with a fine up to $100 or imprisonment up to six months. In all the years of its jurisdiction, the Workmen's Compensation Commission in Arkansas has not levied this penalty once. A claims examiner told a reporter that to do so would in fact be discriminatory - the incidence of retaliatory firing is so commonplace that to penalize a few offenders would constitute discrimination. The machinery for tracking down all the offenders simply doesn't exist. In some Southern states, legislatures are being pushed to address the problem of retaliatory firings, but the movement is far from being widespread and the victories so far have been qualified ones!

A final inadequacy in workers' compensation schemes is in the area of occupational disease. Benefits awarded nationally to occupational disease victims total a mere 1.35 percent. The Southern picture is even gloomier with 35,000 victims of brown lung disease in the U.S. totally and permanently disabled, and with a mere handful receiving compensation, the inequity is startling. (Since 1975, more than 800 disabled brown lung disease victims have filed claims for Workers' Compensation in the Carolinas; only 167 have collected any benefits. Whereas less than 2 percent of Workers' Compensation claims in North Carolina are challenged by the employer, over 80 percent of the brown lung claims are challenged.) Delaying tactics of insurance companies subject workers and their families to long hard court battles - with delays of three or more years not uncomnon. Workers have often settled out of court for inadequate amounts just to survive financially.

The rapid industrialization that has taken place in the South in the last 30 years has meant increasing numbers of Southern workers are being exposed to workplace hazards. With State Chambers of Commerce enticing industry into the region with promises of lowered compensation costs, Southern workers' health and safety are in particular jeopardy. If workers' needs and rights are met fairly, the whole community benefits. If, on the other hand, their rights to adequate and just protection from workplace dangers are sacrificed for the greater profits of industry, the whole community suffers.

Just recently the National Labor Relations Board handed down a ground-breaking decision in the area of workers' compensation. In Krispy Kreme Doughnut Corp. (1 l-CA-7792; 245 NLRB No. 135), the full Board ruled that the employer had violated the National Labor Relations Act by firing a worker who had filed a workers' compensation claim. The Board's action sustained the earlier decision issued by Administrative Law Judge Joel A. Harmatz on April 17, 1979, in Winston-Salem N.C.

Labor law specialists agree that the decision marks a turning point in worker protection from retaliatory firing. Anyone who has been fired for filing a workers' compensation claim should contact his/her regional NLRB office.

Released by Southerners for Economic Justice, 1931 Laurel Ave., Knoxville, Tennessee 37916