Workers ‘ Compensation
Hard Times Ahead
This paper was prepared for Benefits & Compensation 690 Section 192
Professor Charmaine Smalley
Workers Compensation: Hard Times Ahead
Workers Compensation is one of the many known legally mandated benefits that employers are required by law to provided in the United States. The Term workers compensation derived from as one of the first social insurance program to gain widespread acceptance in the United States, and as such became one of the foundations of the modern American welfare state. Most states passed workers’ compensation laws between 1911 and 1920, and all but two states did so by 1935. Workers Compensation (W/C) was issued to help employers compensate employees who suffer injuries or illness related to their job. Workers Compensation is usually the only remedy available to an employee who is injured on the job; it is considered a no-fault program meaning that the benefits are provided to the injured employee whether the accident was the fault of the employer or the employee. Workers Compensation benefits are often coordinated with benefits provided by the Family and Medical Leave Act (FMLA). This article predominantly focus on the increasing and decreasing workers compensation rates across the United States and the effort to reduce workers compensation cost through cost saving benefit reductions combined with more aggressive safety and return to work programs.
Due to the growing number of employees out on leave due to work related injuries many states have seen a increase in high premium cost from 1980’s to 1990s. This has open the eyes of organizations across the united states to prepare for high premiums and lay the framework for more long-term cost reductions through managed safety laws and return to work programs. According to the U.S. Bureau of Labor Statistics in 1998 the average cost fell to 36 cents per hour worked vs. 1997 the average cost was 38 cents per hour worked for all private industry workers. Not only have the average cost over the United States deceased in 1998 but there were also decreased in comparative cost for 40 of the 44 states during 1998, those states include California, Delaware, Rhode Island and Tennessee which are among the high taxed states in the United States. Although theses states have enjoyed the lowest rates of Workers Compenstation during the late 1990s study show that most of the factors not only stem from external factors such as cost-reducing state legislation, lower inflation and the use of managed care but also internal factors within organizations such as careful efforts to educate staff, reduce fraud, improve workplace safety and overall increase in productivity. Total reform of the Workers Compensation industry and changes to the market allow most carriers to tighten eligibility and reduced both the amounts that injured workers received and the duration of the benefits. The effects of the changes from the carriers will lower the cost to organizations and also set a reform to rein in on medical cost from workers injuries which are set to contributed to the soaring workers compensation