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Many have had to sell to larger competitors or exit the business entirely, with the owner of Rockwell's selling to an investment group which manages small, independent cafes and restaurants. The bottom line is that the high cost of worker's compensation is forcing many employees to quit offering healthcare or risk not being able to stay in business. This supports the empirically-derived research that states workers' compensation is the only healthcare system for millions of Americans (Lakdawalla, Reville, Seabury, 2007). For small business owners resolving the ethical dilemma of hiring undocumented workers on the one hand to keep labor costs down but still paying worker's compensation insurance, especially in California, on the other, have had the net effect of reducing the employment rate.
Conclusion
All of these factors point to the need on the part of small business owners to aggressively manage safety practices and minimize accidents as much as possible. Second, the paradox and ethical dilemma of hiring undocumented workers and paying them less yet having to still insure them with the DWC will become a major issue as national healthcare reform is debated this year. The Federal Immigration...
The worst offenders are those businesses that have the riskiest occupations, with roofers being the most prevalent. Too often a worker is hurt or falls from a roof and goes in for treatment, only to find the worker's compensation insurance was never paid. This ethical dilemma for small business owners will last long beyond this recession and will fundamentally re-order the economic landscape of states including California.
References
Darius N. Lakdawalla, Robert T. Reville, & Seth A Seabury. (2007). HOW DOES HEALTH INSURANCE AFFECT WORKERS' COMPENSATION FILING? Economic Inquiry, 45(2), 286-303.
Nhat Thanh Tam Nguyen, & Brian H. Kleiner. (2005). The Role of California's Department of Industrial Relations. Management Research News, 28(2/3), 23-33.
J Tim Query. (2006). Workers' Compensation for Undocumented Workers: A Discussion of the Regulatory Complexities. Journal of Insurance Regulation, 25(2), 3-19.
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