Workers' compensation disparities and sex, race inequities in benefits

Compensations and Benefits Issues

INEQUITIES, DISPARITIES and OTHER OBSTACLES

Issues in Compensations and Benefits

Rising Trends in Recent Years

A 2004 study conducted by the National Academy of Social Insurance found that employers' cost for workers' compensation had increased more rapidly than payments for benefits and medical care (Fogg 2006). This was impelled by the increase in premiums by insurers for future benefit costs. Cash benefits for injuries and medical conditions also went up by 2.3% to $56 billion and employers' costs, by 7% to $87.4 billion. This was the trend in the first three years in the current decade, according to the National Academy of Social Insurance. Chairman of the panel, which produced the report, John E. Burton, said that increasing employer costs were due to rising premiums paid to cover future benefit costs. He predicted a cycle of ups and downs to occur in the market. He explained that employer costs went down in the 1990s when favorable investment returns motivated insurance companies to cut premiums so they could expand market shares. But after 2000, low interest rates and low stock market returns impelled them to raise premiums in order to cover future benefit costs, he explained (Fogg).

Higher Educational Requirement, Market Fluctuations

There are hard realities one must contend with as regards compensation. Salaries and benefits are largely dependent on supply and demand (Auld 2002). Higher education is preferable. It is easier to hire one with a master's degree than if he had only a bachelor's degree or a high school diploma. Compensation tends to be higher in fields, which compete with the private sector for employees. Salaries tend to go higher in departments, which incur problems in recruiting applicants or where job offers are repeatedly unfilled. This is also slightly the trend in departments where turnover is low. Market studies may raise salaries if they reveal that comparable organizations or businesses provide higher compensations. Compensation is affected by local conditions. The tax base of a locality is stronger if it relies heavily on commercial and industrial property taxes. Timing is also a critical factor in seeking out higher salaries. It should be attempted when the economy goes on a rebound and higher salaries will be among many pressures for additional funding (Auld).

Sex and Race Inequities

A study, which used data from the West Virginia Unemployment Compensation Program, showed sex, race and social inequities in the grant of social insurance benefits (Latimer 2003). Those who lived outside the metropolitan area were less likely to qualify for unemployment insurance or UI than those living within the area.. Most non-metro jobs included service, non-durable manufacturing sectors, agricultural and resource extraction industries, which were low-waged and offered less job security. Unpaid, seasonal and part-time jobs, which were not covered by UI or did not qualify, were subjected to the inequities. Those who earned less than average wages tended to be disqualified. Unemployed workers in areas devoted largely to farming also suffered from the drawbacks or consequences of a separation or non-separation issue. These rural workers were dismissed from their jobs for some misconduct, refused to go by the criteria or quit on their own on account of their limited job opportunities (Latimer).

The findings of the study are disturbing in this era of global competition and the institutionalization of occupational and income inequities (Schram 1995 as qtd in Latimer 2003). Economic restructuring and welfare reform drove these inequities even more deeply into the UI and created more problems as a result. From its original form in 1930, the UI has remained unchanged (O'Leary 2000 as qtd in Latimer). It has failed to adjust to the demands for change in the nation's economy and the workforce. Those denied UI benefits took recourse in other but questionable or unreliable sources of social assistance benefits. These included food stamps and Medicaid. These alternative programs were reduced in size and restructured, making them even more limited as substitutes for the UI program (Latimer).

A lifetime cap on benefits and rigid work requirements were thought to help increase labor force participation and establish stronger link between social assistance and social insurance programs (Lare 1999 as qtd in Latimer 2003). But studies found that only approximately 13% of the unemployed who received welfare assistance qualified for UI benefits. Former recipients could not meet the monetary requirement because they simply did not earn enough to qualify. Eligibility criteria discriminated against lower-wage workers whose special needs were un-addressed by the UI program. Another issue confronted many recent welfare recipients, who often had young children and sought part-time work. They were often disqualified from UI benefits. The "able to work" qualification was particularly difficult for the disabled or those living with them to meet. And one more barrier or issue was that many recipients did not even know how the UI system worked or how to apply for UI benefits (Latimer).

Until the current UI program is modified to adopt to the authentic needs of part-time, contingent and self-employed workers in current-day society, the inequities of sex, race and place will continue to afflict the unemployment insurance system (Latimer).

Illegal Employment

A misrepresentation in the employment applicant would not invalidate the employment contract when considering payment for the worker's compensation claim (Decarlo 2001). Another factor pertained to the performance of an illegal act. An illegal act could be hiring during prohibition or employment in an illegal business, such as prostitution, drug trafficking, gambling or any other in violation of law.. Illegal aliens in the United States once posed a problem as most areas allowed them to file for compensation benefits. In a recent court case in Pennsylvania, the employer appealed that the Immigration Reform and Control Act of 1986 prohibited the employment of illegal immigrants in the U.S. He argued that the law compelled the courts to recognize illegal aliens as non-employees under the workers' compensation law. The court ruled that the legislation mentioned prohibited employers from hiring illegal aliens and required employers to provide evidence that the applicants could legally seek employment. But it did not specifically address the matter of benefits or preclude illegal aliens from being considered employees for the purpose of seeking benefits under the workers' compensation law. As a result, the court affirmed the award of benefits (DeCarlo).

Another trouble spot as regards illegal employment had to do with minors (DeCarlo 2001). While modern American jurisprudence sought to protect under-aged employees from abuse and the risks of the workplace, they have been allowed employment for their positive developmental and educational contribution to work. The availability of compensation for injuries depended on the legality of the minor person's employment. Worker's compensation has been held by some courts as the exclusive remedy applicable to the minor even in the event of a violation of another law with its own remedy for violation. Some States provide for double compensation benefits in cases like this. Other States pay increased benefits. However, the standard workers' compensation and employers' liability policy expressly excludes liability insurance for injuries in employments, which violate the law or when performed with the employer's or the executive officers' actual knowledge (DeCarlo).

Lawyers Now Required in Court

Commonwealth Court ruled that non-lawyers could no longer represent employers at unemployment compensation hearings (Dagan 2005). In the past, many companies hired non-lawyers or sent their employees to represent them and participate in the hearings. Claimants, however, may continue to hire non-lawyers or represent themselves. Some observers and critics believe that the ruling can complicate the hearings and prevent employees from challenging wrong or inappropriate benefit claims. The unemployment compensation board filed an appeal against the ruling. The Pennsylvania Chamber of Business and Industry sought a legislation, which would amend the statute on which the ruling was based (Dagan).

The unemployment compensation board fund pays benefits to employees who lost their jobs, except when terminated for cause (Dagan 2002). The rate paid by companies depends partly on the number of their employees listed in the rolls. Companies, which are unwilling to pay for claims may dispute their stand before the board. Some lawyers think the Commonwealth Court ruling would only complicate situations. They believe that lawyers would make a simple court situation more complex than it should be. Furthermore, many companies have remained unaware of the ruling and change in the format. They come to court unprepared. The Board gives companies the choice between delaying hearings and waiving their right to representation. Hiring lawyers is deemed costly to most of them. State officials think the new decision will delay unemployment cases and create a backlog, which they have been trying to reduce in the last few years. At the end of 2002 alone, there were 19,249 cases to deal with. The officials managed to reduce this number to 6,251 (Dagan).

The ruling derived from the Unemployment Compensation Law, which states that a claimant may be represented by a non-lawyer (Dagan 2002). This provision does not explicitly apply to employers. At hearings, attorneys must represent corporations, limited liability companies, trusts and associations. Their witnesses may testify without a need for a lawyer but they cannot raise an argument or a question. On the other hand, lone proprietors and individual partners may either personally represent their case or hire a layers. However, a non-lawyer third party may not represent them at hearings, according to the board (Dagan).

Mental Pay for Stress Not Proportionate to Demand

The workplace is a stressful place to be but data from the National Council r said that only a negligible part of all workers' compensation claims have been paid for mental injury (Mangan 2003). A case at the Wyoming Supreme Court illustrates this. It recently paid an employee's medical expenses and disability, which resulted from attempted suicide. The employee suffered from back injury at work. That the injury was compensable was the consensus. The employer not only did not object to paying the employee's medical bills and indemnity bills. He also thought it was the proper thing to do. But because of the back injuries, the employee could not come to work. He became depressed and attempted suicide. During the hearings, psychologists supported the employee's claim. But the court decided that the injuries did not warrant compensation. The appellate court affirmed the decision but the Supreme Court reversed it. The employer ended up paying the costs of the employee's self-inflicted wound (Mangan).

Risks managers saw the situation differently. They did not view the suicide attempt as arising from or occurring during employment (Mangan 2003). These were the two requirements of a compensable injury. The reversed ruling of the Wyoming Supreme Court surprised many risk management professionals. Such awards for suicide or attempted suicide are not new in the country. At the base of claims of this kind is a new and different kind of injury because it is psychological or psychiatric rather than physical. Worker compensation boards and industrial commissions throughout the country recognize three employment-relevant types of non-physical injuries. These are physical/mental, mental/physical and mental/mental injuries (Mangan).

A physical/mental injury is described as a psychological or psychiatric condition, which derives from a physical injury (Mangan 2003). The Wyoming Supreme Court recognized that the depression arising from the back injury was compensable. It fitted the definition of a physical/mental injury. A mental/physical injury resulting from a psychological or psychiatric condition occurs from or during the course of employment. Classic examples are ulcers and heart attacks due to job stress. The only way a court can bring in the injuries resulting from a suicide attempt will be to classify them as mental/physical. And a mental/mental injury is a psychiatric or psychological condition, which has no physical cause. Examples are the inability to enter the workplace or perform a task. Not all States have come to recognize mental/mental injuries as compensable. Those, which do, impose special or difficult requirements in diagnosing these injuries. This is to establish the connection between the employment and the injury (Mangan).

Some continue to content that the Wyoming Supreme Court decision did not apply to any of the three types (Mangan 2003). The proximate cause is, nonetheless, a physical injury, which arose from or occurred in the course of employment. It led to a mental/physical injury and, thus, applied to one of the three types. This also illustrates that mental injuries are not new in the workers' compensation arena. Those familiar with the workers' compensation law are not surprised to learn about benefits being awarded for heart attacks and work stress. Risk managers are among them yet they refuse to pay benefit claims for suicide and attempted suicide. Both are self-inflicted injuries arising from mental/physical injuries (Mangan).

Around the time of the Arizona Supreme Court allowed benefits for suicide and attempted suicide, insurers dealt with workers' compensation board, industrial commissions and courts. These bodies ordered the payment of benefits to employees who were afflicted with mental illnesses of occupation-related causes. Although only minimally represented, work-related psychiatric conditions captured attention attained prominence by the late 1980s. During that period, analysts forecast that these conditions would grow to be the occupational disease of the succeeding decade. Some of the analysts even made more dire predictions that that. Most States now require employers to make available workers' compensation benefits for physical/mental and mental/physical injuries. All States have come to recognize physical/mental and mental/physical injuries as compensable when arising out of, and occurring, during the course of employment (Mangan).

The response to this emerging crisis has been a tightening of requirements for the claims by State legislatures, workers' compensation boards and industrial commissions (Mangan 2003). These tightened requirements eliminated a substantial source of the claims themselves. The trend changed when the States removed such claims from workers' compensation by statute or judicial precedent. Other States established the pre-existence of the mental injury to the employment. Many States also require a diagnosis based on the Diagnostic and Statistical Manual of Mental Disorders or DSM of the American Psychiatric Association. The rest allow a psychologist to diagnose and treat compensable injuries claims only if the psychologist is licensed by the State. The requirements are also more rigid with psychiatric injuries with occupational causes than physical injuries (Mangan).

Risk managers familiar with workers' compensation claims for psychological injuries recognize this as an emerging pattern (Mangan 2003). Experts believe that the main factor to the emergence of psychological injury claims is cost shifting from the health care system. They perceive coverage for medical expenses and income benefits could be a strong incentive for health care professionals to locate an occupational cause for psychological and psychiatric disorders (Mangan).#