Do workers stand to lose if employers are allowed to opt out of workers’ comp?

Workers’ compensation reform hasn’t just been a hot button issue here in Georgia. Other states are wrestling with change in their state systems, as well. One of the most current examples of this is the state of Oklahoma. The Oklahoma State Senate approved a bill last week that would allow companies to self-insure or have alternative coverage in lieu of their traditional workers’ comp system. The bill passed 28-17, with mostly Democrats in opposition; a few Republicans joined them. Now it returns to the House for consideration there.

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The idea of opting out was met with strong opinions on both sides of the argument. Senator Jim Wilson (D-Talequah) voted against the bill. “We’re just trying to avoid compensating workers. I know what we’re going to do is stick it to the employee with this. And I’m concerned we’re going to take businesses down with it.” Many opponents of the bill agree with him, and they are convinced that the bill will reduce benefits due injured workers.

On the other side of the table, groups that represent big businesses lauded the bill as a way to reduce workers’ compensation insurance costs.

Under this bill, businesses can’t simply check out of the system as it exists; they’re subject to specific requirements before opting out of state coverage. They must either reach a specified risk threshold or have paid out a minimum of $50,000 in losses over at least one of the previous three years. All plans would have to meet the benefit plan requirements for employees under the federal program known as ERISA (Employee Retirement Income Security Act).

There are opponents of the bill who believe it could cause a rise in premiums for companies that go the traditional route and remain with the current system. Senator Jim Sparks (D-Norman) is one of them. “As those big employers pull out of the system, you shrink the pool, and you can’t spread the risk as widely. As you focus the risk, the premiums will increase.”

Senate President Pro Tem Brian Bingman disagrees: He says that, under the alternative coverage, injured employees will receive no less benefits than they do under the present plan. Bingman (R-Sapulpa), who co-authored the bill in the Senate, said “Out-of-control workers’ compensation costs are the number one obstacle to job growth in Oklahoma. If we are serious about making Oklahoma a more prosperous place for our families, we must address the number one issue that is making Oklahoma less competitive with our surrounding neighbors.”

Most of the people I talk to believe that workers’ compensation reforms ultimately help companies at the expense of their employees. Do you think of workers’ comp reform leaves injured employees to flounder?  My observation is that it usually does.

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