How the Trump Administration will Affect Workers’ Compensation

Episode Notes

Transcript

Workers Comp Matters

How the Trump Administration will Affect Workers’ Compensation 01/30/2017

Intro: This is ‘Workers Comp Matters’ hosted by attorney Alan S. Pierce; the only Legal Talk Network program that focuses entirely on the people and the law in workers’ compensation cases. A nationally recognized trial attorney, expert, and author, Alan S. Pierce, is a leader committed to making a difference when workers’ comp matters.

Alan S. Pierce: Welcome to the Legal Talk Network and ‘Workers Comp Matters. I am your host Alan Pierce, and today we have another show regarding issues of the timely nature in the field of workers’ compensation.

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Well, in today’s show we have a guest I have wanted to have on ‘‘Workers Comp Matters’ for a long time. He is Peter Rousmaniere. Peter is a 30 year veteran of the workers’ compensation system. He has been an entrepreneur and consultant, but he is most widely known as a writer.

He has written on many topics of national interest and along the way he has interviewed over a thousand individuals ranging from injured workers to CEOs. He lives in Woodstock, Vermont. He has both his Bachelor’s and MBA from Harvard and Peter I’d like to welcome you to this edition of ‘Workers’ Comp Matters.’

Peter Rousmaniere: Thank you very much Alan. I’m very, very happy to be here. Thank you very much.

Alan S. Pierce: And the reason I suggested this show that we’re recording, by the way we usually don’t disclose the date we are recording our podcasts, but this is now the end of January of 2017 and I thought it would be particularly timely to talk about the impact as best we can tell of the 2016 primarily Presidential election as well as the congressional and senate elections on the administration of workers’ compensation.

And now Peter this has obviously been a subject of discussion both outside and within the workers’ compensation field and I would like to welcome your thoughts to what impact you feel as best we can tell, a Trump Presidency and a Republican-Dominated House and Congress would have on primarily state-based workers’ compensation program, so perhaps you can start with something general and then we can get into some specifics.

Peter Rousmaniere: Right. Well that’s one general point I think it has to do with the focus that Department of Labor, in particular OSHA, has taken over the last three to four years to express concern about the performance of the workers’ comp system.

Now this required an extraordinary undertaking by OSHA. It would be as if the Department of Energy would say, we have grave doubts in the way in which oil distribution is managed in this country and we think that the performers are underperforming.

OSHO has in 2015 and most recently issued two reports which are really hard hitting reports are more substantive than the core public reports. Now OSHO people, they’ve really developed a sense that the workers’ comp system is not working and they are very unhappy about it.

That kind of concern of course starts at the top and David Michaels the head of OSHO has already resigned and with the top people leaving, I suspect that concern is evaporating very quickly.

Alan S. Pierce: Yeah and of course OSHO deals if not exclusively, certainly primarily with occupational and workers’ safety and I know there have been some expressions of concern about whether or not either by executive order of the President or by legislative changes there could be less of a focus on worker safety and/or inspections finds and efforts to keep employers in line with if not minimal standards, appropriate standards.

Outside of OSHA there has also been through at least the Obama Administration’s Secretary of Labor, Perez, some statements from the DoL on workers’ comp more broadly than just the worker safety issue, and perhaps you might speak about how we were faring under a Democratic Administration in terms of Federal commentary on State Workers’ Comp and where you see our new Secretary of Labor designate fitting in?

Peter Rousmaniere: Yeah, I had not been a careful student of the entire body of issues that DoL has presented with regard to workers’ comp, but beyond the area of Work, Safety and Health, the Department of Labor has been involved in a lot of issues pertaining to employment and some of these issues do impinge on workers’ comp.

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Let me give you an example, the concept of this classification. This classification is the term of what used to define when an employer labels a worker an independent contractor as opposed to an employee. All kinds of protections happen for employees. Many protections disappear for the independent contractor and the workers’ comp system only applies to employees.

So therefore if you have a industry such as most notoriously construction, where half the people on a work site are independent contractors or more than half, the contractor has no work comp obligations. There are whole bunch of other obligations that the employer avoids, for example, overtime.

Now, several states, and remember initially, Massachusetts being one of them and a number of other states, have tried to cut down on this classification often led by Labor Union and Construction Labor Unions, because they saw that employers who were abusing the independent contractor route were able to put in lower bids because they didn’t have to pay workers’ comp insurance.

So DoL is very interested in putting together agreements between the Department of Labor and state agencies. I think they’re in about 35 states. I don’t know where that is right now and I’m not sure how much more needs to be done in terms of building more agreements and putting more muscle into the program of reducing this classification, but I wouldn’t be surprised if that can’t 07:01.

Alan S. Pierce: In addition to misclassification there are also other ways that employers for example can avoid paying high premiums and it’s also categorizing construction workers as clerical workers and things like that. And I do know that DoL through Secretary Perez and in response to some congressional and senate correspondence had spoken about the necessity of the federal government at least overseeing the state workers’ comp system and the question I think those of us that are invested in this system have is whether the impetus for continuing to do that will remain with a Republican administration and the President appointed secretary.

So I think the discussion of the Department of Labor and misclassification is a pretty good segue into the next area that I’d like you to talk about and that is the area of immigration and the ability of undocumented workers who for the most part under existing case law are entitled to workers’ compensation, especially in view of what was probably the strongest issue that led President Trump to the White House was his very rigid stance regarding undocumented or what he calls illegal immigrations.

So how do you see that fitting in his Presidency to the rights of undocumented workers who are here working, and working hard and sometimes exploited to be able to qualify not only for workers’ comp but also appropriate safety and health protections?

Peter Rousmaniere: Right. Let’s put this into context. There are about 25 million workers in the United States right now foreign-born. Of those eight million are unauthorized. The unauthorized workforce is concentrated in jobs which require high school degrees or do not require high school degrees. There are hardly any unauthorized workers who have advanced degrees going beyond high school.

There are occupations which are heavily populated by immigrants, such as agricultural workers, maids and housekeeping cleaners, 49% are immigrants as a whole and of the workers who are, immigrants who engage in jobs that do not require formal education, upwards of a half are undocumented.

Allow me for a minute to describe how these folks got here. We have had a cross-border labor market with Mexico going back a hundred years, more than hundred years and depending on what the laws were then at the particular time, there was a fair amount of traffic between the United States and mainly Mexico, and that traffic was over primarily circular and out of 10 other people who came to the United States probably 9 went back or almost 10 went back.

(00:10:03)

Overtime there was a slow-growth as a permanent group of unauthorized workers and then in 1986 when the new immigration law was passed, what that did was shut down the border. Now that was a massive Grand Slam error because what happened by shutting down the border was that anyone who is undocumented unauthorized in this country didn’t want to go back and those who still wanted to come in and could find a way of getting in.

There’s a very high chance even after the border was shut down, of getting through the border, just maybe two or three times if you get through and then with the 1986 legislation it also legalized the stay of about three million people and most of these were men, many of them married with wives back in Mexico and the wives said well I want to be with my husband.

So they walked across the border illegally. And as a result the annual number of new births in the United States of unauthorized sons grew from, in the 1980s from about 50000 to 300,000 in the 1990s. Many of those babies right now are well if they are born in the United States, they are citizens, if they came over with their mothers there would be now 11:26.

What you see is happening is that we have through really mismanagement of immigration policy created a very large pool of unauthorized workers working in a labor force which naturally in the way that the labor and jobs are located really pays very little attention to the form of border between Mexico and the United States and this is going to create all kinds of problems to kind of resolve this because there are all kinds of employers in the United States who want to have these workers legal or illegal and they are a lot more determined to maintain access to this workforce than there are other people who want to deprive them of the workforce, for example, the agricultural or corporate 12:14 in California are one of the most highly skilled immigration experts in the country because they need that workforce.

Now the thing is though that being in the shadows 8 million workers in high risk jobs is a very dangerous situation to be. And in fact 12:36 who is the head of safety for the state workers’ comp insurer in California, says that the greatest single step in improving safety of workers in this country were to legalize these workers, which of course would mean that they now have rights less intimidated, they also are able to move out from where you’re working now because they wouldn’t have to hole up in a job they otherwise wouldn’t want, which would cause among other things 13:07 and the employers will have to spend a lot more time dealing with work safety and health.

I don’t see how the Trump Administration is going to deport these workers in large-scale, the Bush administration tried that with the major raids in the 1990s and the 2000s and all that did was create enormous headlines, which made the 13:33 look real bad.

Alan S Pierce This is probably an appropriate time to take a short break which we will do and we’ll come back with our guest Peter Rousmaniere to discuss further impact of changes that we might see in the workers’ comp setting. So we’ll be right back.

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(00:15:08)

Alan Pierce Welcome back. This is Alan Pierce talking with Peter Rousmaniere. Peter we ended our first segment with a discussion of immigration and the impact of the Trump administration on injured workers or immigrants in general.

Let’s try to change focus a little bit of course probably the equal issue that Trump rallied his supporters around was the repeal of the Affordable Care Act otherwise known as Obama Care.

I know those of us in the workers’ comp community for the last three or four years have been trying to figure out the impact of the ACA on workers’ comp and now we are looking at the impact of repealing the ACA and not knowing what’s going to replace it with workers comp.

I know this is something you’ve looked at, give us your expert opinion as best you can.

Peter Rousmaniere Well I am probably a less expert than man-on-the-street because I am puzzled myself. One would ordinarily assume that if workers are covered with a health plan, they have a option of using their health plans instead of workers’ comp and in fact they was a very high non-claiming rate. I believe that about 50% of injuries that a bunch of reasonable people will recently consider should be claimed under workers’ comp or actually not at all. The medical care can be picked up in the group health plan.

So you think that would be with ACA that would reduce the amount of claims in workers’ comp. On the other hand ACA has very high deductibles that would come in and even for people who have been of course insured for very long time the presence of high deductibles and surgeons who may perceive that they’re getting more highly paid compensating workers’ comp, you can see the reverse taking place which is that more and more people are being driven into workers’ comp by their doctors, mainly orthopedist to perform expensive treatment.

Alan Pierce Alright and I guess like everyone else we’re going to have to wait and see, we’re going to have to wait and see whether the ACA is repealed and what replaces it and whether we are going to have an influx of uninsured individuals once again who may be looking towards the workers’ comp system for medical care, is that a fair statement?

Peter Rousmaniere Yes, I am still trying to figure it out myself.

Alan Pierce Alright, when you when you do, let us know.

Peter Rousmaniere Yes.

Alan Pierce You know the final topic I want to touch on and we don’t have a whole lot of time is discussing a status of what’s known as opt-out especially for those of you who have listened to workers’ comp matters in the past and or have been following the literature or the press accounts over the last year or two, the so-called opt-out movement which began in Oklahoma and was thought to start to move into other states came to a screeching halt when the Oklahoma Supreme Court declared the ability of large employers to remove themselves from the mandatory workers’ compensation market and create their own ostensibly employer benefit plans under an ERISA statute, the Oklahoma Supreme Court declared that unconstitutional and it appeared that opt-out in its present or perceived iterations was all but dead.

Now that we have what is probably a much more large employer friendly administration, how do you see opt-out adapting to both the criticisms leveled against it by the Oklahoma Supreme Court and other commentators who closely scrutinize these opt-out systems and how we might be dealing with the concept of a diminution of employers within the mandatory workers’ compensation coverage arena.

Peter Rousemaniere The thing that interests me most at this point is were like it’s going to be a terrible strategic error on the part of the opt-out advocates. What they did is they came out of tax which is a terrible environment in which you can prove the efficacy of opt-out because there are no rules at all and began writing legislation with Republican committees in the state legislatures to try without any attempt to try to draw a larger audience.

Let me tell you what the larger audience is. Now let’s assume that we have in 1995 a march on Washington by the major unions steel workers, autoworkers and so on. Who will be in that march? Well, they’re going to be probably 90% of them are going to be men. And is workers’ comp important for them? Obviously, it obviously is.

Now look at the women’s march of the day. Okay. How many of those women are really concerned about workers’ comp. How many in contrast are really interested in parental leaves a lot and what the advocates failed to do is to figure out how to appeal to a broader audience of people who really don’t care a lot about workers’ comp and care about other leaves.

(00:20:08)

And this is how I think there maybe a backdoor opt-out going through Washington which I don’t think anyone is paying attention to right, but it could be in the next 10 years, which is a republican driven revision to ERISA which creates a kind of a super ERISA and that’s one which says that this package of ERISA with a set of benefits for the 20:33 one is parental leave, the other is sick leave, the other is an opt-out version of workers’ comp and that an employer who elects this super package of ERISA has to embrace all three of them, parental leave, sick leave and workers’ comp.

And then there would have to be some kind of a method by which state governments have to vote some way of authorizing their employers to be able to elect a super ERISA. I am not a lawyer and I am certainly not a legal strategist, but I can see this happening and think about women in the women’s march would want to see a package such this.

Alan S Pierce Interesting point where it would be tied in to perhaps more socially progressive issues and yeah, I mean the question all of us have is how can the federal government effectively mandate each and every one of the 50 states to adopt an amendment or a change in their state law where the federal government doesn’t have any jurisdiction and I suppose one way would be the creation of as you put it a super ERISA and then the threat of withholding of federal funds to those states if they don’t allow a change to allow that.

Peter Rousmaniere Or it may not be a mandate, it may be an option which works for probably 10 years to see how many states show up and then there is a past legislation which has been tested against a state courts and Bobby Burke was only the first person to test it in Oklahoma, having been tested that means the employers in that state would be able to voluntary elect super ERISA.

Now down downstream it maybe after 5 or 10 years, 15 years be Washington will say, we want this mandatory, but this doesn’t have to be mandatory at the beginning, in fact it would be a strategic error on the part of the advocates to try to make it mandatory because 22:24.

Alan Pierce As a matter of fact if you look back a 100 plus years ago when workers’ comp was first adopted very rarely in any jurisdiction it wasn’t initially proposed as being mandatory, it was an election.

Peter Rousmaniere That’s an extremely good point because today we think it’s been mandatory from the beginning, but you are right, it was voluntary at the beginning and that was to get around the constitutional challenge.

Alan Pierce Constitutional, exactly, exactly. Well we are coming up at the end of time, you did mentioned Bobby Burke and those of you who want to know more about opt-out at least as it existed in 2015 and 2016, you can go back in to the menu of shows on Workers’ Comp Matters, we did a very informative show with Bob Burke of Oklahoma who led the charge of having the Oklahoma Act declared unconstitutional.

Peter I want to thank you very much for being our guest today, I know we really only scratched the surface and we probably will have to revisit this topic again as the year unfolds. For those folks who want to hear or learn more about you, give us your contact information.

Peter Rousmaniere It’s hard to spell my name, that’s a problem.

Alan Pierce I love saying it though.

Peter Rousemaniere But I will spell it out briefly. R-O-U-S-M-A-N-I-E-R-E and my email address is  HYPERLINK “mailto:[email protected]” [email protected]. Thank Alan.

Alan Pierce Alright, well again, thank you Peter for being a guest and that’s today’s edition of Workers’ Comp Matters. This is Alan Pierce, hope you can go out and make it a day that matters.

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