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Who does workers' compensation really protect?

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This question gets asked a lot at public meetings, hearings and classes I attend or facilitate.  I can summarize one perspective with the following: 
 “Workers’ compensation is more about protecting employers than workers… It should be called the ‘Employer Protection Act’… It protects employers from being sued.  It protects them from the real costs of injuries.  It protects employers from having to look the families of the workers they have injured or killed in their eyes and be accountable for what happened.” 
This rather harsh assessment is not without its justifications.  The exclusive remedy workers’ compensation provides does protect employers from being sued by their workers for work-related injuries and diseases; however, it also protects workers from being sued by other workers.  There are some exceptions in some jurisdictions but this protection is an essential element of almost every workers’ compensation system.  More importantly, the no-fault, mostly universal coverage offered by workers’ compensation systems provide timely financial compensation and medical coverage in a way that fault-based systems reliant on the Courts simply cannot.  
 
Yes, the insurance does protect employers from the real costs of injuries but only to the extent that the cost of injuries exceed the cost of the insurance.  That’s the nature and purpose of insurance:  to protect against rare and costly adverse events.  It is also true that most of employers insured under a workers’ compensation policy in any given year will actually pay more for the insurance than the costs of their actual losses.  Some people are surprised by this statement, but only until they think about other lines of insurance.  The cost of my house insurance protects me from the real cost of a house fire but only if I have one.  Thankfully, my house is still standing and the cost of my house insurance far exceeds the losses I have had or will likely every have in a given year. 
 
Just because workers’ compensation in a no-fault system and protects an employer from suit does not mean the employer is not held accountable.  Firms with poor claim cost records relative to their industry counterparts will likely face financial consequences through experience rating (also called experience modification, demerits, and surcharges in other jurisdictions).  Put another way, firms who invest in safety and develop a strong safety culture are likely to have fewer injuries with less severity giving them a competitive advantage. In addition to financial accountability through higher premiums that may hurt competitiveness of poor performing firms, more severe penalties add another layer of accountability in many jurisdictions. 
 
WorkSafeBC recently issued its annual listing of “administrative penalties” against employers for violations of the Occupational Health and Safety Regulation that put workers at risk whether or not such violations actually resulted in real injury.  This form of accountability goes beyond the financial accountability equal to the dollar value of the penalty, it can also holds the employer accountable in the court of public opinion.  One has only to look at the media coverage related to penalties assessed by WorkSafeBC. 
 
Who does workers’ compensation really protect? The obvious answer is the worker.  As an insurance nominally paid for by the employer where the beneficiary of compensation is the injured worker, workers’ compensation protects workers and their families from the full financial loss that might otherwise occur as a result of work-related injury.  That protection amounts to billions of dollars every year paid out to injured workers and their families in Canada, the US, Australia and other countries with workers’ compensation systems. 
 
Often overlooked are the protections extended by workers’ compensation legislation to non-workers.  Spouses and dependents are often beneficiaries of workers’ compensation in the event of a work-related fatality.  Beyond that, the healthcare paid on behalf of the injured worker protect society (taxpayers like you and me) from medical and other healthcare costs that might otherwise be externalized to government programs.
 
Workers’ compensation systems also impose a duty on the insured employer to prevent injuries.  That duty, when embraced fully, becomes cultural but the duty to protect workers extends protection to every other person in the workplace. 
 
The prevention imperative of workers’ compensation to directly protect workers also protects kids in schools, customers in malls, and non-worker participants at or near the worksite.  In a sense, workers’ compensation protects all of us in one way or another making it an important element of social policy.


About Terry Bogyo:

Terry Bogyo

Terry is an active researcher, speaker and commentator on workers compensation issues. Now retired, he was the Director of Corporate Planning and Development for WorkSafeBC. His responsibilities included environmental scanning, strategic planning and inter-jurisdictional comparisons.

Terry says of himself: I am a student of workers’ compensation systems. Many years ago I discovered two things about this area. First, workers’ comp and OH&S are of vital importance to people. Protecting, caring for and providing compensation to workers are important, noble and morally responsible endeavors. The second thing I learned was that no matter how much I knew about workers' comp/OH&S, there was always so much more to learn. This is an endlessly challenging area of study. My purpose, therefore, is not to lecture, but to reflect on the ideas and issues that are topical in this area... and to invite others to share in a learning experience. By adding your knowledge and insights, others with similar interests can participate in the discovery and study of this important domain.

His blog is "Workers' Compensation Perspectives".

Subscribe to comments feed Comments (2 posted)

avatar
03/08/2013 18:12:22
I think your arguments defending WCB's role in protection of workers is scewed as the organization is your employer and pays you well. The wage you are paid is well above the maximum that workers are offered through the Worksafebc system.

In the current system the employer is protected, as there are scenarios where if the injured worker was able to pursue a lawsuit in the court system, they would be more fairly compensated. As the Canadian courts do not preclude someone for seeking compensation for changes to quality of life and in ability to pursue recreational activities. For example: having a severe communited fracture of both femurs could easily make it difficult or impossible for a recreational skier to ski again. The court system allows for compensation of these losses where as Worksafebc does not. These losses are significant to individuals.

Additionally, a higher paid worker will not be compensated adequately as there is a wage rate cap in the Worksafebc system. There are a number of scenarios where a worker would be far better to have the ability to sue the workplace; but in fact they are not able to. Taking away the right to sue the workplace is protecting the employer.

You also mention benefits to dependants and the spouse. Worksafebc actually restricts the benefit to a spouse or dependant and if a worker does not have a spouse or dependent, other family members will not get any compensation. Dependents, spouses and other relatives (parents, siblings, etc) in the court system can pursue lawsuits for the death of their relative and the resultant financial losses. Thus, Worksafebc is less comprehensive in terms of compensating for losses after the death of a worker.

Additionally, there is a direct example that demonstrates how employers feel that the WCB system s is better for them then the ability pursue a lawsuit against the company. The policy discussion titled: Workers' Compensation Coverage for Motion Picture and Television Productions. That industry wants contractors to be under their WorksafeBC coverage. If it wasn't in their favor they would be ok with the status quo (allowing these individual to have the ability to sue the company).

The WCB system comes from the "historic compromise" that is derived from a different era, where lawyers required fees up front and most workers could not afford that. We now live in a time where lawyers will allow their clients to pay them after they have been given their settlement. Additionally, in the early 1900s workers had very little representation as there was very few unions and very little worker rights. A system that was developed almost a hundred years ago to protect the worker may not be as relevant in the 21st century. Thus the historic WCB system did protect the worker; however, the current system protects the employer more then the worker. Lawsuits could be far more costly to an employer then their Worksafebc premiums.

The WCB system of the 21st century provides some protection of workers but also protects employers and the benefit is more in favour of the employer then the worker.
avatar
Steven Miller 03/11/2013 06:55:04
Worker's compensation benefits in the United States, in its current iteration neither provides adequate lost wage benefits nor covers medical treatment as it once did prior to the "reform" that came into being with a vengeance in the 1990's. In addition to hard caps on maximum rates of compensation that existed from the beginning , workers' compensation reform implemented caps on the duration of lost wage replacement benefits (both hard caps and caps determined by the "AMA" or other "guidelines"), caps on periods of temporary total disability (see the recent Florida court decision finding unconstitutional their 104 week cap on temporary total disability benefits that had been implemented by its reform law), and caps imposed by "medical treatment guidelines" dictating what treatment an injured worker may receive. The benefit of the bargain that came from the "historic compromise" at least from the injured worker's standpoint is virtually non-existent as a result.
Because injured workers no longer receive lost wage replacement benefits that compensates them for their loss or adequate medical care to assist them in recovering from their injuries as they did prior to reform, it's time to reconsider the exclusive remedy because the bargain has been diluted past the point of recognition.
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