New York has long been known as one of the nations’ more progressive states. And with both houses of the state legislature now firmly in control of Democrats, progressive new laws tackling everything from climate change to tenant’s rights have been coming out of Albany at a remarkably fast clip. But one area that has remained untouched by state legislators thus far is the New York Workers comp system, which, according to a recent report from the Center for New York City Affairs at The New School, is seriously flawed.
Co-authored by James Parrot, the director of economic and fiscal policy at the Center for New York City Affairs, and research assistant Nicholas B. Martin, the report highlights several areas where New York’s workers comp system falls short. It also points to some telling workplace safety concerns — among them the fact that workplace fatalities in the state reached a 20-year high in 2017 while the number of fatalities in the rest of the nation stayed flat.
Wage Replacement Inadequate
New York has the fourth highest costs of living in the country, and the highest statewide average weekly wage. But the state’s income replacement guidelines for injured workers don’t reflect either of those facts. New York sets the minimum weekly income replacement at $150 — less than half the average benefit of $339 provided by five neighboring states and lower than 14 other states. And its maximum weekly benefit of $871 — capped at two-thirds of the state’s average maximum weekly wage — ranks 29th in the nation. Most other states cap benefits at 100 percent of the state’s average weekly wage.
As of 2017, New York also began limiting the amount of time an injured worker can receive temporary disability benefits for a partial disability to two-and-a-half years.This limitation, combined with other caps, meant that the actual dollar amount of worker benefits fell 15 percent between 2014 and 2017. At the same time, insurance company profits rose by over 90 percent, according to the report.
Low Employer Costs
One of the central tenets of “the grand bargain” of the workers compensation system is that employers agree to pay injured workers’ wage replacement and medical costs in exchange for those workers giving up the right to sue. To be effective, however, wage replacement must be sufficient to sustain an injured worker and their family until such time they can return to work.
Additionally, the requirement that employers pay into the system (in the form of premiums) is meant to incentivize them to enhance workplace safety in order to reduce costs. Yet, the cost of workers compensation to New York state employers is a low 0.7 percent of an employee’s total compensation — lower than 18 other states.
Industry leaders and state legislators point to the need to keep workers’ comp costs low in order to recruit new businesses to the state. But such low costs in the face of soaring fatalities and inadequate wage replacement for injured workers suggests something is amiss.
Limited Access for Low-Wage Workers
The incidence of workplace injuries in New York State is highest in low-wage workers, such as employees of nursing homes, bars, restaurants and hotels. Most of these workers are already struggling to make ends meet, and many work more than one job. For them, an injury requiring time off work can be catastrophic, even if they return to work in a relatively short period of time.
Nevertheless, low-wage workers have the most difficulty accessing New York’s workers comp system, which is burdensome at best. Most injuries go unreported, and of those that are reported, very few result in a workers’ compensation claim. The reasons for this are varied, ranging from a lack of knowledge of the process to language barriers to fear of retaliation by the employer. Undocumented immigrants may also fear that filing a claim will mean a visit from ICE, or worse.
Additionally, a number of employers, particularly in the construction industry, inaccurately classify employees as independent contractors in order to rein in workers compensation costs. These employees may have no idea that they are not protected by the workers comp system until they file a claim.
The report from the New School is an exhaustive look at the New York workers compensation system and workers comp laws. Accordingly, the authors’ recommendations for improving the system to increase access and support for injured workers are sweeping in scope. They include:
- Raising the minimum and maximum indemnity benefits
- Adjusting the wage replacement cap above the current two-thirds or the average statewide weekly wage
- Adjusting the base wage upon which benefits are based to reflect earnings potential rather than the amount earned in the year before an injury occurred
- Providing expanded access for non-English speaking workers and undocumented immigrants
- Strengthening anti-retaliation statutes
- Enhancing penalties for misclassifying employees as independent contractors
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