More work injuries likely after ICE raids

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Last month Immigration and Customs Enforcement (ICE) raided four chicken processing plants in Mississippi and arrested 650 people for alleged immigration violations. Lots of attention has focused, rightly so, on the children of the workers’ who were detained and the communities where the raids happened.

Less attention has been focused on what will happen to the workers who weren’t arrested at those worksites after the raids. I think workers at those plants will experience more injuries for two reasons

In December 2006, ICE launched a major raid at the Swift Beef plant in Grand Island, Nebraska. Our firm had several clients working in that plant at the time. I remember my clients reporting to me that they were forced to work faster and harder to make up for the employees lost in the ICE raid.

Meat packing employees are already at a relatively high risk for overuse injuries. That risk will likely be heightened if employees are required to work longer and faster in order to make up for employees lost to an ICE raid. Studies show that newer employees are more vulnerable to injuries. The employees who replace the arrested employees will likely be more vulnerable to injury as well.

Meatpacking has the reputation of being a low-skill job. I don’t think that is the case. I know at least in beef packing there are so-called “show stopper” or hourly positions that can nearly shutdown a plant if those “show stopper” employees don’t come to work. Assuming those some “show stopper” employees were arrested, existing employees are likely being trained to perform those jobs or they will be performed by supervisors. Effectively those current employees would be new employees because they would be performing an unfamiliar job.

There were likely workers who were arrested in the raid that had workers’ compensation claims. I don’t know what the law is in Mississippi, but in Nebraska immigration status has little effect on entitlement to workers’ compensation benefits.

There has been some discussion that the raids were a form of retaliation for workers at Koch Foods in Mortion, Mississippi who obtained a $3.5 million settlement from the EEOC for a hostile workplace. I agree that the threat of immigration enforcement does intimidate workers from exercising their rights at work.

But on the other hand, any employer who colludes with ICE to arrest part of their workforce in order to intimidate their workers is cutting off their nose to spite their face. Media coverage of the raids focused on the fact that food processors have sought out an immigrant workforce as a way to cut costs and limit the power of unions. Fortunately, in Nebraska, many meatpacking plants are unionized despite the challegnes posed to unionization in rural areas with a very diverse workforce. It is difficult to discern the motivations of employers, but it could be reasonable to presume that an employer that heavily relies on immigrant labor wouldn’t want to have part of that labor force taken away by an ICE raid. Other employers who weren’t subject to the EEOC settlement at Koch Foods were also raided by ICE.

Meatpackers are in the business of slaughtering and processing animals for meat.  Sure those employers may save some money by discouraging workers’ compensation and unfair employment claims through the threat of immigration raids, but the packinghouses need to keep the chain moving.  That’s harder to do when they are short-staffed due to an ICE raid. 

Plants that were hit with ICE raids are going to be hard pressed to return to pre-raid production levels overnight. That’s why the remaining employees will probably have to work harder, possibly in unfamiliar jobs and likely be more vulnerable to injury.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Why health care is consolidating and what it means for injured workers in Nebraska.

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Nebraska State Senator Adam Morfeld spearheaded the expansion of Medicaid in 2018. The Ricketts administration has yet to implement the expansion approved by voters

Health care is consolidating; hospitals are merging with other hospitals and hospitals are acquiring formerly independent medical practices. This consolidation is driven by the implementation of the Affordable Care Act. (ACA)

Health care consolidation is likely a net negative for injured workers in Nebraska. Injured workers ultimately bear the costs of increased medical costs under the ACA, while not enjoying the benefit of the Medicaid expansion under the ACA,

Why is health care consolidating?

The simple answer is that the Affordable Care Act (Obamacare) was a driving factor behind health care consolidation because its designers assumed health care consolidation would lead to lower costs. As Joe Paduda at Managed Care Matters points out, the overwhelming weight of the data about health care cost and consolidation has shown the opposite.

Consolidated health care systems function as monopolies in the communities they serve. In theory monopolies are supposed to be illegal. But as commentators like Matt Stoller have observed, judges and regulators have effectively gutted anti-trust law in the last 40 years with more or less bi-partisan consensus. Stoller also believes consolidation leads to more corporate crime, which in the world of workers’ compensation would mean fraudlent billing practices.

In my mind, the ACA’s creation of health care monopolies wouldn’t have been feasible if anti-trust law had not been defanged. Opponents of the ACA would have had grounds to challenge the ACA on anti-trust grounds as well as the other legal arguments they used to limit the effectiveness of the ACA.

What does health care consolidation mean for workers’ compensation?

Consolidated hospitals have the power to push up medical costs in workers’ compensation. Paduda points out this is particularly true in states, like Nebraska, that haven’t expanded Medicaid. Workers’ compensation is viewed as a cash cow for hospitals, particularly rural hospitals, that are hurting for revenue

For workers, I believe if workers’ compensation insurers have to spend more money on medical care, they are going to look to cut costs on the indemnity or disability side of workers’ compensation. In short, more money for hospitals and less money for injured workers. This may lead to more pressure to reduce workers’ compensation benefits in an economic downturn.

As I mentioned earlier, the consolidation of health care is partially the result of the Affordable Care Act. The ACA has had some positive effects on injured workers. A study of the ACA showed the shifting of injuries from health insurance to workers compensation.

Expanded health insurance, particularly if not tied to an employer, also allows injured workers to treat for work injuries that have been denied by workers’ compensation insurers.

Expanded health insurance also means that more workers’ will have relationships with primary care doctors and more control over their own medical care in a work injury. But in communities with limited health care choice, injured workers may be pushed towards employer-friendly occupational medicine doctors employed by that particular health care system. The right to chose a doctor becomes moot when there isn’t an effective choice of doctors.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Pennsylvania court narrowly interprets workers’ comp. retaliation

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In a decision that was disappointing but not entirely surprising, a federal court in Pennsylvania held that merely getting hurt at work wasn’t enough to claim wrongful termination in retaliation for filing a workers’ compensation claim.  (h/t to Tom Robinson for his post on the case.)

At the core of this decision is assumption about employment at-will that often underlies the interpretation of all sorts of employment laws. Here is why I think the decision was wrong, why I think it was decided the way it was and what that decision means in the bigger picture.

Why I think the Pennsylvania court got it wrong

I think the Pennsylvania federal court made the wrong decision for many reasons. In Kasten v. St. Gobain, the United States Supreme Court held that a question about the location of the time clock constituted a protected activity for the purposes of the Fair Labor Standards Act. In other words, what constitutes a protected activity should be broadly construed.

Federal anti-discrimination law is also less than clear whether “protected status” and “protected activity” are really a different category. Justice Ginsburg made this argument in her dissent in the Nassar case. The reasoning behind this argument is that complaining about retaliation means that either you are member of a protected class or that someone in a protected class is being discriminated against.  In the case of a work injury, protections against discrimination should attach when an employee is hurt at work rather than when they formally file.  The reasoning supporting this proposition is that if formal filing of workers’ compensation is required, an employer is free to fire an employee who gets hurt but hasn’t filed a claim.

The importance of employment at-will

The rationale against these arguments in the Pennsylvania case was that workers’ compensation retaliation is an exception to employment at-will and the employment at-will exception should be construed narrowly by courts because of the importance of the “at-will employment” doctrine. This is a mainstream position held by most in the employment defense bar. Though employment at-will is rarely cited in federal case law involving employment issues, I believe veneration of employment at will underlies most decisions limiting the application of exceptions to employment at-will.

You can see the force of employment at-will at work in the Department of Justice’s brief arguing against including gender identity within Title VII. The argument for including gender identity and sexual orientation within Title VII is based on the “sex plus” theory in announced in the Price Waterhouse case. The DOJ narrowly construes the “sex plus” theory of discriination to argue that gender identity and sexual orientation aren’t per se covered by Title VII. That argument is supported by reasoning that requires injured workers formally file workers’ compensation claims in order to be protected against discrimination from their employers because of their injury. Both arguments rest on narrowly interpreteting exceptions to employment at-will.

Jursidcition and role of federal courts in workers’ compensation retaliation 

Another question is why was this case in federal court in the first place? Workers’ compensation and workers’ compensation retaliation cases are state law cases. But in the Pennsylvania case involved a federal ADA complaint so the court took jurisdiction under so-called pendent or ancillary jurisdiction.  Even in a purely state law claim a federal court can take jurisdiction through so-called diversity jurisdiction, if the employee and employer are citizens of different states as is often the case.

Federal law isn’t controlling over state law, but state courts often look to federal courts to interpret employment law. Federal judges have the chance to interpreter state law workers’ compensation retaliation cases in diversity jurisdiction cases In my view, federal district courts serve almost as a parallel appellate level court in Nebraska. So even if this Pennsylvania decision isn’t controlling authority, it will certainly persuade other courts faced with similar issues.

What the case means for injured workers and their lawyers 

This case stands for the proposition that injured workers are going to need to actively pursue workers’ compensation claims or risk having their retaliation claims dismissed for not engaging in the protected activity of filing workers’ compensation. This is often challenging because injured workers sometimes wrongly believe that aggravations of old injuries or overuse injuries aren’t covered by workers’ compensation. Employees may also feel that workers’ compensation is dirty or illegitimate and let that stigma discourage them from filing a workers’ compensation claim. Employers may also be discouraging employees from filing workers’ compensation claims through safety programs or by encouraging employees to shift the costs of a work injury on to private health insurance and or private disability insurance.

In short many of the same mental hurdles and practices that can complicate a workers’ compensation claim can also weaken an injured workers’ protections against discrimination.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Happy Labor Day 2019

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Happy Labor Day 2019!

In honor of Labor Day, I’m taking a break from blogging. Here is a book and documenntary reccommendation about labor law in honor of Labor Day

“American Factory” is a documentary about what happned when a Chinese company took over a former GM plant. You can find it on Netflix.

Beaten Down, Worked Up is a book about the current state of the labor movement by former New York Times labor reporter Steven Greenhouse. I plan on picking it up this weekend.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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Four things Andrew Luck has in common with many injured workers

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Indianapolis Colts quarterback Andrew Luck shocked the sports world last weekend when he announced his retirement from football at age 30. Luck’s difficulty in recovering from various injuries were a motivating factor in his retirement.

While it may be hard to conceive as a multi-millionaire elite-level NFL quarterback as an injured worker, work injuries certainly played a role in Luck’s retirement. Though Luck isn’t a typical injured worker, his case brings up at least four issues that many injured workers face after a work injury.

The stigma of a work injury – Luck was booed by some Colts “fans” after news of his retirement. Some of that could just be fans taking out their frustrations on a highly paid athlete. But injured workers are often accused of faking or milking injuries. In more vulgar terms, injured workers often get called “p—ies.” A lot of times those same criticisms are thrown at athletes by fans. I think criticisms of injured players and injured workers can overlap and reinforce themselves. “Get back in the game” and “get back to work” are often used interchangeably when used in reference to recovery from an injury.

Criticism of younger workers – Commentator Doug Gottlieb* called Luck’s retirement at age 30 as “the most millennial thing ever.” Gottlieb didn’t mean it as a compliment. Earlier this year I wrote about how millennials comprise about 2/3rds of work injuries in Nebraska. Criticism of millennials overlaps with criticism of injured workers. Under this mindset, since millennials are “soft”, they are going to milk or exaggerate work injuries.

The mental strain caused by injury – Luck spoke about the mental strain of having to work to recover from his various injuries. While mental injuries from physical injuries can be covered by workers’ compensation, there is no inherent pay in workers’ compensation for pain and suffering. Mental distress is only compensated to the extent that it impairs an injured workers’ ability to earn a living.

Doctors’ restrictions may not always be accurate – I assume that since Luck was suited up to play in the preseason that he had been released to play by his doctor. Luck appears to have believed otherwise. It’s fairly common for a workers’ belief about their restrictions not to match with doctors restrictions. At least in Nebraska, a plaintiff can to testify to their ability to work. Judges are called on to judge the credibility of that testimony. Most commentators, who aren’t Doug Gottlieb, found Luck to be credible. From speaking with other attorneys who have represented professional athletes, most judges find this type of testimony to be credible.

In my experience an injured worker doesn’t need to be an NFL quarterback in order to have their testimony about their ability to work to be found credible by a judge. But I’ve never seen an insurance company voluntarily pay disability benefits based on a claimant’s testimony.

*Doug Gottlieb referred to a Nebraska basketball player as a “punk” in 2009 because of a jump ball call in a game against Kansas.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

This entry was posted in Nebraska, stigma, Workers' Compensation and tagged .

Guest Post: At-will employment and right to work explained

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Nevada attorney Nate Ring

Happy Labor Day week! Here’s a post from Nate Ring at The Nevada Labor Law Blog about the difference between right to work and employment at-will

In my experience, when it comes to employment and labor law, no two terms or concepts are confused more than right to work and at will employment. It seems that every week, I encounter someone who believes that (a) the terms are interchangeable or (b) one is actually the other.  This is true for friends, family, potential clients, and even other attorneys who do not practice employment law (actually, I have had some attorneys who claim to practice employment law that have also made mistake (b) above).

This post is not about my qualms with either of these legal doctrines. I am setting aside my issues with the term right to work, its utterly misleading name and the negative effects it is really intended to have on labor unions. I am also setting aside my concern with at will employment and the reality that it gives far more power to those with capital than those who provide labor. Ok, maybe I am not completely setting these aside.

I will first address right to work, its background, meaning and effects. I will then discuss at will employment, its background, meaning, and effects. I will focus on the two as set out in Nevada law.

Right to Work

At its base, right to work states an employee cannot be required to pay any dues or fees to a labor union that represents him. This is true despite the union negotiating a collective bargaining agreement on his and other employee’s behalves and providing grievance and arbitration representation to that employee and others. Right to work allows a selfish employee the ability to obtain benefits at no cost to him personally. It is in reality a freeloader or freerider law.

Right to work laws are in effect in 27 states. Nevada is one of those states. The genus of right to work laws is the Taft-Hartley Act of 1947. This law fundamentally shifted the balance in labor relations set under the 1935 Wagner Act against labor unions and in favor of employers. For purposes of this topic, it permitted states to create right to work laws. Section 14(b) of the Taft-Hartley Act made this permissible.

Right to work laws have long been supported by business interest groups and they have been successful in getting all states in the deep south and many in the Midwest to pass such laws. NRS 613.230 through 613.300 contain Nevada’s right to work law. The law took effect in 1953 and during the 1950s, Nevada voters defeated three initiatives to repeal it. According to the Nevada Legislative Counsel Bureau, the Nevada Legislature has considered and rejected at least ten measures that have sought to amend or repeal the right to work law.

What is the real purpose of a right to work law? The real purpose is quite simple, business groups want to drain labor unions of dues money by allowing freeloaders to obtain negotiated benefits without payment. Labor unions are required to provide representation but cannot charge for the tasks they perform for members of a bargaining unit. Business hope that eventually the labor union will crumble under the weight of providing services with no remuneration and the businesses will be free to run roughshod over employees.

Union density is much lower in right to work states. Wages and benefits are also lower in right to work states. More troubling is the fact that the rate of workplace injuries and immigrant labor abuses are higher in right to work states. A lot of ills befall working people because of right to work laws.

At Will Employment

At will employment is a judicially created doctrine that is not enshrined in Nevada statutes. At will employment simply states employers are free to terminate employees at any time, without notice or reason and employees are free to leave employment at any time and for any reason, also without notice. An employer cannot, however, terminate an employee for a discriminatory reason (i.e. race, sex, sexual orientation, religion) or a reason that violates Nevada public policy.

 

Nevada is not alone in being an at will employment state—nowhere near it. In fact, 49 states have at will employment. The lone exception is Montana, which requires just cause for termination of an employee following the employee’s completion of a probationary period.

In American Bank Stationery v. Farmer,106 Nev. 698, 799 P.2d 1100 (1990), the Nevada Supreme Court held at will employment is presumed and an employee can only rebut this presumption with proof of an express or implied employment contract.

In my experience, courts are loath to find exceptions to the at will employment doctrine. Employees often believe their employee handbook creates a contract—it often does not! I have seen and heard of cases in which employers have employee handbooks and policies that run into the hundreds of pages, but contain one or two disclaimers stating “Regardless of what is contained in this employee handbook, no promise of employment for a specific term is being made, and your employment is at will.” The employers have even followed the policies and procedures contained in the handbook fully except for the single act of terminating the specific employee, but courts have not found an implied contract in that employee handbook. Proving an exception to at will employment can be very difficult unless an employee has a written express contract for her own employment or the termination violated a public policy of the state.

Right to work and at will employment are very different legal doctrines that are often confused for one another. I hope this post helps to dispel some of the confusion and interchangeable use of the terms that happens daily.

 

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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New law eases receipt of death benefits for foreign dependents

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Last week we wrote about legislation that will go into effect on September 1 that will make it harder to collect medical debt related to a workers’ compensation claim. On the same day, legislation will go into effect that will make it easier for the families of foreign workers to collect benefits for workers killed on the job.

The new law amends Neb. Rev. Stat. 48-122 to streamline the ability for a foreign dependent to proceed with litigation on behalf of a deceased family member. In other words, if a family member dies in a work accident, but his/her family does not live in the United States, the foreign dependent is able to collect workers’ compensation benefits for the death. In the past, however, in order to proceed with litigation, the dependents and their lawyer would need to get approval from a foreign consul of the country where the dependents lived. This was difficult and cumbersome to get feedback from a counsel that had little to nothing to do with a Nebraska workers’ compensation claim. The process could be even more difficult for Cuban nationals whose country doesn’t have diplomatic relations with the United States

As a result, this statute was amended so that a lawyer may simply proceed to represent the foreign dependent even if the foreign consul does not consent or fails to respond to the request for consent to the representation and litigation. The only potential pitfall to this bill is that there is a potentially expensive bonding requirement. But our firm has experience with setting up conservatorships that could help get around the bonding requirement,

The collections bill and foreign dependents bill both passed as part of LB 418 that passed the Legislature 35-0. Our firm was happy to work on this legislation, but this legislation was largely passed because of the outcome of the 2018 Legislative elections.  Senator Cavanaugh, who sponsored the bill won a close election. Due to the election outcome, Sen. Matt Hansen of Lincoln was also elected to chair the Business and Labor Committee that handles most legislation related to workers’ compensation. Senator Hansen’s leadership was helpful in getting passing this legislation.

A legislature friendly to workers is no guarantee in 2021. Worker-friendly Kate Bolz will be term-limited out in a district that isn’t particularly friendly for workers in southeast Lincoln. Grand Island Senator Dan Quick, a union electrician who was hurt at work, could face a tough re-election challenge. Pay attention to state legislative races, support pro-worker candidates, vote and tell your friends and family to vote as well.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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How workers’ compensation policy makers should respond to the threat of recession

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Fears of a recession emerged recently as long-term interest rates dropped below short-term interest rates leading to a so-called inverted yield curve.

This is Nebraska Workers’ Compensation Watch not CNBC, so I’m not going to play Mario Bartirehmo and go into the why and how of the inverted yield curve or make economic forecasts. (Blogger Joe Paduda wrote a good post about how a recession could impact workers’ comp. if you want to read about that sort of thing.)

Instead I will write about how workers’ compensation policy makers and regulators should respond to the threat of a recession and lower long-term interest rates.

The importance of state regulation

Workers’ compensation is first and foremost a form of insurance. Insurance is regulated at the state level. (You can read about the why of that here) In Nebraska, workers’ compensation insurance is regulated by the Department of Insurance and the Nebraska Workers’ Compensation Court. State regulators and lawmakers need to be doing two things to protect injured workers in any future recessions.

Preserve Guaranty funds – Guaranty funds pay out for claims from insolvent insurers. In Nebraska insurance companies need to pay into a guaranty fund. Insurance companies are financial institutions who make their money by collecting premiums and investing those premiums. In a recession, those investments can go bad. If bad investments lead to insolvency, a guaranty company can pay out claims from an insolvent insurer. Even if the economy doesn’t tip into a recession, low interest rates can lead to bad investment decisions and create problems for financial institutions like insurance companies.

The problem with guaranty funds is that politicians like to use them to balance state budgets instead of cutting programs or  raise taxes. A quick Google search reveals that such bi-partisan paragons of fiscal responsibility such as  Montana Governor (and Democratic Presidential Candidate) Steve Bullock and former New Jersey Governor (and former GOP presidential candidate) Chris Christie raided guaranty funds to balance state budgets. Cutting a workers’ compensation guaranty fund is essentially cutting benefits if the fund can’t pay legitimate workers’ compensation claims.

Strict scrutiny for self-insureds: Nebraska allows companies to self-insure for workers’ compensation. NWCC Rules 70-76 spell out the rules for self-insurance. The rules require yearly approval of for self-insurance and only a small number of employers are self-insured. I am not aware of a guaranty fund for self-insureds in Nebraska. Nebraska Workers’ Compensation Court rules requires a showing of financial responsibility in order to self-insure which should give workers’ some reassurance. But in the worst case scenario an injured worker would become a creditor in a bankruptcy proceeding if a self-insured went bankrupt.

The challenge of high deductible insurance – Financially unstable companies tend to have high deductible insurance for workers’ compensation. Those companies are more vulnerable to bankruptcy. In those cases, as Iowa law firm Gilloon, Wright and Haeml points out on their blog, insurance companies may want to delay payment until the bankruptcy is settled. Injured workers should retain counsel to preserve their rights in that situation.

Settlement value and interest rates

Last year I wrote how Nebraska’s mandated 5 percent discount rate lead to the undervaluing of permanent total disability claims. Long-term interest rates are good measure about the safe return on a long-term investment. The higher those rates the less an insurance company needs to put aside in order to meet their obligation to pay out an award of permanent total disability. The lower the rate of return the more they need to set aside to meet that obligation.

Traditionally the Nebraska workers’ compensation court would approve the settlement of litigated permanent total disability claims for 80 percent of the present value of the claim. In the last few years, the court has not been willing to follow the 80 percent rule. I suspect the difference between long-term interest rates and the mandated 5 percent discount rate is part of the reason that the court won’t follow that custom.

In the wake of low interest rates, the United Kingdom lowered their settlement discount rate. I believe jurisdictions in the United States need to follow suit. Long term interest rates have reached a historic low and are even negative in many countries. A 5 percent discount rate doesn’t make sense in these economic conditions.

The offices of Rehm, Bennett & Moore, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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