Last fall, I wrote about my opinion that good economic conditions often lead workers to be underpaid for work injuries.
But will that conclusion change now that unemployment has increased to historic highs? Maybe, here is how I believe higher unemployment could affect the value of workers’ compensation cases.
Loss of earning power
Nebraska law pays back injuries, head injuries, mental injuries, burns, multiple body part injuries on how they impact your ability to work. Nebraska calls the impact of a work injury on your ability to work “loss of earning power” or “LOEP” for short. A medical opinion about the harm, restrictions or loss of use caused by an injury is just starting point in deciding loss of earning power.
Courts consider social and economic factors along with physical restrictions in calculating loss of earning power. Those other factors include: education, age, where you live and transferable skills.
The competitive labor market
Where you live is important because it gives the court an idea of the jobs available to you. Oftentimes in workers’ compensation cases there is an argument about which cities or areas to include in a job market. But the mere availability of work in your area doesn’t determine your loss of earning power.
Under Nebraska law, loss of earning power is based on a competitive labor market. When times are good, the players in the workers’ compensation system ignore the idea of a competitive labor market.
But when unemployment rises, lawyers, judges and vocational counselors, (the experts who help decide LOEP) may remember the idea of a competitive labor market. In a competitive labor market, someone who lost a job due to a work injury is going to have difficulty finding a job. The same goes for workers with serious work restrictions.
Retail jobs, along with food service jobs, are considered by many to be an employer of last result. But when unemployment spiked in March, Wal-Mart has 1,000,000 applicants for 150,000 open jobs. In comparison, Ivy League school Cornell University accepted 14.1 percent of applicants in this year. So I think it’s fair to say that the labor market is competitive. (I’ve noticed a lack of articles about the “skills gap” and “employee ghosting” since March)
No place like Nebraska?
Under Nebraska law, judges decide loss of earning power based on local economic conditions.. The good news/bad news for Nebraska workers is that Nebraska still has the lowest unemployment in the nation. Nebraskans may not see a major increase in permanent disability benefits due to economic conditions.
But workers who live outside of Nebraska can claim Nebraska workers compensation benefits. Generally they can claim benefits if they were hurt in Nebraska, hired in Nebraska or their employer is based in Nebraska. Residents of other states would have their loss of earning power or disability determined based on where they live. These workers may see increased permanent disability benefits.