Tag Archives: Reform

Proposed 401(k) Changes Act As Stealth Tax Hike; Could Foreshadow More Anti-Worker Laws

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Congressional Republicans have proposed to tax contributions to 401k retirement plans in a move that amounts to a stealth tax hike on the middle class. The proposed tax on 401ks is also part of the trend of business attempting to shed benefits offered to their workers.

Employees are not taxed on money they contribute to 401k plans, but those contributions are taxed upon withdrawal from the account during retirement. The tax benefits to tax deferral are two. One taxes paid during retirement are generally paid at a lower marginal rate because income is lower during retirement. Secondly, because of the time value of money a dollar in taxes paid today is worth more than a dollar of taxes in the future. Descriptions of the proposed change in 401k taxation as a mere accounting gimmick are misleading and inexcusable from a publication like the New York Times.

The other benefit to a 401k plan to employees is that employers can match employee contributions and employers can get a tax deduction for that contribution. The proposed changes in 401k taxation are expected to lead to an increase in popularity of Roth IRAs. Roth IRAs tax contributions but do not tax withdrawal. Employers can offer and contribute to Roth IRAs, but employer contributions in Roth IRA are taxable for the employer as well, so few employers match Roth IRA contributions like they do with 401ks.

401k or defined contribution plans largely replaced defined benefit or pension plans. The shift from pensions to 401ks has reduced income for many current retirees and will continue to do so for future retirees. The effective end of the pension in the private sector, which coincides with decline in union membership, coupled with reductions in the purchasing power of Social Security retirement benefits resulted in a substantial increase in senior citizens who are forced to work in retirement. This increase in senior citizen employment driven by reduced retirement income forced some senior citizens, who are deemed “work campers,” to become migrant laborers who travel the country in recreational vehicles from temporary job to temporary job.

Curtailing 401k accounts would continue and worsen these trends as the 401k account has essentially replaced traditional pensions. The prospective end of 401ks may be the first tangible result of more draconian employee benefit reforms in the 2010s and 2020s.  The emergence of the gig economy will probably be the catalyst for any new round of anti-worker reforms.

The emergence of the gig economy has led to an increase in fights over employee classification. Gig economy workers, like Uber and Lyft drivers, tend to be classified as independent contractors who aren’t eligible for even rudimentary employment benefits like unemployment and workers compensation insurance.  

Courts and legislators have yet to conclusively answer whether gig economy workers are employees or independent contractors. No less a luminary than former Treasury Secretary Robert Rubin lead a panel of prominent Democratic economists and elected officials in a forum about modernizing labor laws to promote the gig economy. Anyone who remembers the results of the financial reforms promoted by Rubin in the 1990, should shudder when Rubin discusses reforming laws governing the employer-employer relationship.

The rise of the gig economy is leading to calls for portable benefits not tied to the employee-employer relationship as a way to address concerns about how to classify gig economy workers. Portable benefits are an old idea in the political arena.  The Affordable Care Act increased portability of health insurance through health care exchanges. Even business groups critical of the ACA praised how the ACA increased portability of health care benefits. Many employers like the idea of “portable benefits” as it reduces employee costs.

But it would be unfair to dismiss the potential good from portable benefits. Proponents of portable benefits argue that portable benefits help low wage employees who do not but do not have employee benefits like retirement and health insurance even if they are classified as employees. If portable benefit schemes gain traction, they should be implemented in a way that helps workers rather than as a way to reduce income and benefits going to workers.

There are valid criticisms of 401k accounts. Matt Bruenig of People’s Policy Project states that tax deferral benefits of 401k accounts accrue to wealthier Americans. Progressive lawmakers like former Iowa Senator Tom Harkin have proposed Universal Savings Accounts (USAs) that would give employees a low-cost way to save for retirement independent of an employer-provided retirement account like a 401k. USA accounts could be a good replacement for 401k accounts if there was a realistic chance they could be implemented. As it stands now it is likely 401k accounts will be curtailed without the prospect for the adaptation of USA accounts in the near future.

While Congressional Republicans are working to curtail the 401k plan as an employee benefit, some Democrats are also anxious to help employers shed benefits traditionally offered to employees. These benefits can be voluntary benefits like health insurance or mandatory benefits like workers compensation and unemployment insurance. Either way workers need to filter out the noise of politics as entertainment and support political candidates who unambiguously put workers ahead of political donors from big business.

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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States with Opt-Out Workers’ Comp System are Strict on Injured Workers

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Dallas attorney Bill Minick (Photo credit Dylan Hollingsworth for ProPublica)

Today’s post was written by guest author Hayes Jernigan, from The Jernigan Law Firm in North Carolina. In 2015, ProPublica and NPR have done a great service to the public by making in-depth reports on workers’ compensation systems in many states. Their most recent focus was looking at the opt out systems implemented Texas and Oklahoma. These similar systems essentially strip workers of the protections that workers’ compensation gives, stacking the deck dramatically toward employers and their insurance companies.

Fortunately, Nebraska is not an opt out state yet. But many Nebraska employers, especially those who are self-insured for the purposes of workers’ compensation, have adopted many tactics from opt out states. I think the most prevalent tactic is hoodwinking employees into filing for short- or long-term disability when an injury should be covered by workers’ compensation. Employees often unknowingly agree to this in situations where the work duties aggravated an old injury or pre-existing condition or if there is some minor delay or defect in reporting the injury. If you sign up for private disability insurance, you are often asked to deny that your disability is work related. That can doom any possible workers’ compensation claim in the future. If you are being asked to sign up for long-term or short-term disability for a medical condition that may have been caused by work injury, contact a workers’ compensation attorney.

Texas and Oklahoma have both adopted an “opt-out” system for Workers’ Compensation. ProPublica along with NPR recently published an in-depth look at the results in these two states. Under this system, employers can opt-out of state mandated workers’ compensation insurance by creating their own policy for injured workers. These employer-written policies give employers 100% control over the terms, the benefits, and even settlements.

Specifically, ProPublica and NPR found that these employer-created policies generally have strict 24-hour reporting requirements or even require an injury to be reported by the end of a shift. This means, if an employee does not report their injury within their shift, or within 24 hours, they are prevented from bringing a claim at all. Period. End of discussion. Employers can also dictate how much benefits will be paid and some employers have capped death benefits for employees who are killed at work at $250,000. Whereas under the State Workers’ Compensation system, if a deceased worker leaves behind minor children, they will continue to receive benefits until they turn 18 (which could easily end up being well over $250,000 when you factor in lost wages until the worker would have been 65). This is potentially detrimental to a young widow or widower who is left with very young children.

This morning we tweeted a recent ABC news article that a worker was killed when he fell at a construction site in Charlotte. I’d hate to think that his or her family would be limited to recovering only $250,000 in the event the worker left behind dependent family members and young children. Money can’t begin to replace someone who is lost to us too early from an accident at work, but $250,000 would hardly cover a lifetime of income that the family will lose, especially if young children are left behind.

 

To read more on how the Opt-Out system is affecting injured workers in Texas and Oklahoma, go to: ProPublica: Inside Corporate America’s Campaign to Ditch Workers’ Comp.

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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Safety, Workers’ Compensation Rights Are Concern in Many States

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Here is another sad round in the endless battle to preserve human rights against bigger profits.

On May 5, the Illinois House of Representatives met as the “committee as a whole” and heard testimony from an injured Oklahoma worker who had been devastated by cost- and benefit-cutting “reforms” similar to measures the governor of Illinois wants to impose on Illinois workers.

The article about this extraordinary event is important. One victim of losing long-held rights to compensation stood before a legislature of another state, educating them on what really happens to injured workers as a result of “reform.”

Fair workers’ compensation benefits are a fundamental human right. Human beings and their loved ones suffer with each takeaway, while CEOs are paid outrageous sums to increase profits. Injured Oklahoman John Coffell described exactly how he and his loved ones were affected.

“Coffell told the legislators that after injuring a disc in his back last summer, his pay dropped dramatically because Oklahoma had reduced the maximum wage-replacement benefits injured workers could receive from $801 a week to $561 a week.

“Almost immediately, he said, his utilities were cut off, his truck was repossessed and his family was evicted from their rental home. Because no relative could accommodate all of them, Coffell sent his three children, aged 5 to 9, to live with grandparents. He and his wife only had enough gas money to see them on weekends. They’ve had to rely on food stamps to get by.”

Because of his state’s workers’ compensation “reform,” Coffell’s children only got to see their parents on weekends.

Others who were affected by workers’ compensations in two different states – Illinois and Indiana – also painted the stark reality of how harsh a system can be at the hearing in Illinois. The contrast was obvious. “Laurie Summers — an Illinois nurse who dislocated her shoulder lifting a patient at a hospital in Indiana — said she had to drain her retirement savings and fight to get surgery.” But “Christine Fuller — who lived in Indiana, but whose father died from falling off a roof on a job in Illinois — said the survivor benefits she received from workers’ comp helped pay the mortgage and put her through college and graduate school.”

This testimony and hearing demonstrates that workers and their allies are gaining strength and finding new ways to fight the never-ending efforts to reduce costs, increase profits, and improve the business climate. These tactics frequently and all-to-often sacrifice workers’ safety and the safety net that is workers’ compensation.

This unusual event also shows that even though workers’ compensation programs are run at the state level, workers’ compensation “reforms” don’t happen in a vacuum. Businesses may tout the alleged advantages they get over other states by pushing these reforms through state legislatures. But a worker like Coffell from Oklahoma pushed back against the Illinois legislation, even though it didn’t directly affect him. He showed the struggle that a worker often has, regardless of the state where he or she was injured, to get workers’ compensation benefits, especially in states focused on “reform.”

“The ProPublica and NPR series has led to bills to raise benefits in Alabama and prevent medical care from being cut off in California. Officials have also warned insurers in California not to abuse the process and have launched an audit of how one insurer handled a claim in which a paraplegic’s home health care was terminated,” according to the recent ProPublica article about the Illinois hearing.

All concerned about the human rights of injured workers must keep working to find better, stronger and more effective ways to protect these human rights. Because a state’s business climate should not be more important than workers’ rights, safety and dignity.

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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Is Worker’s Comp Profitable Because Disabled Workers Don’t Get Benefits?

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My friend Tom Domer of The Domer Law Firm in Milwaukee, who happens to be one of the most knowledgeable workers’ compensation lawyers I know, wrote a great blog post explaining why workers’ compensation insurance companies profit mightily and injured workers struggle. Workers need to avoid the kind of thinking that leaves them with empty pockets and insurance companies with growing bank accounts. Injured workers should speak with qualified experienced lawyers before deciding whether to pursue workers’ compensation benefits or to abandon a claim if they are being denied.

I recently wrote an article in the national magazine for the Worker’s Injury Law Advocacy Group (WILG), the Worker’s First Watch, Fall 2013 reviewing the worker’s compensation resources research report indicating that the worker’s compensation industry is extremely profitable.  I began representing injured workers in 1976.  It seems every year since then worker’s compensation insurance carriers have complained they are not making profits and the culprit responsible is increased benefits paid to workers.  In fact, over the last 20 years the insurance industry has been profitable in 16 of 19 years and broke even in one year.  Several factors account for this profitability, including worker’s compensation insurance carriers successfully pursuing deregulation and “reform” measures to restrict eligibility. 

The net result of increasingly restrictive rules for compensability in many State worker’s compensation systems as a result of “reform” resulted in many workers with disabilities caused by work who did not receive worker’s compensation benefits.

The general trend since the early 1990s has been to restrict coverage through State statutory and administrative “reform”.  Many workers face lengthy litigation and frustration.  More restrictive regulations may preclude claims where the worker lacks “objective” medical evidence for his injury, or is unable to medically document persistent pain, or has a disease resulting from multiple causation that cannot be distinguished from workplace disease, or has job stress related disorders.  One significant problem is that many injured workers fail to file for benefits.  (For those of us in the trenches daily, these pose obstacles to compensability.)  Among the many reasons for failure to file are:

  • Ignorance of worker’s compensation and eligibility.
  • Ignorance of the work-relatedness of the condition.  (Many workers know they suffer an impairment but do not know the health condition is caused by work.)
  • Reimbursement for medical care or Short Term Disability benefits available.  (Many workers use Short Term Disability or group medical insurance rather than worker’s comp.)
  • Belief that the injury is lacking in sufficient severity.
  • Many workers fear job loss or other forms of retaliation, who do not want to report a condition as work-related.
  • Workers do not want to be perceived as complainers or careless.
  • Deciding not to file based on the negative experience of co-workers.
  • Fear of the stigma associated with being a worker’s compensation claimant.  (Much of this stems from the intense focus on fraud perpetrated by the insurance industry, resulting in increased levels of stigmatization, decreasing the likelihood injured workers will file for benefits.)
  • Pressure from co-workers on safety incentive programs.  (These programs, sometimes called “Safety Bingo” create incentives not to report.)

Those of us who have hearings daily that involve the non-reporting of an injury, or significant time delay between the occurrence of an injury and the reporting of an injury, can refer to the above list for some ammunition on the “non-filing” or “late filing” issues.

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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