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Congressional Democrats Urge Labor Dept. To End State Abuse Of Federal ERISA And Other Workers Compensation Laws

23 October 2015No Comments

Top ranking Democratic leaders from both house of Congress have filed a public letter with the US Department of Labor in which lawmakers outline and stridently urge for the federal government, specifically the Dept. of Labor, to prevent a pervasive pattern of abuse of state workers’ compensation programs by state officials. Specifically, the letter alleges that an alarming trend nationally at the state level includes the illegal or questionable reliance on state and federal statutes and workers’ benefits program to prevent state-financial liability for paying workers’ claims. The letter, which was signed by ten (10) major Democratic Congressional leaders including presidential candidate Bernie Sanders and nine (9) other ranking committee members from the Senate and House Committees for Labor, Ways and Means, Social Security, Workforce, and Budget.

Specifically, the letter alleges and seeks to situate a growing national trend in which states actively seek to unwind, if not completely abolish, outstanding state-level workers’ benefits and compensation programs back to the hands of private employers with little or no fiscal-incentive to adequately provide for workers’ protections. Other allegations noted by the concerned Democratic lawmakers concerning the state of workers’ compensation laws nationally include the following:

  • Congressional leaders reported to the Department of Labor that thirty-three state nationally have made cuts detrimental to workers in state workers’ compensation plans, benefits, or statutes in the past decade, with further reductions in benefits and more states likely to occur pending future lobbying efforts in several of these states
  • Federal lawmakers also noted that via “opt out” lobbying efforts in certain states, such as those already in place in Oklahoma and Texas with efforts underway in dozens of other states, seek to ensure that employers are provided the legal right to administer and regulate their own workplace injury plans, thus removing any oversight at the state-level in terms of workers’ rights
  • Federal lawmakers also note that these opt out efforts at the state-level are further complicated by the fact that 2004 Congressional budget cuts ended the federal monitoring and tracking of state compliance with minimal federal requirements for employee injury compensation programs, thus leaving employees highly vulnerable to employer-provided workplace injury compensation programs not subject to either federal or state oversight
  • Democratic lawmakers also specifically cited the fact that state-based opt out agendas are predicated on a questionable reading of the Employee Retirement Income Security Act, or ERISA, which proponents of opt outs say should govern workplace benefit plans, or shift the burden of administration and costs of these benefits onto the federal government away from state budgets
  • Democratic lawmakers additionally challenged the pervasive and growing national practice of using federal provisions for workers’ compensation protections to actually deny claims for overtime, inappropriately label employees as 1099 contractors, and ultimately, avoid administering an effective workers’ compensation claims program
  • Specifically, Congressional Democrats noted that ERISA does not permit reliance upon the federal program for those employers engaged in creating benefit plans under ERISA for the sole purpose of compliance with state or federal workers’ benefits laws, which appears to be the case in a growing trend across the nation
  • Finally, the lawmakers also noted that while workers’ compensation and employee benefits are traditionally addressed at the state level, the reality is that claims denied or mitigated at the state-level predominantly are addressed by the federal government, either directly or indirectly, by way of workers’ reliance upon federal benefits such as Social Security disability, TANF, SNAP, Medicaid, Medicare, and other federal programs that ultimately cost the federal government an estimated $30 billion dollars last year due to only those claims denied or incurring substandard benefits coverage by a state or employer-managed workers’ compensation program

Given the political realities facing Democratic lawmakers, with a Republican control of both the Senate and House, federal legislation on workers’ benefits protections enhancements at the federal level is unlikely. However, Democratic lawmakers noted informally that executive powers vested within the Obama administration may be a mechanism by which state and employer abuses of federal workers’ compensation laws could be given redress.

For a copy of the letter urging worker compensation law reform at the federal level from Congressional democratic leaders to the Department of Labor:

For an ongoing US Supreme Court Case review from SCOTUS concerning a judicial review of certain aspects of the ERISA, refer to:

Argument analysis: Justices dubious of ERISA plan’s right to recover medical-reimbursement costs

For more information from NPR on slowly vanishing workplace compensation statutes favoring workers occurring in states across the country over the past decades, consult the following:

Posted Under: Workers Compensation