Workers’ Compensation Crisis Stalls Washington State Budget

Workers’ compensation law in Washington State will be transformed.  The question has now become “how much.” Last week lawmakers revealed that protecting workers’ compensation benefits is so crucial, they are willing to stall the entire state budget to protect workers’ rights against the rising tide of corporate power.  Still, critics question what they perceive as inflexibility on the side of democrats when settling the issue of workers’ compensation.

After all the debate and maneuvering on reform over the last months, the issue has boiled down to one very contentious proposal: giving workers the option of settling their workers’ compensation claims with a lump-sum payment rather than negotiating a lifetime disability pension.

Like many other states dealing with massive budget shortfalls as the economy slowly recovers, Washington State lawmakers are focused on slashing programs and reforming services that are seen as bleeding money.  As we have reported here, Workers’ Compensation emerged as a flash point in the budget debate when it was reported by several media sources and government agencies that about 85 percent of all workers’ comp costs came from just 8 percent of all claims.  These claims involved injured workers who received long term benefits or were awarded lifetime pensions.  While these sorts of settlements are often necessary to meet the long term needs of injured workers, the oft quoted “85 percent” figure has become the clarion call for groups aligned with big business against labor rights.  Speaker Frank Chopp is the most vocal opponent to the lump sum settlement option.

The Seattle Times Editorial Board has come out strongly against efforts by Chopp to stall the budget in order to protect labor rights.  They cast the fact that Washington has no settlement option for workers as limiting to all parties involved: injured workers, employers, attorneys, and the Labor & Industries system.  They argue, “Now the workers’ comp system gives them a pension and tells them they are done working for life.  The new idea is to allow them to take a lump sum and find different work.”  They note further, “Now the system pensions them.  It has been handing out more than 1,000 new lifetime pensions a year, a practice that has been become expensive…for labor, too, because a payroll tax is a tax on the creation of jobs.”

This formulation of the workers’ comp fix directly echoes arguments made by Republicans and the Association of Washington Business that offering lump sum settlements is an obvious, simple fix for the Labor & Industries system.

However, Labor Rights activists note that the devil is very much in the details.  As we have noted here in this blog, “Buried in the back of the bill is a section that may limit the ability for workers to be compensated for separate and totally unrelated injuries, merely because they were unfortunate enough to have been injured multiple times.”  Further, many groups aligned with Labor point out that the temptation to accept a lump sum can be overwhelming a worker who is injured and anxious about his or her future. The Seattle Times quotes David Groves of the Washington State Labor Council when he points out “People who are in desperate circumstances are going to be pressured to take buyouts that re against their best interests.”

In a letter posted to the Times on May 11, Kelly McQuade makes perhaps the most telling point about the lump sum option for injured workers.  She notes, “Where is that person going to turn when the lump sum is gone?  Other state-funded services (if they even exist in the future) will pick up the slack.  This is a Band-Aide that will hurt Washington labor for years to come and cost more in the long run.”

Governor Chris Gregoire has indicated that forcing the Legislature into special session over this matter would be unacceptable.  As she works behind the scenes to come to a compromise, we will keep you updated on how this crucial issue plays out.  As this crisis makes clear, injured workers should seek the advice of a Seattle Labor & Industries Attorney who is an expert at navigating the rapidly shifting landscape of Washington Labor & Industries Law.  Visit us soon here for major updates…

Emery Reddy