Workers misclassified as independent contractors, reductions in benefits and states looking to make workers’ compensation coverage optional for employers are three “worrying” trends for the insurance industry, a U.S. Labor Department official wrote in a recent post on the agency’s website.
Christopher Godfrey, director of the DOL’s Office of Workers’ Compensation Programs and a member of the Workers’ Compensation Data Study Panel at the National Academy of Social Insurance, wrote that the number of American workers covered by workers’ compensation has declined, which is partly attributed to workers being misclassified as independent contractors who “continue to lack the financial security”; of workers’ compensation.
Another issue, Godfrey wrote in the Nov. 18 post, is that states are paying fewer total benefits to injured workers.
“From 2016-2020, total benefits paid to injured workers declined in 40 states,” he wrote, adding that COVID-19 “was a large factor in this decline, but total benefits paid were already down in 21 states before the pandemic.”
He described declining benefits as a decades-long trend stemming from several factors, including changes to state workers’ compensation laws and policies. “Today, there is considerable variation among states in benefits for injured workers,” he wrote.
Another trend is that some states are considering ways to make workers’ compensation optional.
South Dakota, Texas and Wyoming have already made workers’ compensation voluntary in whole or in part for at least some occupations, he wrote, adding that “over the past decade, bills in Arkansas, Oklahoma, South Carolina and Tennessee have proposed alternative systems or options for workers’ compensation for employers to opt out of coverage for workers.