Workers Compensation: Foundations for Reform - Research Paper Example

Workers Compensation Tracy Dobson al Affiliation Workers compensation has been a of discussion throughout the world. Workers have the right to receive protection and compensation from any work related risks, and this has demanded that employers keenly look into ways and mechanisms of ensuring safety for the worker. This paper looks into the general issue of workers compensation with particular reference to the United States of America, where there are the rules of state and those of federal government. Other nations are also factored in for the purpose of intense discussion. This is achieved through in depth research on work done by other authors, especially in reference to the history of workers compensation. The wordings alone “workers compensation” have a lot to showcase a reaction that is usually negative. The negativity in it is a challenge to all stakeholders involved in the system. Insurance is involved, and as understood, it is also a business entity. The company as well is another business entity. Furthermore, the worker wants to gain from the company. It is therefore an interesting situation on how all these stakeholders play part in achieving a balanced interest that would act for the benefit of all. Challenges cannot be ruled out since this is a society of politics, but all in all, the worker has to receive his fair share of compensation. Keywords: compensation, workers, works, risks, insurance, company Introduction Workers compensation is a program that protects workers who are injured while on duty. The program comprises of laws that are designed to ensure that employees who are injured or get disabled while working are compensated with fixed monetary awards. The laws also provide benefits to the dependents of those who get injured as a result of work related accidents. Compensation has been defined as the payment of damages with an aim of restoring the life of a plaintiff to its normal state or as close as possible. Therefore, it has to include cover for the payment of damages, payment for medical treatment, and loss of wages (Lencsis, 1998). Workers compensation revolves around the fact that the employer pays for all injuries to employees no matter the fault. As suggested by Wertz and Bryant, “this concept is based on the opinion that the society has a moral responsibility to care for workers injured at work and their families” (2000, p. 2). Before the introduction of the workers compensation plan, workers suffering from work related injuries could sue their employers through the courts of law. This procedure was time consuming and expensive. The employees could also easily loose the court cases since their employers had more money than them. Furthermore, they could not be compensated when the source of accident was attributed to negligence of the employee. Employees were also expected to be aware of work related risks and therefore in case of an accident, the employee could be blamed of having accepted risky work. Elements of Workers Compensation Workers compensation holds that all work related accidents and illness have to be compensated regardless of the error, compensation covers, which include medical costs the cost of indemnity, rehabilitation cost and death benefits are to be provided and the system does not provide for compensation on inflicted pain. In Canada, workers compensation is one of the ancient social institutions. The current workers compensation began in 1900, following other developed institutions like public health, pension schemes, unemployment insurances and other esteemed institutions. While the aim of the workers compensation remains relevant today, according to Gunderson and Douglas (2000), uncertainty exists concerning the ability of the workers compensation to serve its purpose. Currently, there are a lot of factors that have threatened the functioning of workers compensation, such as environmental factors which have interfere with the institution of work therefore affecting the program of workers compensation. Workers compensation has arguably been one of the major contentious issues, in a fundamental level; it is a transfer of finances from the employers to employees (labor). The transfer of this money is associated with conflicts since neither party is willing to make loss. The rift between the employer and the employee creates long term tension, yet the root cause is all in the compensation system. Methods of Coverage Workers compensation can be provided in several ways. To some extent, it is covered by the state alongside insurance providers as well as a company’s business activities. Examples of such coverage sources are:- Commercial insurance companies: Basically, these are the companies that market the workers compensation insurance and could be classified into two programs i.e. the voluntary and involuntary programs. Self-insurance funds: The employers are normally in a common business. They pledge their individual assets for collective guard against exposure for paying employees their compensation benefits. According to Wertz and Bryant, “these funds have become increasingly popular because of their availability and potential for saving premium costs by controlling” (2000, p.6). Insurance companies or states have the duty to pay for the expenses associated with workers compensation. What motivates the insurance companies is the ability to make profits. The companies compare the risks involved with potential insured. As a business, an insurance company would not want to spend more on claims than what it can achieve through premiums. They use the money they have collected from premiums to pay for the claims. It is understood that the workers don’t pay for the claims. This is true as far as direct cash payments are concerned. It is therefore important to note that the payments are indirect. Wertz and Bryant say that workers compensation is a business entity; it has no much difference from rent and any other business utility (2000). In most cases, employers fail to make investigations concerning accidents to determine the cause. Sometimes the management relies on its feeling that the affected employees have false claims. There is danger concerning the take of employees on compensation. The danger being that the more they know about a compensation scheme, the more they tend to abuse it. This makes the employer to fail to trust the employee with information. When such a relationship exists, then there would be the other consequences of distrust such as low morale, negligence and absenteeism. When an accident occurs, there should be proof that it is compensable and this is mostly determined by the amount and the value of information gathered. This boosts the confidence of the case and leads to a better solution. Losses Incurred by Employees as a result of Injuries or Disease Economic loss: An illness or an injury can lead to economic or non-economic losses. This includes all the direct monies lost as a result of an accident. Medical and rehabilitation costs: When an injury or illness strikes, the employee incurs costs due to treatment. In case the disease or the injury causes impairment, additional costs are required for the treatment and restoration of the workers ability, which may include rehabilitation. All these stretch the finances required for complete treatment. Loss of earnings: Injuries and diseases can lead to loss of income by an employee. This ranges from wages, health insurances, loss of pension and other benefits. Such losses can cause losses in future. According to Hunt, loss of earnings can “reduce social security benefit rates (both disability and old age), and loss of health insurance can result in subsequent large health care expenditures for the worker and his or her family, especially if routine preventive care is deferred” (Hunt, 2004, p. 24). Approaches determining Workers Compensation There are three models that determine workers compensation, these are: Personal injury model. Loss of earning model. Social adequacy model. Personal Injury Model This system applies the rule of civil justice system whereby the injured individuals demand full replacement of both economic and non-economic losses. It is argued in the court of laws. It is not a guarantee that full replacement occurs because an individual bears some of the expenses like the recovery costs. In this model, the jury is given full freedom to make the decision. Loss of earning model The main aim of workers compensation is the replacement of the losses encountered by the worker. The loss of earnings model requires that those involved look at the actual losses due to individual disability. To ease this process, there set rules. The specific factors controlling the benefits rate depends on the workers benefits and predicted economic status. The adequacies of benefits are attributed to the way in which the benefits provided compensate for the actual losses or disability inflicted. This model is said to be fair since the worker receives compensation that is proportional to the injury encountered. Employees who earned less before the accident would definitely earn little. In this model, there is disparity between those who encountered slight and total disability. The social adequacy model This provides the extent to which compensation provides a socially adequate standard of living. It basically stresses on prevention of property loss rather than replacement. The difference between the social adequacy model and loss of earning model is that in the case of social adequacy model, benefits are assumed to provide minimum level of support. Under this model, employees receive benefits according to their economic need as per the external standard. Therefore, employees who have been able to enjoy higher standards of living because of high income are likely to face bigger losses in their standards under this model. Purpose of Workers Compensation Programs on workers compensation are meant to provide benefits to workers who encounter accidents and illnesses in workplaces. As such, compensation is only provided in the case of an illness or accident arising while working. As said by Hunt, “a primary goal of workers’ compensation programs is to replace a portion of the earnings by workers who are injured or made ill by their work while maintaining the incentive to return to work” (2004, p. 28). Workers compensation is also meant to provide suitable and adequate treatment to promote healing and recovery, so that the worker could return to work soonest. By this there would be minimization of wage replacements that was to be encountered in the future. In workers compensation, wage losses do not include fringe benefits i.e. non-wage benefits. Uniqueness of Workers Benefits There are various differences that exist between workers compensation programs as compared to other social programs. The differences are quite clear when the United States of America is taken as a sample study. For example, compared to the federal disability income program, the workers compensation program provides benefits for short term and partial disability, while the disability income program demands both full and long term disability before consideration of benefits. The workers compensation agenda is controlled by the states. It therefore does not include the role of federal government. The difference is that the states have different levels of benefits such as in the eligibility, administration and use of procedural rules. It is therefore a demand that there should be acceptance of available features by the state system, so as to promote awareness. There exists a program referred to as the no fault workers compensation which is meant to provide for the provision of benefits, without necessarily seeking damages from the employer, even if the accident was due to the negligence of the employer. This program came as a result of the failure by the workers to be compromised by politics. This program had to be adopted in the twentieth century. Another uniqueness of workers compensation program is the fact that other social programs tend to achieve differed balance between replacement loss and social adequacy. Amongst other differences, workers compensation portrays its difference from other programs in that its funding is entirely from the employers. This shows that employers have a big contribution towards the program design and administration. Objectives of Workers Compensation Program Adequacy This is one of the objectives in the current compensation program. The program should provide considerable protection from any interference. Av research by Thomason, Schmidle and Burton recommends that “maximum weekly benefits for temporary total disability benefits should be at least 66.67% of the states average weekly wage by 1973” (2001, p. 9). Affordability Affordability is mainly concerned with developing a compensation program that ensures that employers and employees are able to afford insurance without much difficulty. Affordability was so preferred due to the fact that the economic system of the United States encourages efficiency and mobility (Thomason, Schmidle & Burton, 2001). Delivery system efficiency This objective ensures that other compensation programs are met efficiently and in a more comprehensible manner. It brings together several bodies which are required to responsibly carry out the duty of ensuring efficient workers compensation. Such bodies include insurances carriers, courts and workers compensation agencies. Prevention A workers compensation program functions in a way that it prevents the rate of occurrence of work related injuries and illnesses. It does so by ensuring that all preventive measures are put in place. For example, it ensures that the employers are put in preventive services that would improve their safety records. Conclusion Since the inception of the workers union, workers compensation has become a highly contentious issue as it fundamentally acts in the transfer of monies from employers to workers. The interests of either side conflict, therefore there is always a natural tension. It would worsen further if politics were allowed to play a role. Given the continued discussions over matters concerning workers compensation, the cumulative evolution regarding the working environment has now led to reforms, which have been implemented. Further reforms are yet to come in place, with the determining factors being changes in world politics and continued growth in reference to awareness of workers occupational health and safety. Reference List Gunderson, M. & Hyatt, D. (2000). Workers compensation: Foundations for reform. Toronto: University of Toronto Press. Hunt H. A. (2004). Adequacy of earnings replacement in workers’ compensation program. Kalamazoo: W. E. Upjohn Institute. Lencsis, P. M. (1998). Workers compensation. Connecticut: Greenwood Publishing Group. Thomason, T., Schmidle, T. P. & Burton, J. F. (2001).Workers compensation. Kalamazoo: W. E. Upjohn Institute. Wertz, K. & Bryant, J. J. (2000). Managing workers’ compensation. Florida: CRC Press, 2000. Read More