The Labor Department is ringing the alarm bells over state compensation laws that are continuing to shrink workers’ benefits, according to reports.
“Working people are at great risk of falling into poverty," the regulator said in a
new report on changes in state workers' compensation laws. According to the department, these changes have resulted in "the failure of state workers' compensation systems to provide (injured workers) with adequate benefits."
Further, the report noted that over the last decade, US states have approved laws, policies and procedures that have “limited benefits, reduced the likelihood of successful application for workers' compensation benefits, and/or discouraged injured workers from applying for benefits."
"The current situation warrants a significant change in approach in order to address the inadequacies of the system," the report says.
To address the situation, the Labor Department recommended an “exploration” of federal interventions, specifically "the establishment of standards that would trigger increased federal oversight if workers' compensation programs fail to meet those standards."
In response, trade group American Insurance Association (AIA) issued a statement opposing the proposed interventions in state workers’ compensation.
"AIA appreciates the need to periodically review the state workers' compensation system," AIA Vice President Bruce Wood explained. "However, changes and improvements to the workers' comp system should be debated at the state level where whatever policy balance results, can be more readily fine-tuned as circumstances require."
The group further stated that the state-based system is more sensitive to changes in individual state economies.
