Positive Workers' Comp and Unemployment Insurance News from Olympia (Really!)

by David DHondt AGC Executive Vice President

After years of urging state leaders to address the state’s burdensome workers’ comp and unemployment systems the construction industry received some welcome positive news from Olympia this week. On Tuesday the Governor announced policy changes that if enacted would reduce unemployment insurance taxes immediately and help stem the growth of future workers’ comp rates.

First workers’ comp: We’ve long maintained that the rules under which the system operates drive costs – and the rates employers pay – eternally upward. Two statistics bear this out: The average amount of time that a Washington State worker is out and receiving benefits is three times the national average and the number of lifetime pensions has tripled in the last few years.

This week Governor Gregoire finally used the word that AGC has been promoting for some time: “Reform.”

The Governor said she plans to reduce lifetime pensions by offering lump-sum benefits to older workers unlikely to reenter the workforce and adjusting pensions of totally disabled workers who earn income through limited work.

Governor Gregoire also said she will introduce legislation to create a network of credentialed health care providers for state and self-insured employers. Other proposed changes included incentivizing employers to keep injured workers on the job by subsidizing wages in exchange for offering employees light-duty work and expanding Centers of Occupational Health and Education which encourage health care providers to adopt best practices and return workers to their jobs.

By no means does this package of changes include all the reforms that AGC believes are necessary. For example we still need to recalculate how timeloss benefits are awarded to prevent the all-too-often scenarios of workers receiving more in benefits than they did by working and the pension reform should go farther. On the other hand many of the Governor’s reforms seem supportable by the industry as good first steps (caveat: Specific legislation has not yet been introduced).

More to the point after years of pushing by AGC and its allies the door appears to be open for real discussion of workers’ comp reform with tangible benefits for business. AGC will work with the Governor on her list of reforms and will seek additional improvements that will maintain workers’ comp as a valuable and viable safety net for workers.

Unemployment insurance: The Governor’s unemployment insurance changes are more straightforward but no less welcome as rates are set to rise by an average of 36 percent in 2011.

Using reserves in the insurance system’s healthy trust fund the Governor would reduce and cap the shared-cost portion of unemployment taxes in 2011 reducing businesses’ unemployment taxes by $300 million. That’s a prudent move in today’s economy and one we support. The Governor also suggests permanently expanding training benefits in order to qualify for one-time federal dollars to modernize the UI system. That’s something we will look at more closely to analyze its long term cost/benefit effect.

All in all we welcome the Governor’s proposals and her statement that “Jobs are the only way out of this recession and the state must do everything possible to be partners in the economic success of small and large businesses.” We await the specific details of her proposals and will analyze them carefully.

Let us know what you think. Contact me at ddhondt@agcwa.com or 206-284-0061 or Rick Slunaker AGC’s Director of Government Affairs at 360-352-5000.