Reforms to workers”™ compensation and unemployment insurance announced in Albany this month have buoyed employers even as they seek further pro-business changes.
The twin reforms, part of the recently approved state budget, should save businesses $1.2 billion, according to the governor”™s office. The state estimates the workers”™ compensation reforms alone will save businesses $800 million while increasing benefits to workers.
The state will create one method for collecting annual assessments from employers, thereby saving self-insured employers an estimated $500 million. This change will eliminate a system the state called “overly complicated and expensive.” Businesses in the Hudson Valley should save an estimated $14.7 million from the change.
The Fund for Reopened Cases ”“ an appeals docket for insurers ”“ is also being closed, with the state deeming it unnecessary.
The state is also introducing measures to increase competitiveness in the marketplace that it hopes will drive down costs and provide relief to businesses. Albany believes businesses in the Hudson Valley should save $27.5 million, while statewide they should save $300 million.
Injured workers will see an increase in their minimum benefits from $100 to $150.
This summer, the Workers”™ Compensation Board will begin accepting injury reports electronically from insurers using a national standard that will reduce paper costs and allow for more timely benefit payments.
“Two years ago we pledged to reopen New York”™s doors to business and transform our economic climate to make our state friendlier to job creators and reduce the unnecessary bureaucracy and burdens facing businesses,” Gov. Andrew Cuomo said in a statement. “While there is still work to be done, the sweeping reforms to the workers”™ comp and unemployment insurance system included in the budget are a major victory for our state”™s businesses large and small.”
Lev Ginsburg, director of government affairs for The Business Council of New York, said his group supports the reforms but remains cautious. Reforms to workers”™ compensation were made several years ago, but the savings never materialized, he said.
Ginsburg said he was disappointed the state did not get rid of the Aggregate Trust Fund. The fund, enacted in 1935 and administered by the State Insurance Fund, requires all carriers to make lump sum payments upon a finding by a third party of a worker”™s “permanent partial” disability.
“It would”™ve removed a serious burden on insurance carriers,” Ginsburg said. “It should”™ve been removed by now. It unfairly puts a thumb on the scale in favor of a claimant in negotiations.”
Ginsburg said that workers”™ compensation costs in New York are higher than in other states, but that these reforms will make New York a more business-friendly state. “We have more work to do,” he said.
John Ravitz, executive vice president of the Business Council of Westchester, said business groups have been advocating for workers”™ compensation reforms for years.
“The business community felt the scale was tilted in the wrong direction,” Ravitz said. “Workers”™ compensation was becoming a huge burden on their shoulders. Hopefully this reform plan will work.” The increasing cost of workers”™ compensation and unemployment insurance was keeping employers from hiring more employees, he said.
“Bringing in more employees allows you to accomplish more, but how can you afford it?” Ravitz said. “This is a positive step in the right direction. The devil is in the details. Hopefully, businesses will see relief.”
Ravitz said the state needs to do more to address fraud and abuse of workers”™ compensation that drives up costs. “You want to have a level playing field,” he said. “If it”™s better to do business in Connecticut, Massachusetts or New Jersey, people will just go right over the bridge. Hopefully this will make the state more business friendly.”
Ken Fuirst, co-president of Levitt Fuirst Associates, an insurance firm based in Yonkers, said that Cuomo has good ideas to make the system more efficient. He said that liability rates are skyrocketing in New York, making it harder for companies to do business.
Fuirst would like to see the state repeal Labor Law 240, the so-called Scaffold Law that gives special protection to workers working at heights, requiring building owners and contractors to be 100 percent responsible for any injuries sustained.
“Over the last 10 years, lawyers have used this as a wedge to exploit this law,” Fuirst said. “Any injury on a construction site ends up in six-figure lawsuits. Workers”™ compensation was designed to pay for injuries at a job site and keep the lawyers out of it.”
New York is the only state where lawyers are allowed to sue for injuries at a worksite, he said.
“There”™s no issue with workers”™ compensation; it”™s general liability labor law,” Fuirst said. “Until that is implemented, you will never see the results.”
Cuomo also detailed reforms made to unemployment insurance that will save employers in New York $400 million, including an estimated $43 million in savings for employers in the Hudson Valley.
Reforms include changes to the Unemployment Insurance Trust Fund, stronger penalties for fraud and more assistance to help the unemployed find work.
Unemployment benefits will also increase. The maximum weekly rate will increase from $405 to $420 beginning in October 2014. Additional increases will continue and be indexed to 50 percent of the state”™s average weekly wage. The minimum weekly benefit rate will increase from $64 to $100. Rates were last increased in 1999.
