June 2004 Archives

June 25, 2004

 

In the last few months, the deaths of independent and military contractors in Iraq have been much in the news. According to the Brookings Institution, there are more than 15,000 security contractors in Iraq, making independent contractors the second largest force after the U.S. military.

Recently, the Department of Labor has issued statistics about workers compensation claims for U.S. contractors, including those in Iraq. Of the 771 workers comp claims filed by U.S. contractors so far this year, 345 occurred in Iraq. Of the 66 deaths, 57 occured in Iraq.

Workers compensation for contractors is mandatory under the U.S. Defense Based Act (DBA) of 1941. Coverage applies to both U. S. workers and any foreign subcontractors who are not covered under their own country's workers comp laws. Since Iraqi contractors are not covered by workers comp, any contractors must be covered under the DBA.

According to the DOL, there are three major insurance carriers currently providing DBA coverage in Iraq: ACE-USA, AIG, and CNA, although there are more than 700 carriers and self-insured employers authorized to write coverage under the Longshore and Harbor Workers' Compensation Act.

"DBA benefits are include disability, medical, and death benefits to covered employees who are injured or killed in the course of employment, whether or not the injury or death occurred during work hours. Compensation for total disability is two-thirds of the employee's average weekly earnings, up to a current maximum of $1,030.78 per week. Compensation also is payable for partial loss of earnings. Death benefits are half of the employee's average weekly earnings to the surviving spouse or to one child, and two-thirds of earnings for two or more such survivors, up to the current maximum weekly rate. Permanent total disability and death benefits may be payable for life, and are subject to annual cost of living adjustments." DOL

Insurers are not mandated to provide this coverage. As an inducement, the government reimburses insurers for war related claims:

"Labor Department officials said they had no cost estimate for reimbursements of Iraq-related claims, but given the maximum payment of $1,030.78 per week and the number of injuries and deaths, it could well climb into the multimillions. In past years, annual reimbursement costs under the War Hazards Act have ranged from $1 million to $2 million.

...Rates have ranged from an early low of $10 per $100 of an employer's payroll to as much as much as $40 per $100 of payroll in recent months, said Hartwig of the insurance institute. That means an employer with a million-dollar payroll would pay between $100,000 and $400,000 in premiums.

Insurers also are limiting terms of policies, such as not offering as much coverage in some locations or for certain types of jobs, and raising deductibles."

Countries submitting the most claims since September 2001:
529 - Iraq
317 - Kuwait
60 - Bosnia-Herzegovina
52 - Colombia
51 - Saudi Arabia
48 - Germany
44 - Afghanistan
30 - Marshall Islands
26 - Qatar
(source: DOL)

Contractors submitting the most claims since September 2001:
346 - Halliburton
309 - CSC Dyncorp 309
307 - Raytheon
157 - Titan
142 -CSA Ltd.
118 - ITT Industries
99 - L-3 Communications
96 - General Dynamics 96
89 - Northrop Grumman
54 - Washington Group International
(source: DOL)

More information:
Department of Labor Defense Based Act
U.S. Chamber of Commerce - Doing Business in Iraq FAQs
Services for U.S. Citizens in Iraq"
ABC News - Independent Contractors Fight and Die in Iraq, But Who Do They Answer To?
MSNBC - U.S. faces big bill for workers' comp in Iraq
Michigan Comp Law

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June 22, 2004

 

The Weekly Toll - In his Father's Day post, Jordan Barab at Confined Space recounts last week's workplace deaths, noting the children who must grow up without fathers and the fathers who must bury their sons. It should serve as a sobering reminder to all of us who work in this business what our work is really all about: keeping workers safe on the job.

Summer Electrical Safety Tips for Kids - these are good rules for kids of all ages, actually. Thanks to rawblogXport for the pointer.

Michigan Comp Law features a recent post on the cost of workers comp claims in Iraq. We've been meaning to post on this topic too, perhaps we'll add to the discussion later this week.

Tom Peters has a weblog. Welcome to the "blogosphere," Tom.

Green Slime Syndrome - The Onion reports on this alarming work hazard. Thanks to Medpundit. ;-)

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June 17, 2004

 

We've just posted an article that Tom Lynch authored for the Winter 2004 edition of The Journal of Workers Compensation entitled Good Grief! Does Our Future Lie in California? Although the article was published just prior to the ouster of Grey Davis and the subsequent adoption of a workers comp reform plan, the overall examination of why some states work well and why some *break* may be instructive.

Here is an excerpt:
The United States did not invent workers compensation. That honor goes to Germany, which first introduced the concept in 1884. By the middle of the 20th century, most countries throughout the world had some kind of workers compensation or employment injuries legislation. Some systems take the form of compulsory social insurance; in others, the employer is legally required to provide certain benefits, but insurance is voluntary. In most countries, employers finance some type of employment injury benefits for workers.

In common law countries, such as the United States, workers compensation is based upon a doctrine of strict liability, or liability without fault. This is a departure from the principle of tort law in which the injured party receives no damages unless it can be shown that someone else maliciously or negligently caused the damage. The rationale for the "social fault doctrine" is that, under conditions of modern industrial employment, employers are in the best position to prevent accidents and disease, and they should therefore be given economic incentive to take preventive action.

In 1911, after failed legislative attempts in Massachusetts and New York that had been ruled unconstitutional, Wisconsin successfully followed the lead of Germany and England and became the first state in America to enact a workers compensation statute. Over the next few years, the rest of the nation followed suit. Today, our 50 states have 50 different laws.

One might be tempted to say that what we really have are 50 bottles of identical wine with 50 different labels, but the differences go far beyond that. Benefits differ by state, as do systems for medical reimbursement. The workers compensation system in most states operates through some form of private insurance, but in some states, such as Ohio and West Virginia, the system is operated by the public sector; there are even two states, Texas and New Jersey, that make workers compensation insurance optional for employers.

The differences that abound among the states in their approaches to workers compensation lead to some states having economically "healthier" systems than others. Nowhere is this difference in wellness more vivid than in California, the state that, if it were a country, would have the fifth leading gross national product in the world. (Read the full article).

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June 15, 2004

 

Melissa Hershberger of Synergy Fest raises the issue of independent contractors and links to an excellent article that appears in the American Institute of Certified Public Accountant's online Journal of Accountancy on correctly classifying independent contractors. The article points out that as many as 38% of the employers audited by the IRS have misclassified workers.

The article cites the case of Jerry Ware v. Workers’ Compensation Appeals Board, Bel-Air Country Club (link is a pdf) as an illustration. Ware was a caddie who filed a workers comp claim for orthopedic injuries. Ware claimed employment but The Club contested, stating that he was an independent contractor who was paid in cash, had no set hours, and was free to work elsewhere. This was really an interesting case because it really straddled the line on many issues used to determine work status. Initially, the Supreme Court denied employment, but on appeal, the decision was reversed. Among the reasons cited in the Appeals Court decision:

  • the Club still supervised dress, behavior, types of services rendered and the payment process;
  • caddying was an integral part of the Club's business;
  • the plaintiff did not have his own business; and
  • the Club provided caddie rooms and lockers.

Ronald Ryan at Michigan Comp Law also has a recent weblog post with case law on the employee versus independent contractor. In the case of Reed v. Yackel, the Court of Appeals held that Reed was indeed an independent contractor because, among other reasons, the work he performed was not viewed as integral to the employer's business and he held himself out to the public as one who could be hired for general labor.

Employers must carefully examine this issue on a case-by-case basis - just because you call a worker an independent contractor doesn't mean you won't be accountable for benefits should a work injury occur. The issue of control is central: who controls the work? Who controls the hours and the place the work is performed? Are taxes withheld? Are benefits provided? Are tools or equipment supplied? How closely is the work supervised? Are you the workers' only client?

The Journal of Accountancy suggests that employers rigorously apply the 20 common law factors that the IRS developed to determine independent contractor status. The article includes these factors - it's a good bookmark for any HR director to note. The U.S. Chamber of Commerce also lists The IRS's 20-Factor Analysis in a format that can be easily printed.

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June 11, 2004

 

If you asked the average "man on the street" to name dangerous professions, chances are nursing and other healthcare professions wouldn't make the list. Yet according to the Bureau of Labor Statistics, hospitals have the second highest rate of nonfatal injury or illness cases. Many of the risks are well known: back injuries and musculo-skeletal disorders from lifting patients; exposure to blood-borne pathogens; and injuries resulting from assault by patients.

Somewhat less obvious are the risks posed by exposure to hazardous drugs. Recently, NIOSH released a lengthy alert about chemotherapeutics and other drugs. As many as 5.5 million healthcare workers -- including nurses, pharmacists, physicians, and veterinarians -- are exposed to antineoplastic and other hazardous drugs in the course of their work:

"Healthcare workers who prepare or administer hazardous drugs or who work in areas where these drugs are used may be exposed to these agents in air or on work surfaces, contaminated clothing, medical equipment, patient excreta, or other sources. Studies have associated workplace exposures to hazardous drugs with health effects such as skin rashes and adverse reproductive events (including infertility, spontaneous abortions or congenital malformations) and possibly leukemia and other cancers. The health risk is influenced by the extent of the exposure and the potency and toxicity of the hazardous drug. Potential health effects can be minimized through sound procedures for handling hazardous drugs, engineering controls and proper use of protective equipment to protect workers to the greatest degree possible."

The NIOSH alert is a "prepublication" report that will undergo further editing before a final release sometime this year. The final report will present a voluntary guideline that will include information on more than 100 drugs and will offer detailed recommendations for control measures that should be taken by employers and employees to reduce risks. Many measures assumed to be adequate in the past may not be sufficient protection in response to the risk.

In an article in entitled Do more to protect health workers from chemo agents that appeared in Hospital Employee Health, Thomas Connor, PhD, a research biologist with NIOSH in Cincinnati and an author of the alert indicated that workers may not be aware of the risk:

"Exposure may occur in these situations: Drugs are reconstituted or diluted. Nurses or others expel air from syringes or give injections, and small amounts are aerosolized. Uncoated tablets are counted or dosed in a unit-dose machine. Health care workers touch contaminated surfaces, patients' body fluids, or contaminated clothing and linens. Workers prime the IV with drug-containing solution or administer the drug with the IV.

Every step along the way, you have the potential for release and exposing the workers, says Connor. I don't think people are aware of it. They can't see it [because the drugs are colorless] and don't think there can be a spill."

Requests for printed copies when they become available can be made through the NIOSH toll-free information number, 1-800-35-NIOSH, or by contacting the NIOSH Publications Office through the NIOSH web page.

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June 8, 2004

 

For more than 20 years, visual artist Raymon Elozua has been assembling a vast collection of company histories, pamphlets, and technical brochures that document America's industrial history. This site features 155 photos from that collection - images of factories, machinery, and laborers hard at work. Many of the jobs depicted have faded into history.

The artist grew up in the South Side of Chicago in the shadow of the giant steel mills and factories. His dad worked at U.S. Steel and his first job was at U.S. Steel, triggering a life long interest in everything about these industrial behemoths, from the architecture to the people who worked the jobs within. His interest in documenting this bygone era of American working life was sparked by the demise of the South Works industries.

"I began looking for pictures of men and woman at work, individuals who were living the American dream of creating a future for themselves, their family and their country, no matter the effort or hardship."

This fascinating site is the result of Elozua's 20-year quest. It's a wonderful piece of history and a tribute to the labor of our parents' and grandparents' generations. It made me think of my own Dad who spent many years as a busdriver after a few grueling years working in a mill while we were kids. He'd be happy if he were around to see how much easier his kids have life today. Thanks, Dad!

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June 7, 2004

 

As we near the summer hiring season, LynchRyan reminds employers that workers compensation laws do not distinguish temporary hires from regular year-round employees. Anyone who works for you, no matter for how long, is protected by workers compensation. This is as it should be.

We caution employers to hire carefully. There is no such thing as an unimportant hire. When it comes to offering work experience to young people -- still in high school or college -- a few cautions are in order:

First, do not allow these new hires to operate heavy equipment. Indeed, you should probably not allow them to operate any equipment that entails risk. In one tragic case from last summer, a high school student in Massachusetts was killed when he ran a fork lift off of a loading ramp.

In addition, never assume that a summer hire knows how to do the work, no matter how simple the task may appear. Whether it's pounding nails or filing, summer hires need guidance and supervision. Doing a job the right way is not necessarily something students have learned in school.

Finally, if you have young people on the summer payroll, don't just "toss them the keys." Young people are, by definition, inexperienced drivers. Unless you know them and their driving habits very well, keep them busy in safe activities other than driving. Youthful exuberance is a wonderful quality -- but not when it comes to driving or operating equipment. It's your responsibility as an employer to make sure that this first or second job experience is not the student's last.

For more information on safe driving, see our article entitled, "Where the Rubber Meets the Road."

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June 7, 2004

 

The three-year Terrorism Risk Insurance Act (TRIA) is set to expire December 31, 2005 unless Congress acts to extend it. This is of great concern to insurers who will soon be negotiating and writing business insurance policies for 2005 and beyond. Any policies that are written after 1/1/05 will not be fully protected by federal backstop insurance.

An industry coalition of concerned insurance parties is petitioning Congress to extend TRIA, stating that "Without a risk-spreading mechanism, the right attack could very well bring the insurance industry to its knees, and significantly destabilize our economic infrastructure."

Although the original measure was intended to be a bridge, industry spokespeople are united in calling for an extension as being essential for the stability of the industry. The following were among the points made in Senate banking Committee testimony:

"The commercial property-casualty insurance sector continues to lack the financial capacity to handle catastrophic terrorism losses on its own. Certain plausible event scenarios estimate insured losses from another catastrophic terrorist attack on U.S. soil could exceed $250 billion, far exceeding the entire commercial property-casualty industry's estimated capacity.

"Terrorism risk cannot be modeled or predicted. Because terrorism defies the normal underwriting and rating principles, that limits the ability of property-casualty insurers to advance a private mechanism for that risk. For example, the complex and deliberate nature of terrorism prevents insurers and policyholders from using loss control as an effective tool to minimize the risk."

Backstop insurance is of particular concern in workers compensation. Workers comp is different from other types of insurance where events occur and they are paid for within a short amount of time. Workers comp claims have a long tail by their very nature, meaning that payment can extend over many years after the original event. Insurers must maintain reserves to cover the expected cost until the claim is closed.

With the September 11 event, workers comp insurance was on the line for the death benefits for workers killed in the attack; it is also the "exclusive remedy" for any workers who sustained injuries during the attack, or who were in the "course and scope" of employment during the extensive cleanup projects in the aftermath of the attack. Recently, we've seen alarming reports that the dust from the World Trade Center attacks is more toxic than originally estimated, and that the associated range of health problems may be severe. We may have only seen the tip of the iceberg in terms of survivor health problems. This is a dramatic example of the "long tail" claims that can be associated with workers comp.


For more on this topic:
Terrorism risk and workers compensation
Workers Comp and Terror: The Long Shadow

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June 2, 2004

 

We'll be adding the following weblogs to our sidebar under business weblogs:

Business Opportunities Weblog - Dane Carlson blogs entrepreneurial ideas and opportunities.

Labor Blog - a labor and employment weblog from the Institute of Industrial Relations Library, University of California, Berkeley.

Michigan Comp Law - a weblog hosted by the law firm of Ryan, Jamieson, Morris, Ryan and Smith that provides updates and information on workers compensation law in Michigan.

Thoughts from a Management Lawyer - attorney Michael Fitzgibbon's weblog about Canadian labour and employment law issues.

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June 1, 2004

 

Lately, we've had several visitors to the site searching for information about heart attacks. We take that to mean that people are trying to determine whether a heart attack that occurs in the workplace is a compensable event. Not everything that occurs in the workplace is deemed compensable and that is particularly true of illnesses. Generally, a heart attack in and of itself would not be a compensable event. The acid test for compensability would revolve around whether it can be determined that the heart attack is an event that has arisen out of and in the course of employment.

First, as with anything related to workers comp, your state law will prevail. Because workers comp legislation varies by state, there is no universal dictate that would apply nationally so we are speaking in generalities here. Heart attacks and strokes can be complex issues and may require legal consultation.

"Arising out of employment" means that a heart attack would have to be job related, or in other words, did the heart attack happen because of the work? Was there a causal connection? "In the course and scope of employment" generally would have to do with the time, place, and surrounding events.

Illnesses and conditions are often progressive in nature, and they may be due to other or unknown causes, such as family history, obesity, smoking, etc. It would be up to the worker to prove that the heart attack was related to or caused - at least in part - by the work. Were there precipitating work factors, such as unusual physical exertion or mental stress? Also, in any discussion of heart attacks, the issue of pre-existing conditions often comes into play. While pre-existing conditions would generally not be compensable, they would also not necessarily be a bar to compensability. If it can be shown that the work aggravated or accelerated a pre-existing condition, compensability may be granted.

Here are a few interesting cases in various jurisdictions that deal with heart attacks or heart conditions. (Readers, please feel free to post comments if you have other examples or links to other cases.)

New Jersey - Burden relaxed in heart disease claims

Vermont - Volunteer firefighter awarded benefits

Illinois - Stress from over the road truck driving was not a sufficient basis to allow recovery for a fatal heart attack

Louisiana - Various cases involving heart attacks or conditions that were denied

Longshore & Harbor Workers Compensation Act - Court decision restates law regarding employer’s burden of proof to rebut presumption of coverage

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