April 13, 2011

Montana Reforms: Rocky Mountain High Rates on the Way Down?

In the ever-useful Oregon rankings, Montana has the dubious distinction of being the second most expensive state for workers compensation. Alaska, with its vast spaces and compelling views of the former Soviet Union, is number one. Gov. Brian Schweitzer recently signed HB 334, a bill designed to lower the mountainous rates. Only time will tell...

It's always interesting to see how a state legislature tackles high comp costs. In Montana, they set out to take a balanced approach, narrowing eligibility but enhancing benefits. While the legislators are patting themselves on the back for achieving their goals, unions have complained that too much of the cost reduction comes at the expense of workers. It usually does.

Here's a glimpse of the bill in action, trying to reduce employer liability for specific exposures:

(2) An injury does not arise out of and in the course of employment when the employee is:

(a) on a paid or unpaid break, is not at a worksite of the employer, and is not performing any specific tasks for the employer during the break; or

(b) engaged in a social or recreational activity, regardless of whether the employer pays for any portion of the activity. The exclusion from coverage of this subsection (2)(b) does not apply to an employee who, at the time of injury, is on paid time while participating in a social or recreational activity or whose presence at the activity is required or requested by the employer. For the purposes of this subsection (2)(b), "requested" means the employer asked the employee to assume duties for the activity so that the employee's presence is not completely voluntary and optional and the injury occurred in the performance of those duties.

At times the revised law reads like a monologue, with legislators trying to anticipate the circumstances of an injury and limiting the comp system in its ability to award benefits.

Rate Pain
The Oregon study illustrates some of the exorbitant (2008) rates paid by Montana employers. For a point of reference, we compare these rates (per $100 of payroll) to those in Massachusetts. (The MA rates are in brackets):

Carpentry shop (2802) $17.85 [$4.53]
Plumbing NOC (5183) $10.44 [$4.10]
Carpentry NOC (5403) $26.91 [$11.80]
Clerical (8810) $0.85 [$0.13]

Massachusetts employers, in a state with six times the population of Montana, spend about $650 million for comp premiums. Montana's current tab - $400 million - is expected to drop about 25 percent as a result of the new law. Even if you reduce the above Montana rates by 25 percent, employers are still confronted with big premium bills. Mount Comp might be substantially lower than it was, but it's still a grueling climb.

| 1 Comment

1 Comment

High injury rates are directly related to the type of employment available. In this economic downturn, Montana may get away with cutting WC coverage. When jobs are not so scarce, they may find employers may have trouble filling vacancies.

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This page contains a single entry by Jon Coppelman published on April 13, 2011 4:17 PM.

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