By James Parrott and Nicholas B. Martin
Despite an early history as a national leader in safeguarding the interests of workers injured on the job, New York’s workers’ compensation system has eroded considerably over the years, as legislative and administrative changes have often focused on curtailing benefits rather than adapting to changes in the economy, workforce, and business practices. While legislative changes in 2007 and 2017 included some positive measures, for the most part changes significantly lessened the adequacy of worker benefits. The unfortunate result is that the focus of workers’ compensation in New York has shifted from fairly compensating injured workers to minimizing employer costs.
Over 200,000 workers are injured annually in New York State. Three-fourths of the 115,000 injuries that involve lost worktime occur in low-wage industries. Fatal workplace injuries in New York, particularly in construction, have soared to their highest level in 20 years. The incidence of workplace fatalities has risen sharply in New York over the past decade while it has been flat nationally.
While changes in 2007 increased the maximum indemnity benefit (to compensate injured workers for lost worktime), a cap on permanent partial disability payments wiped out that increase for most long-term partially disabled workers.
The two-and-a-half year cap on temporary disability payments adopted in 2017 reduced benefits for all workers not fully recovered within a few years.
New York’s $150 minimum weekly benefit is less than half the $339 average for five neighboring states. Despite the fact that New York has the highest statewide average weekly wage, its maximum benefit of $871 in 2018 ranked 29th among all states.
At best, New York provides an indemnity benefit to injured workers that is a maximum of two-thirds of the worker’s average wage in the year before injury (capped at a maximum of two-thirds of the state’s average weekly wage) with no adjustment for inflation. National experts recommend that the wage base be adjusted annually to reflect a worker’s earnings potential rather than the pre-injury wage. This would include periodic wage increases, and promotions workers usually receive over the course of their careers.
Warehousing, nursing homes, food manufacturing, hotels, and hospitals have the highest incidence rates of lost workday injuries in the private sector. State and local government workers, particularly those in law enforcement, nursing homes, hospitals and public schools have injury rates higher than the state’s overall rate. Retail trade accounts for the highest number of injuries with lost worktime.
Employer costs for workers’ compensation are a very small 0.7 percent share of total employee compensation. Eighteen states have higher employer costs than New York.
The actual dollar amount of worker benefits fell 15 percent form 2014-17 while insurance profits rose 92 percent. Benefits paid to (indemnity benefits) or on behalf of workers (medical costs) were only 55 percent of workers’ comp premiums in 2017. In that year, insurance profits exceeded $1 billion.
The report recommends that New York update income replacement benefit payments, improve access to benefits, particularly for low-wage workers, and ensure that businesses responsibly invest in enhancing workplace safety and assisting workers in safely return to work. Additionally, enforcement should be bolstered against the misclassification of workers as independent contractors, a maneuver used by employers to evade paying workers’ compensation premiums.