Labor Union Welfare Fund Depleted By Overly Generous Benefits to Injured Workers

Background: Several years ago, I worked with a heavy-duty shipping facility and gained union cooperation, much to management's surprise. The union was really driving the workers compensation cost containment process, with full union leadership commitment. Losses were reduced approximately 50%. This is true story with identity changed. It illustrates several points. 1) that unions can be your friends and 2) you must review the situation, looking for collateral soure benefits.

 

I recalled there were some "collateral source benefits."  A collateral source benefit, a term which I invented, is a benefit which acts as a "collateral source" of income or perks that create a situation whereby an employee has an incentive NOT to work. I couldn't remember the exact situation at this shipping facility, and recently asked them to refresh my recollection about how the welfare and pension funds worked as a disincentive for employees to return to work. I did recall there were vacation credits – when workers were off work due to an injury, they accrued seniority faster than when they did work because they were presumed to be putting in a certain number of hours, which was an overestimate because with the poor economy most jobs were part-time assignment, yet they were accruing as if it were full-time. 

 

 My Question: Was it the pension fund or welfare fund  that was a disincentive to return to work?

 

Former Union Leader's Answer:  Actually it was both a pension fund and welfare fund. But the main concern was the welfare fund.  The welfare fund was set up by the union in 1965 and part of it protected the benefits of a worker who got hurt. They would get credited hours towards full medical and vacation and holiday pay. I started here in 1977 and the breed of workers here were honest hard working men (mostly second and third generation) who wanted to be protected if a real injury occurred. When work was slow they went out and banged nails, mowed lawns or painted, well you get the drift.

 

The union leader explained that in the early 90's the type of worker in the blue collar field changed. There were very few second and third generation workers.  When work got slow, mysteriously injuries increased and it seemed like the desire to get other jobs was replaced by collecting workers comp. In addition to that, guys were earning more "credited hours" than the guys who were actually working. As you can probably guess, this just about bankrupt the welfare fund and that perk was no longer available. Also because the change in that perk took so long to happen many of the union benefits were lost.

 

Physical Examinations as Baseline: The union leader went on to explain there was another unrelated situation I might be interested in: The Longshore and Harbor Workers Act was set up based on facilities in large cities like New York or Los Angeles where a person could work for many employers in a short period of time. So in order to determine which employer was actually responsible for the claim it was set up that it would be the last employer.  In 1994 when the company changed hands, we set up medical exams/physicals so that we did not inherit claims from the old company. Unfortunately, all this happened so quickly the union resisted the timing of the physicals. Some say this was so that some guys could have the chance to get drugs out of their system. Since the facility couldn't wait, many of our guys worked a day or two before they took their physical. One part of the physical was hearing loss. Many guys showed some hearing loss. One of our guys was very friendly with an attorney at a local firm. All of a sudden there were hearing loss claims coming in from about 75% of our guys if not more. We inherited all of these claims despite the fact we only employed the workers for a day or two and they had worked for the prior operation for 10-20-30 years.

 

Well, I hope this helps. I ask that you not use my name but you can mention that your source was a union leader at one time.