Why Workers Comp Laws Are State, Not Federal

Current Debate Regarding Single Federal Work Comp Law

There currently is a debate in progress regarding the benefits of eliminating state laws and replacing them with a single federal law. However, no one seems to be discussing why comp laws began as state laws and have remained so. Even the federal government has retained non-uniform laws under those areas it controls.

There is not one single federal comp law. There is one for federal employees, one for harbor workers, one for residents of the District of Columbia, one for employees of the District of Columbia, and one for each territory, possession or commonwealth of the United States. The federal government could easily consolidate those laws which it adjudicates, but never has done so.

Eliminate Different Workers Comp Rates

One of the arguments in favor of federalization is the elimination of different comp rates. However, the maximum federal employee weekly comp rate is approximately $1436/wk, with annual cost of living increases. That would NOT come down with federalization, and few, if any, states could survive such increases in comp rates.  (The federal government is able to tolerate such rates because of its draconian adjudication procedures, which no union would tolerate in a state system. Most work comp attorneys have handled one federal comp claim – few have handled two.)

Laws Are State For Local Economic & Political Advantages

But why did comp laws start, and remain, as state laws? They started as state laws in the first decade of the 20^th century because the needs of comp system were drastically different from state to state. New York’s first law only covered heavy factory and construction work. States in the west often excluded farm and ranch work. Each state was drafting its law to conform to economic reality. New York could not afford to have the families of the seriously disabled on public assistance. Wyoming could not risk bankrupting ranches and farms with comp premiums. (People who owned ranches and farms, at the time, often went through periods of what can only be called medically dangerous malnutrition.)

The reasons that comp laws remained state laws are for local economic and political advantages. Insurance laws are generally regulated by states, not the federal government. No governor has EVER willingly lessened that economic control, perhaps the largest control of state financial resources available to a governor.

In addition, state comp laws have built in advantages for union negotiations on a yearly basis in the state legislatures.

Opposition from Unions and Insurance Companies to Federalize

When national health care was proposed in 1993, there was a tiny period of time where it was suggested that federal health care eliminate the health care provisions of work comp. Persons on the health care task force, mostly academics, were stunned to see that the opposition to federalizing comp came from unions as much as insurance companies.

Other nations with comp laws based on the initial British system, Canada and Australia, have also retained laws by province and territory instead of having one national law.

Prognosis for the future? More of the same.

Author: Attorney Theodore Ronca is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100. medsearch7@optonline.net

Editor Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: mstack@reduceyourworkerscomp.com.

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