Opinion: Tread cautiously on mandating workers' compensation coverage for COVID-19
In the wake of the COVID-19 pandemic, several new emergency measures were enacted to support struggling businesses and employees during this unprecedented time. Some measures include Small Business Administration loans, expanded unemployment insurance and increased paid-leave benefits. States are also eyeing additional changes, including to the workers’ compensation system.
We at the Michigan Chamber of Commerce urge caution on such changes. Why?
Because the workers compensation system is working. And undue pressure on it from a flood of new claims could quickly destabilize it and shred a safety net for businesses and workers.
The workers’ compensation system has been around for more than a century. In good times and bad it has stepped up to help workers injured on the job. Workers’ Compensation insurance is required by law in most states, including Michigan, and pays medical care and lost wages for workplace injuries.
Recently, there have been calls to mandate workers’ compensation insurance to cover all COVID-19 claims — regardless of whether employees contracted the illness in the workplace or not. The fact is, we lack the testing and technology to determine if these claims happened at the workplace or someplace else.
While these calls for “presumption” are certainly well-intentioned and aimed at finding additional financial support for those infected with COVID-19, they could also unleash unintended negative consequences for employees and employers alike.
To start, sick employees could stand to lose more than they would gain under any so-called “presumption” measure. Expanding workers’ compensation ignores another far superior avenue for getting income replacement to workers who become ill.
In most circumstances where the need is simply for short-term income replacement, the newly enacted federal Pandemic Unemployment Assistance Program (PUA) is a much better deal for workers.
The PUA program, enacted as part of the federal CARES Act, is a 100% federally funded program that pays an individual who is ineligible for regular unemployment insurance (UI) the same weekly benefits he or she would receive under a state’s regular UI program. An individual who qualifies for PUA will also receive Federal Pandemic Unemployment Compensation (FPUC), which adds an additional $600 to an individual’s weekly benefit amount until July 31, 2020.
In other words, an employee could qualify for up $962 per week in state and federal unemployment benefits. By contrast, under the workers’ compensation system, an employee would only be eligible for 80% of his or her after-tax average weekly wage.
Employers stand to lose under this proposal as well.
Research shows a move to mandate coverage will destabilize and overburden Michigan’s well-managed and financially stable workers’ compensation system. To pay for these additional claims, workers’ compensation premiums will need to increase dramatically, which will further hurt businesses struggling to reopen or remain open during this pandemic, making a bad situation even worse.
We urge policymakers to protect Michigan’s model worker’s compensation system and resist the temptation to overload the system and push it to the brink.
Wendy Block is vice president of business advocacy and member engagement for the Michigan Chamber of Commerce.