Interim Washington Legislative Report: Bills of Interest to Contractors

Workers’ Comp: The Next Legislative Battle

Workers’ Compensation is likely to take a central role in the remaining legislative session because the program is “bleeding money.” Governor Gregoire, the head of the State Dept. of Labor & Industries (“L&I”) and the State Auditor have all said that the system is heading towards bankruptcy. In a December report, the state Auditor’s office indicated that the State’s fund for workers’ compensation has a 95% chance of becoming insolvent in the next five (5) years.

The Auditor’s Report blames the problem on fewer payments coming from businesses due to the recession and a drop in returns from investment due to the economic downturn. The major expenses come from only 8% of the claims, those who are receiving benefits for a prolonged period of time or have life time pensions. That section of workers represents 85% of the compensation costs according to the Dept. of L&I.

Washington businesses pushing to “modernize” the system such as allowing workers a voluntary settlement option and ensuring the system is only covering conditions that actually arise from work. Washington is only one of a handful of states that still operates without a settlement option. Labor argues that allowing workers to settle would put the workers who cannot afford good lawyers, at the risk of getting bad deals. The battle is raging in the halls in Olympia and a solution is direly needed.

Saturday March 5, 2011 word came from the Legislature that a compromise bill passed the Senate which contain business-friendly “settlement option” for injured workers. The Bill has yet to clear the House.

The voters in this state had a chance to privatize workers’ compensation last year, but that Initiative failed. Now we will have to wait and see if our legislature can cobble together an acceptable fix to this acute problem.

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