Washington state should be lowering the cost of doing business, not raising it, write these Republican members of the state Senate Labor, Commerce and Consumer Protection Committee. They oppose the state Department of Labor and Industries recommendation to increase workers' compensation tax revenues by $117 million in the next year.
BOEING and other employers in Washington are being wooed by locations with lower minimum wages, unemployment insurance costs and workers’ compensation taxes. Unfortunately, while other states lower costs of doing business, ours is rapidly moving in the opposite direction.
Monday, the Department of Labor and Industries (L&I) recommended a $117 million workers’ compensation tax increase for the upcoming year, causing deep concerns for employers, workers and legislators.
As the Republicans on the state Senate Labor, Commerce and Consumer Protection Committee, we have warned such a steep tax hike will harm employers and likely mean more layoffs.
What employer can afford a tax increase in this economy? Combined with an expected minimum-wage hike scheduled this fall, L&I’s move could drive more employers, big and small, out of Washington.
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A successful workers’ compensation system gets injured workers the right treatment at the right time so they can return to their jobs. It helps injured workers make ends meet until they get back on their feet. It should do this at fair and affordable rates for both the employers and workers, who pay workers’ compensation taxes.
Our system is failing to get workers back to work. Nearly half of injured workers never return to their jobs. In Washington the average injured worker misses 266 days of work — nearly three times the national average. Oregon workers miss an average of 70 days.
Despite declining claims, costs remain out of control. Since 1990, claims have dropped more than 50 percent, but workers’ compensation taxes are up more than 40 percent in less than 10 years. Administrative costs alone skyrocketed 28 percent in the past year. Medical payments are well above the national average and rising faster than inflation.
It’s important to remember employees pay about 25 percent of workers’ comp costs. Reforming the system will save all of us money.
As our fragile economy tries to recover, it would be irresponsible to levy a job-killing, multimillion-dollar tax increase on employers and employees without first reforming the serious flaws in the workers’ compensation system. Workers and employers need a more-flexible, less-costly system that returns employees to work sooner.
Fortunately, by modeling other states’ best practices, we can find solutions.
Here are just a few:
• Create a settlement option. Last session, Republicans introduced Senate Bill 5465. Still awaiting action by the majority party in the Senate labor committee, the measure would allow workers, employers and the state to settle and release claims for a lump sum.
• Better define “occupational disease.” We must rule out non-work-related conditions like growing older. Washington has one of the nation’s broadest occupational-disease definitions.
• Stop diverting workers’ comp funds. The Legislature and L&I often view workers’ comp trust funds as a convenient piggy bank, diverting money to unrelated programs. Before asking people to pay more, we should make sure funds are used only as intended.
• Reform lawsuit abuse. In 2003, Florida passed tort reform to limit workers’ compensation litigation costs for businesses. Employees also benefited. Returning injured workers to work sooner lets them earn more during their work years. Workers kept a greater percentage of what they were awarded for lost wages. Over five years, limits on attorneys’ fees reduced Florida’s workers’ compensation costs 28.6 percent.
Workers’ compensation taxes are already high. Unreasonable administrative expenses and a failure to return people to work in a timely manner mean out-of-control costs. Raising these costs further, without addressing the system’s inefficiencies, will impact our employers’ ability to protect much-needed jobs.
Instead of focusing solely on refilling state coffers, we should view this as an opportunity to fix the system and reduce costs without reducing benefits injured workers need most.
Sens. Janéa Holmquist, R-Moses Lake, Jim Honeyford, R-Sunnyside, and Curtis King, R-Yakima, serve on the Senate Labor, Commerce and Consumer Protection Committee.