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Studying Workers’ Compensation Subscription: An Opportunity to Respect Workers

Editor’s note: The following was written by Texas House of Representatives member Armando Walle exclusively for Construction Citizen.

Texas House Speaker Joe Straus recently directed Texas House committees to study important issues in advance of the next legislative session in 2015.  I am particularly pleased that Speaker Straus gave the House Committee on Business and Industry the assignment of “[Studying] the voluntary nature of workers' compensation in Texas and how it meets the needs of employers and employees.”

Texas is currently the only state in the nation that does not require workers' compensation coverage for private employers, including construction companies.  In fact, since 1913, Texas employers have been allowed to opt out of workers’ compensation coverage.  Civil legal action is frequently the only path to redress for an injured employee against their potentially negligent non-subscribing employer.

Unfortunately, even when a civil lawsuit is litigated in favor of a plaintiff employee, the practical benefits of the favorable judgment can often be low compared to a similar claim going through the workers’ comp system.  To illustrate, when a construction worker severely injures his back from a work-related fall working for a non-subscriber, he will probably at least get the minimal care provided by an emergency room (often resulting in uncompensated care costs being passed to the local taxpayer).  However, there will be no mechanism by which he can access rehabilitative services that would have been covered by some sort of workers’ comp or other insurance to help him get healthy and return to work.  Instead, if he can afford a lawyer, he must often wait months or years for a final judgment, during which time he sits unemployed or underemployed with an unaddressed injury preventing a timely return to work.

This issue is particularly important to me as many of my friends, family, and constituents work in the construction industry.  Both the residential and non-residential sectors of the construction industry are experiencing robust activity, especially in my hometown of Houston.  While workers’ compensation reforms from 2005 have made coverage more affordable and reduced the potential for fraud, the ever-present trend toward building everything faster and cheaper puts more pressure on contractors to cut costs.  Consequently, many contractors end up cutting corners in compliance with worker safety guidelines and omitting any form of insurance coverage for their employees.

Over the past few sessions, I introduced legislation that would at least require construction contractors and their subcontractors to provide workers' compensation coverage for their employees.  Ultimately the legislation was intended to increase worker safety, while ensuring access to health care for injured employees, reducing the costs to the taxpayer for uncompensated medical care, and returning rehabilitated workers back to work.

This legislation ultimately did not pass due to fears that this proposed law would be a first step to eventually requiring all employers to carry workers’ compensation coverage.  My bill very clearly focused only on the construction industry, not because I meant to vilify contractors, but due to the reality that construction is just a more dangerous job than most other occupations.  In fact, in Texas, workplace fatalities occur in construction at 4.5 times the rate of all other lines of work.

Currently, responsible contractors subscribed to workers’ compensation are often underbid by non-subscribing competitors bargaining the health and safety of their employees away to gain a competitive advantage.  Requiring all contractors to carry workers’ compensation would get all contractors bidding on an even playing field.

There is a growing trend of larger non-subscribing employers providing their employees with a system of self-insured coverage in lieu of workers’ compensation.  Some of these self-insurance plans drawn up by employers may best be described as a “diet” version of workers’ compensation, especially with the inclusion of strict damage caps and restrictive arbitration clauses.  However, some semblance of coverage is much better than the zero coverage currently permitted here in Texas.  Ultimately, folks hurt on the job must have some assurance from their employer that workplace injuries will be treated in a timely manner to make sure the injured employee can get healthy and return to work.

As legislators, we have a significant opportunity to investigate if the existing mix of subscribers and non-subscribers to the workers’ compensation system adequately serve their employees.  In studying this issue, it is clearly worth exploring whether the state has a role in providing oversight of the key features of the current voluntary system, like the dispute resolution process and benefits available from employers who do not subscribe to workers’ compensation.  Additionally, to address the overall issue of safety of employees, we must also look into whether workplace safety is enhanced or diminished in workplaces that are not covered by workers’ compensation, and if cost effective measures are available to employers to improve safety performance.

It is my hope that our work in the committee will bring about potential solutions, legislative or otherwise, to fixing these ongoing issues of worker safety and health.  It may ultimately be shown that additional data collection is necessary to consider these issues further, which may also require regulatory changes.  Either way, I encourage you all in the construction industry to stay updated, reach out to your elected officials, and even provide prospective at the upcoming committee hearing on the topic in the next few months.  My door is always open to you in working toward a reasonable, long-term solution.

Representative. Armando Walle is serving his third term in the Texas House of Representatives representing House District 140, which includes northern portions of unincorporated Harris County and the City of Houston.


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