Tuesday, April 10, 2018

Does workers’ compensation cover the full cost of a funeral for a work-related death?


Every workers’ compensation system provides certain payments in the event of a work-related death of a worker.  The expectation that workers’ compensation insurance will cover the full cost of a funeral and burial of an injured worker, however, is not the reality in all jurisdictions.

Most commonly, the amount to cover funeral and burial expenses is a separate benefit from payments or compensation that might be available to survivors and dependents.  Where there are no survivors or dependents, the funeral or burial amount may be the only workers’ compensation payment made with respect to the work-related death.  Statutory dollar limits or policies that exclude items connected with funeral or burial costs result in many jurisdictions falling far short of coverage of the full cost of a funeral and burial. 

Statutory provisions vary widely

The exact statute wording varies by jurisdiction.  Here is a typical section from the Colorado code:

When, as a proximate result of an injury, death occurs to an injured employee, there shall be paid in one lump sum within thirty days after death a sum not to exceed seven thousand dollars for reasonable funeral and burial expenses. Said sum may be paid to the undertaker, cemetery, or any other person who has paid the funeral and burial costs, if the director so orders. If the employee leaves no dependents, compensation shall be limited to said sum and the compensation, if any, which has accrued to date of death and the medical, surgical, and hospital expenses provided in articles 40 to 47 of this title. If the deceased employee leaves dependents, said sum shall be paid in addition to all other sums of compensation provided for in this article.

Allowed expenses for burial and funeral costs may be paid directly to providers such as funeral homes and memorial societies; they are often paid very quickly; other benefits or compensation for dependents and survivors which may take longer to adjudicate and conclude.

Lump-sum payments may be intended to cover funeral or burial expenses

Some jurisdictions make lump sum payments to the estate upon the work-related death of a worker.  The specified amount may be a significant sum for dependents and survivors at a time of need. In a few cases, as in Kentucky, the lump sum may be the only amount payable because of a work-related death. Kentucky’s statute, for example, makes this statement:


If an employee’s death occurs as a result of the injury, a lump sum payment is made to the employee’s estate, from which burial expenses are to be paid. The amount of the lump sum payment changes annually.

Guidebook to Workers’ Compensation, Commonwealth of Kentucky, Department of Workers’ Claims

The lump-sum value in Kentucky increases annually with inflation.  (2017:  $82,022.93 $US). 

Lump-sum provisions for surviving spouse and dependents are more common in Canada and Australia and are typically paid in addition to funeral and burial expenses.  In some cases, lump sum payments are independent of survivor or dependent benefits.  In Quebec, if a worker dies without dependents, the father and mother (or the estate if both are dead) are entitled to a lump sum of $26,986 each ($CDN 2015).

In Australia, the lump-sum payment amount varies by state.  In New South Wales, for example, the lump sum a lump sum payment (currently $791,850 $Aus) in addition to a weekly payment per dependent child (currently  $141.80 $Aus).  The lump sum is payable to the estate if there are no financial dependents.  The funeral expense reimbursement in NSW is limited to a maximum of $15,000 $Aus and covers typical items including funeral director's professional fees, cost of the funeral service (including cremation or burial), mourning car, cemetery site, flowers, and newspaper notice.  

Components of a typical funeral and burial may not be covered

Components of a typical funeral and burial may be excluded from consideration by workers’ compensation law or policy.  WorkSafe Victoria, for example, explicitly excludes some items from coverage:

WorkSafe [Victoria] will not pay for:…
services or items not considered reasonable - WorkSafe does not generally consider the following items to be part of the reasonable costs of a burial or cremation:
·         vault or crypt
·         elaborate monument/tombstone/memorial chosen for personal or cultural reasons
·         mourning cars, and
·         catering.

Dollar limits on funeral and burial expenses are common…but vary widely

Some jurisdictions are less specific about what services will be paid for and may separate some expenses from the maximum allowed expense.  WorkSafeBC’s policy states:

The employer of the worker is required to bear the cost of transporting the body to the nearest business premises where funeral services are provided, and if burial does not take place there any additional transportation may, up to the sum set out below, be paid by the Board.
·         Funeral And Related Expenses  [January 1, 2018 – December 31, 2018]  $9,268.72
·         Transportation of Body [January 1, 2018 – December 31, 2018]  $1,464.39
No action for an amount larger than that established by the above provisions lies in respect of the funeral, burial, or cremation of the worker or cemetery charges in connection with it.
Rehabilitation Services and Claims Manual Volume II Chapter 8 Section 54.00

Although cultural, religious, social, and economic factors determine the cost of a funeral and burial, one might expect workers’ compensation systems to have similar dollar limits regarding burial and funeral expenses.  However, the funeral and burial maximum expense covered in US, Australian and Canadian workers’ compensation jurisdictions varies widely. 

Using published data from IAIABC/WCRI survey of State Workers’ Compensation Laws: 2016, AWCBC Dependency Benefits and Fatalities, SafeWork Australia publication Comparison of workers’ compensation arrangements in Australia and New Zealand (2017) and individual workers’ compensation jurisdiction websites with rates between 2014 to 2016, a quick survey illustrates this variation. 

  • In the US, the median burial benefit is specified as having a maximum of $7500 but the range is quite broad:  South Carolina has a maximum only $2500; Rhode Island pays up to $20,000 ($US).
  • In Canada, Nova Scotia has the lowest funeral benefit maximum at only $5000 while the adjacent province of New Brunswick has a maximum benefit of $16,246.  Interestingly, Ontario has a minimum funeral benefit of $2948.10 but no statutory maximum.  Reasonable costs will be reimbursed. ($Can)
  • In Australia and New Zealand, the range is a little narrower.  ComCare, the federal workers’ compensation system, is in the mid-range at $11,459.25 while New South Wales and Northern Territories are at or about $15,000 (Aus$).
  • New Zealand has a $6021 (NZ$) maximum

It is not clear in policy documents I could review why jurisdictions with low maximum amounts for funeral/burial expenses are so restrictive.  Nor is it clear why a particular value has been chosen as a maximum in states with higher maximums.  Many amounts are fixed in legislation while others are adjusted by automatic formula.  The Northwest Territories and Nunavut is to link the maximum funeral expense to 13% of the yearly maximum insurable earnings (currently $90,600 so, 13% would be $11,778 ($Can)).

Unduly restrictive burial or funeral costs can add stress to grieving survivors and family. Funeral and burial expenses exceeding an arbitrarily low limit will have to be paid from some other source, often out of the benefits family members might otherwise need for their own support. 

Costs of a “normal” funeral and burial

The United Nations agency, the International Labor Organization (ILO), provides guidance on what member states should mandate in the event of a work-related death. Convention: 

In addition [to the cash benefit to widow, widower, dependent], a funeral benefit shall be provided at a prescribed rate which shall not be less than the normal cost of a funeral

Section 2 of Article 18 of the C121 - Employment Injury Benefits Convention, 1964 [Schedule I amended in 1980] (No. 121) [Convention concerning Benefits in the Case of Employment Injury (Entry into force: 28 Jul 1967)]

[Note: Canada, the US and Australia are not signatories to this convention.]

What is the “normal cost of a funeral” ?  According to the National Funeral Directors Association website ( http://www.nfda.org/news/statistics ), the 2014 “National Median Cost of an Adult Funeral with Viewing and Burial” including vault was $8,508 (US).  This amount includes the typical things you would expect:  transfers, embalming, casket, viewing, hearse, printed memorial package, etc. 

What’s not included in the direct cost survey are some common expenses normally associated with funeral and burials in the western, predominantly Judeo-Christian tradition.  Church services (including costs for organist, choir), religious officiant (priest, rabbi, minister) for grave-side internment, reception with catering for grievers, and grave marker. Also not include are indirect costs which may include travel and accommodation for non-dependent family members and relatives.  There may be additional fees depending for items such as certified copies of the death certificate and other documentation often provided by the funeral home.

The median cost used in this analysis, therefore, understates the full cost associated with a normal funeral.  It is, by definition, a midpoint in a distribution of costs for a particular set of services and products covered by the survey. 

Half of US WC systems have dollar limits less than the median cost of a funeral and burial

Using $8,500 as the NFDA median cost reference point for normal funeral costs in 2014, I used data from the IAIABC/WCRI 2016 survey of Workers’ Compensation Laws to determine which US states failed to meet or exceeded this standard.  Twenty-seven US state workers’ compensation authorities reported maximum funeral benefits that fell below the $8,500 threshold, often by a significant amount; 18 states had maximum burial benefits of $8500 to $10,000.  Only 4 states had maximums greater than $10,000.   These later two groups exceed the ILO standard of “not less than the normal cost of a funeral.”






Kentucky is excluded from this analysis because its workers’ compensation statute does not have a stated maximum.  As noted earlier, Kentucky’s statute related to funeral expenses is KRS 342.750 (6) provides for a “death benefit” from which it is intended funeral, burial and other expenses would be paid.  The 2014 value for that benefit was $75,541.95 ($US).

Funeral and Burial costs may be the only workers’ compensation expense

In some cases, the benefit paid to offset the funeral or burial expenses may be the only compensation payable under a workers’ compensation claim.  This is commonly the case where death in the course of employment is immediate and there is no spouse or dependents.  In such cases, there will be no medical or hospital expenses and no temporary or permanent disability workers’ compensation costs.  As one jurisdiction explains:

It sometimes happens that a childless, unmarried worker is killed on the job leaving no dependents. In that case, his or her estate receives a burial allowance of up to $6,000 but nothing else.

An Overview of Workers' Compensation in Michigan [(2000: November) Bureau of Workers' Disability Compensation, Michigan Department of Consumer & Industry Services, Lansing, Michigan] 

I contacted Michigan’s Workers’ Compensation Agency regarding the limitations of their statute with the following hypothetical case:

N. is a 50-year-old land surveyor.  She is unmarried with no children or other dependents.  She has no living siblings or parents. While surveying along a river, the bank gives way.  She is observed falling into the rushing river and swept away in the torrent.  Her body is never recovered. Her executor files a workers' compensation claim but is unsure if there is anything payable.  There were no funeral or burial expenses.

Michigan authorities confirm that no workers’ compensation costs would be incurred in such a case.  Even costs associated with a “memorial service” would likely be denied as the statute provides only for, funeral and burial expenses.

Employer Impacts

The emotional and financial impacts of a staff member’s work-related death cannot be ignored.   There may be broader mental health consequences for co-workers and other staff members as well as investigation costs, operational costs to the employer.  Except for the potential costs associated with accepted claims from other workers physically and/or psychologically injured in association with the event, these costs are not covered by workers’ compensation. If there are minimal or no workers’ compensation claim costs associated with the death of a worker, employers may still experience higher premiums. 

In the Michigan example noted above, the death event may place the employer in a high-risk category that results in higher premiums.   In some jurisdictions, the average cost of all fatality claims is applied to the employer’s “claims cost, which may in turn impact experience rating (ER also called Ex Mod) that ultimately impacts premium.

WorkSafeBC’s experience rating policy evens the claim cost to employers for work-related fatal claims:

(3) ER [Experience Rating] adjustments are based solely on claims costs. The costs used are those directly associated with compensation claims. The cost used for fatal claims is the five-year moving Board-wide average rather than the actual cost of each claim.
-WorkSafeBC, Assessment Manual 1-42-1

Underwriting or direct premium costs may not be the only impact.  Many workers’ compensation systems offer rebates or safety “dividends”; a traumatic work-related death may disqualify the employer from receiving this payment.  In Ontario, for example, the employer may be disqualified from receiving its share of a “safety group” rebate or other rebates from WSIB (see WSIB Fatal Claim Premium Adjustment Document No.: 14-02-17)  

Recommendation: Flexibility and compassion

Every work-related death has unique emotional and financial impacts on families, friends, co-workers and employers.  The years of potential life lost to a work-related death are priceless; the workers’ compensation insurance consequence should never be costless.  As noted, cultural, social, and traditional factors can impact cost of an appropriate funeral and burial.  These factors may result in variation over and under the normal or average cost of a funeral and burial.  A worker’s family or estate may have recourse to other sources of reimbursement or payment for a funeral, however, in my view, workers’ compensation should be the first payer for work-related death. 

Policies on reimbursement should not be overly restrictive nor should the overall maximum cost be strictly limited to the median cost used in this analysis or dismissive of the additional service and items that may be required.  A policy guideline that allows for some discretion to exceed a policy maximum and cover the full cost of a funeral and burial in certain circumstances seems appropriate. 

The idea that a worker’s work-relate death can be costless (or near costless) from a workers’ compensation insurance perspective is concerning.  The possible inference that a worker’s life has no or little value is clearly in opposition to common sense. Many workers’ compensation systems have policies clearly recognizing that every worker’s life has value.  Demonstrating that recognition with significant compensation costs whether averaged across all fatalities, paid to the estate or provided for the full cost of a memorial, funeral and/or burial reinforces this principle.

Thankfully, the number of work-related fatalities has fallen over the years.  If arbitrarily low limits on funeral and burial expenses were related to the financial costs of higher fatality rate, then that justification no longer exists.  Every worker who passes away as a result of a work-related injury, illness or disease deserves the dignity of a funeral, memorial and proper burial.  Workers’ compensation systems should provide for that. 



Tuesday, March 13, 2018

Is there a gender bias in workers’ compensation and OH&S?


Women represent about 47% of the employed labour force in United States and Australia, 48% of the employed labour force in Canada.   One might expect the hazards in the workplace to be similar for men and women and that is true for some risks.  Women working in construction doing the same work as men likely face similar risk of injury from falling objects, falls from elevations, lacerations, as well as pinch and “caught-in” injuries.   Many women working in construction are involved as flaggers where transportation/struck-by injuries more common. Women and men working as flaggers face the same hazards from drivers ignoring "cone zone" rules.

Even if women and men face identical hazards, the risk and rate of injury may differ. Variations in exposure, task selection/role assignment and even hours of work can influence published injury rates. 

There are, of course, other variations that change the risk and injury rate profiles for both men and women.  Equitable work for men and women often means different approaches that address the realities of difference between them and the context in which they work.  One OSHA paper [Advisory Committee on Construction Safety and Health (ACCSH). 1999. Women in the Construction Workplace: Providing Equitable Safety and Health Protection. U.S. Department of Labor. Available at: https://www.osha.gov/doc/accsh/haswicformal.html ] noted differences and health impacts of:
  • Workplace culture
  • Sanitary facilities
  • Personal protective equipment and clothing
  • Ergonomics
  • Reproductive hazards
  • Health and safety training

The differential impact of these issues on the health and safety of women and men may not be fully realized or acted upon.  Inspectors may only note the presence or absences of PPE and not the appropriateness of the range of sizes and fit available for workers.  The standard of sanitary facilities may not be high on the priority list for workplace safety and health officers but, as the study points out, the quality of what’s provided can have greater impact on women’s health.  In the era of “#metoo”, there may be greater awareness of sexual harassment on the worksite, but how many worksite inspections actually address workplace culture, training and enforcement?

These are not trivial issues.  These issues result in real harm to women, harm that may not always meet the traditional threshold for a workplace injury claim.  Psychological injury, bladder infections, ergonomic injuries are often the subject of greater adjudication scrutiny and contribute to a disproportionately high rate of denied workers’ compensation claims made by women.   The common experience of women having claims denied leads to a reluctance to even report harm let alone file claims.  This compounds the harm, perpetuates the problem, and hides the magnitude of gender bias in both prevention and workers’ compensation. 

Although the labour force is almost evenly split between males and females, the pattern of work is not exactly the same.  Women tend to be over-represented in work outside the 9 to 5, Monday to Friday work paradigm—and when most regulatory inspections and access to services take place.  Despite women experiencing a disproportionately high number of injuries on weekends and statutory holidays, there is little evidence that prevention inspections and services are equally available and allocated accordingly.

Inspectorates and prevention agencies need to assess their allocation of resources in just in ways that expose gender bias.  Metrics that show an equitable allocation of resources, access and activities to sectors dominated by women would be a start.  Anecdotally, the expectation of women and men expecting to see a workplace health and safety officer on their worksite is vastly different and begs the question, why. Measurement matters.


Measurement is the first step that leads to control and eventually to improvement.   If you can't measure something, you can't understand it. If you can't understand it, you can't control it. If you can't control it, you can't improve it.
- H. James Harrington (Author, columnist, a Fellow of the British Quality Control Organization and the American Society for Quality Control).  

   
Is there a systemic bias in the system?  It would not be the first time this question has been raised nor would it be surprising to find that workers’ compensation and occupational health & safety have similar inherent bias as shown in drug studies, ergonomic tables and other medical research. 
Some might argue that the risk, as evidenced by injury and claim rates, is higher for men.  The roughly 60/40 split in male/female time-loss injuries should support a similar distribution in prevention resources and efforts; fair argument, but I have seen no agency that reports efforts or activities on this metric.  Nor have I seen any reports of workplace inspectorates being evaluated through a gender lens. 

All workers deserve and receive equal protection through prevention and inspection services.   Saying our current workers’ compensation, prevention, and enforcement systems do that does not necessarily make it so.  It is time to take a hard look at what we are doing and not doing to achieve truly equal OH&S and workers’ compensation protection.

 Sometimes equality means treating people the same, despite their differences, and sometimes it means treating them as equals by accommodating their differences.- Judge Rosalie Abella, Report of the Commission on Equality in Employment, Canada

Thursday, February 15, 2018

How do you report unsafe work?


Suppose you are in a hotel and you see the window washer outside your room being blown around and unable to secure the platform.  Should you say something?  Would you?  And to whom? 

What if you stop for lunch on the weekend and the roofers on the steep slop of the mall across the street are three stories up and not tied off (and have no other fall restraint system in place)?    

What if your child comes home from his first week on a summer job concerned about the lack of personal protective equipment for the pesticides they are having to use but is fearful of losing the work by complaining?   

If you see an unsafe work situation at work, you have an obligation to say something.  Employers have a duty to keep workers and the workplace safe for workers and “other persons” in the workplace.  If you are a worker, you also have a right to refuse unsafe work.  But what if you are not a worker? What if the unsafe work or condition is something you observe but are fearful of reprisals if you intervene on your own? 

Most people would agree that you have a moral obligation to say something to prevent harm.  Most occupational safety and health and workers’ compensation authorities have information on their websites advising who to call or contact in the case of immanent danger to life or health.  For example, WorkSafeBC’s Prevention Information Line (see webpage https://www.worksafebc.com/en/contact-us/departments-and-services/health-safety-prevention ), states the following: 

Prevention Information LineContact us to:

  • Report a serious incident or major chemical release.
  • Report unsafe work conditions (see also Refusing unsafe work).
  • Report anonymously, in almost any language.
  • Request a worksite inspection consultation.
  • Get information about workplace health and safety.
  • Get information about the Occupational Health and Safety Regulation.
Phone: 604.276.3100 (Lower Mainland)
Toll-free: 1.888.621.7233 (1.888.621.SAFE) (Canada) Hours of operation: Monday to Friday, 8:05 a.m. to 4:30 p.m. Fatalities and serious injuries: Call the numbers above, 24 hours a day, 7 days a week.

Note how this organization removes the barrier of language and allows anonymous reporting.  There are, however, other barriers.  There is no facility to report by email or internet form, no facility to submit files, documents or photos, and, short of emergencies, access time is limited to normal daytime hours Monday to Friday.  Ideally, any person—worker or member of the general public—should  be able to report unsafe work without having to judge if it is an “immanent” danger.

In Washington State, the Department of Labor and Industries advises you fill out the following form: 

“Alleged Safety Or Health Hazards (DOSH Complaint Form)” Document number  F418-052-000 http://www.lni.wa.gov/Forms/wordforms/F418-052-000.doc

The website continues with instructions to “Mail, fax, or hand deliver a completed complaint form to any L&I office.”  It also advises “Your name & contact information (you may request anonymity or confidentiality for safety complaints).”  

This approach has some barriers.  First, not all of us have the time or inclination to download a document with about 20 fields,   (try and do that on your smartphone and I bet you will abandon the effort) . The form cannot be submitted as an email.  There is no provision for the form to be completed anonymously (although you can request anonymity and confidentiality).

Contrast this approach with taken by Alberta Labour.  You can “complain” about unsafe work using an online form.  Their website  (https://work.alberta.ca/occupational-health-safety/file-a-complaint.html )  states “Anyone can report unsafe conditions at a workplace; you don’t have to be employed by a business to do so.”  The web form has only a few mandatory fields and you can remain anonymous, although anonymity, of course, means officials can’t contact you for follow-up details or additional information. 

The Workers’ Safety and Compensation Commission (WSCC of the Northwest Territories and Nunavut) has a similar online form but has the added “search and view” feature.  The screen shot shows the detail available using this function.  It allows anyone to follow up on what is being reported and what happened as a result of a report.  The report is sortable on multiple fields. 

I particularly like this level of transparency.  While individual firms and persons are protected, it raises the profile of health and safety.  It also increases the perception that unsafe work will be detected and reported.  For some organizations this increased risk may act as a deterrent to unsafe or unhealthy workplaces. I’m not suggesting OH&S inspection should be crowd sourced, but allowing and encouraging public participation in making workplaces safe and healthy has the added advantage of raising societal awareness on this important issue.  

Some systems say the don’t respond to anonymous sources.  Note this line from the Yukon Workers’ Compensation Board’s website (https://wcb.yk.ca/QuestionResults/OHS/Reporting/Q0228.aspx ):
When you report a dangerous workplace, you will be required to give your name and contact information for follow-up. Our safety officers do not respond to anonymous complaints.
This barrier may discourage anyone from “getting involved” and the rationale for this exclusion is not explained.

One of the best online forms I’ve seen for reporting unsafe work comes from the Australian Capital Territory.  The Access Canberra webpage (https://www.accesscanberra.act.gov.au/app/forms/worksafe_report )  has a simple form complete with the ability to upload documents or files and includes an interactive map to pinpoint the closest physical location of the concern.   Think about the investigative value of uploading photos that are geotagged and timestamps.  It also has a tick box to “submit anonymously”.   The mobile version of this page is just as good and works well on a smartphone.

The purpose of reporting an unsafe workplace is prevention.  Barriers to reporting defeat this purpose.  Reporting unsafe workplaces and situations should be simple, quick and  as barrier free as possible.  My checklist for a good “report unsafe work” site includes:
  • Accessible (multi-lingual if possible)
  • Available 24 hours a day, 7 days per week
  • Open to reports from the general public
  • Allows anonymous submissions
  • Permits attachments (documents, photos, etc.)
  • Simple and quick to submit from a smartphone
  • Provides a tracking reference to the submitter
  • Provides a transparent process for showing recent submissions and actions

Its time workers’ compensation and Occupational Health and Safety  organizations begin to leverage the power of instant communications and encourages greater public participation in making workplaces as safe and healthy as possible. 

Wednesday, January 3, 2018

What accounts for the close similarity between some workers’ compensation systems?


Over the last several years, I have been looking early workers’ compensation systems in North America.  The striking surge in workers’ compensation legislation among US states and Canadian provinces in the early decades of the twentieth century is evidence of a societal change that transcended party politics and established social convention. 

There is some debate as to which state or province had the first true workers’ compensation system.  Some cite Wisconsin as the first US “constitutional” workers’ compensation system to come into force.  In Canada, many point to Ontario while others, including Arthur Larson, cite British Columbia’s 1903 legislation as the first on this continent.

The first true compensation act adopted not only in Canada, but in North America and indeed the entire New World, was enacted in British Columbia on June 21, 1902 [Effective May 1, 1903]”Arthur Larson “Workers’ Compensation Reform – The Canadian Example”, Meredith Memorial  Lecture, 1987.

One confusion over which jurisdiction ranks first to have a workers’ compensation system depends on what you consider the starting date of the legislation.  You will note there is usually a gap between the passage of legislation and the effective date on which the first claim might be accepted.  This period is necessary to give life to the legislation.  Administrative bodies have to be created, administrators hired, office acquired, employers identified/enrolled (classified, assessed premiums, etc.), forms designed, systems established, and so on. 

Legislators then as now could “borrow” concepts and even copy wording from other jurisdictions.  You can see this when you look at early versions of legislation.  The identical wording of some sections of legislation may be found in states or provinces on opposite sides of the continent.  It stands to reason that forms to report injuries and start claims will ask similar questions; after all, the “who, what, where, when” questions are necessary regardless of the underlying legislation. What struck me as I looked back at the beginnings of workers’ compensation was the striking similarity in administrative structures and even forms between independent jurisdictions.  I still have no explicit answer that concretely  accounts for the similarities (including features such as design, questions asked, form numbers and colouring)  between “report of injury”  forms used in widely separated jurisdictions.  The obvious answer is that the administrative structures and processes were copied, however, there is no obvious answer as to how exactly that worked in most jurisdictions. 

Part of the answer may arise from the work of people like Frank Webster Hinsdale.  Hinsdale was born in New York in 1862 and died in Vancouver in 1932 but moved around a lot between those years.  I found clippings from Washington state describing him as an entrepreneur, living in Washington and buying coal properties in British Columbia in 1909. In 1910 he was with the Olympic National Bank and then is reported as working for the Washington State Industrial Insurance Commission.  That state was just setting up its workers’ compensation system and it appears Hinsdale traveled much of the state, explaining to business and others how the system would work.  In 1911, he assumed the position of Chief Auditor for the Industrial Insurance Commission. 

The next record I could find of Hinsdale’s work was his testimony to the Ontario Royal Commission on Workmen’s Compensation in January 1913.   The minutes of his evidence before Sir William Meredith provide insight into the thinking behind workers’ compensation in Washington State.  Meredith was interested not just in the words that framed the legislation, but the processes and how things actually worked. Hinsdale provided his insight and the rationale behind certain practices. 

At one point in the testimony, Hinsdale is asked to comment on a common criticism of workers’ compensation, the idea that insurance pooled risk removes employer incentives towards safety.  Hinsdale responded: 

I cannot imagine why an employer who finds that his rate is increasing, or who is confronted with a demand for a contribution to the fund would not say to himself, ‘what causes all these accidents?’ I cannot imagine why he should not immediately want to install every safety device possible, and after he has installed them in his own place, I should think that he would require them to be installed in every other place.Meredith, Minutes of Evidence, Vol. 2: 286

By the end of 1913, Hinsdale was hired away from Washington to head up Oregon State’s implementation of workers’ compensation.  Skip ahead to 1916, and Hinsdale appears in British Columbia.  That province passed its new Workmen’s Compensation Act on May 26 1916 with an implementation date of January 1, 1917.  A newspaper report from July 2016 picks up the story:

WORKMEN S COMPENSATION EXPERT MR. FRANK W. HINSDALE, who, as Premier Bowser announced at Phoenix, has been engaged by the government to inaugurate the system under the new Workmen's Compensation Act, is said to be one of the greatest authorities on the continent on the administration of such legislation. He inaugurated the Washington administrative system as chief auditor and then did the same for Oregon.  He later inaugurated [the Ontario] system and then went to Halifax, where the Nova Scotia government has just brought a new act into force.
July 25, 1916 Vancouver Daily World from Vancouver, · Page 8

Hinsdale got right to work and the newspaper reports of the day quote him outlining his work:

...[O]n the day when the 'Workmen's Compensation Act' comes into force the whole machinery for the administration of the act must be moving……The mere enumeration of the names and addresses of these employers, with notes showing the nature and proper classification of their industries, or of the branch or departments of their business which would be within the scope of the act, is a work of considerable magnitude.
- Frank W. Hinsdale  (as quoted in The  Daily Colonist, Victoria, BC Sept 3, 1916 p. 3)

That term, “the machinery for the administration” of the workers’ compensation system reflects the thinking of the industrial age and the practicality of translating legislative action into workable processes.   I have no direct evidence that Hinsdale personally accounts for the many similarities one finds between across the jurisdictions he touched, but it seems likely that he and others like him account for many of the similarities we find that were there in the beginning and persist to the present day.             

Hinsdale stayed on in BC as Secretary to the Board.  The last reference I could find to his work was a note in the 1931 Annual Report which reports that notes “the late Actuary, Frank W. Hinsdale, F.C.A.S.” certified the financial actuarial evaluations to December 31, 1931. 

It is often said that workers’ compensation jurisdictions can learn from each other.  While true in principle and easy to say, no workers’ compensation system can learn anything from any other system without people like Frank W. Hinsdale facilitating that learning, sharing knowledge and passing on experiences.

Thanks, Frank. 


[Access to the documents cited above was provided by the Librarian, Secretary of State, Washington and the Librarian and library staff at WorkSafeBC, which also funded some some research into its early history].

[Note:  I would welcome more information on the setting up of workers' compensation systems after legislation and before implementation as well as copies of the first forms used in your jurisdiction]. 

Tuesday, May 23, 2017

Who is NOT covered by Workers' Compensation?

For the last few months I have been researching the public policy criteria for determining who is  covered by workers’ compensation and who is not.  From a public policy perspective, an accurate statement of "percentage of the employed labour force covered by workers' compensation" is an important foundational statistic to any public policy evaluation or reform.  Some data do exist but, so far, it appears:

  • Stated workers’ compensation coverage rates are likely over-estimated
  • Few jurisdictions provide actual counts (or direct, well documented estimates) of workers mandatorily covered
  • No jurisdiction publishes counts of those who voluntarily “opt in” to coverage
  • No jurisdiction publishes counts of persons (as opposed to the number of waivers issued) exempted by waivers, elections, or opt-out provisions
  • Public policy justifications for exclusions or exemptions are almost non-existent
  • Where justifications are offered, they primarily rest on the historical evolution of workers' compensation coverage



While there are some published coverage estimates based on workers’ compensation data regarding the numbers of workers covered, most do not explain their methodology.  Many rely on external data sources (unemployment insurance data, employment surveys).  

Even the wording surrounding coverage in workers’ compensation is not consistent.  In some cases, certain industries, occupations, worker categories, or employers are “exempted”, others “excluded”, and still others may “seek a waiver” from the otherwise universal or sectoral coverage rules.  Often, there are rules that allow some exempted or excluded categories to apply for coverage on an optional or “elective” basis.  Rarely, however, are detailed estimates of number or proportions of the work force within and beyond coverage provided at the state or provincial level.    

The inconsistencies in workers’ compensation coverage rules have real-life implications for those in the scope of coverage and outside it.  The lack of consistency in coverage rules may lead to erroneous assumptions that can leave workers and their families destitute and employers without the protection of the workers’ compensation exclusive remedy.  Worse yet, the lack of workers’ compensation coverage externalizes health care costs of work-related injuries to other medical plans (private and public) thus raising costs for the funders (including taxpayers as well as individual and group disability insurance plans). 

Workers’ compensation premiums are often justified as a means of confining the financial costs of work-related injury, illness and disease to the industry that gives rise to them; if workers’ compensation costs rise, there is an incentive to greater investment in safety and prevention.  For workers and employers outside the workers’ compensation scope of coverage, those incentives may be less clear and far less direct.  More importantly, those financial costs for wage replacement and medical aid (diagnostics, treatment, rehabilitation) are externalized to others.  If someone else bears the financial cost of work-related injury, why bother invest in prevention?

I’ve asked several government policy branches responsible for health and workers’ compensation to provide their public policy rationale for limiting the scope of workers’ compensation coverage.  The few formal responses I have received so far are like this one (I won’t name the jurisdiction):

“Many of the [excluded] industries listed…  were deemed ‘low risk’ while others actively lobbied to be exempt from coverage.”

“Low risk” is not defined and “active lobbying” implies that those with good lobbyists are the only ones likely to be excluded. 

In my research so far, I have examined about 70 jurisdictions in Canada, the U.S. and Australia.  The public policy approaches for determining who is and who is not in the scope of coverage fall into the following general categories of workers’ compensation coverage:


  • Optional inclusion (Texas, for example)
There are three public policy approaches to those excluded from coverage:
  • Hard exclusion:  NO option to come under coverage for any reason
  • Soft exclusion (Voluntary inclusion):   Option for exempted or excluded to “opt in” or enter voluntarily into workers’ compensation coverage
  • Waiver exclusion:  Ability to “opt out” of coverage if certain conditions are met
The following list provides some of the occupations and industries that may be excluded from workers’ compensation coverage (NOTE: Many of those occupations/industries in this list are in fact mandatorily covered in some or most jurisdictions).  The list is not comprehensive nor is it universal.  The jurisdictions mentioned are illustrative only; others may or may not have similar (or more or less restrictive) provisions for a given occupation or industry.  This listing is provided here to illustrate the range of exclusions and the variability in the criteria among various jurisdictions:

Agricultural / farm workers /harvest help/Gardeners – Exempt if 5 or fewer in Florida, if family farm and less than  $8k payroll in Minnesota

Babysitters and Child Care -  Child care before or after school of less than 15 hours per week is optional in British Columbia but mandatory if more than 15 hours per week.       

Cab / vehicle for hire drivers – Independent taxi drivers exempt in Massachusetts. Taxicab drivers whose compensation is by contractual arrangement are exempt in Alaska

Casual employees  - Exempt if less than 26 hours weekly in Connecticut,  if less than 20 consecutive days in Kentucky

Cleaning persons/ Private household workers-  Household or domestic employees whose typical duties include house cleaning and yard work are exempt in Montana. Exempt if less than 20 hrs/week and 6 less than 6 weeks in any 13 week period in South Dakota.

Commission-paid salespersons—This is often listed as a separate category from real estate and insurance commissioned sales but criteria vary.                 

Corporate Officers/Exec Officers / Directors /Major Shareholders – Exemption formulas vary widely.  Elective for up to 10 shareholders with 10% or more of shares in Michigan, 5% ownership in Pennsylvania, 25% share ownership in Nebraska           

Cosmetologists, Barbers- exempt in Montana

Domestic servants – Exemptions from coverage if less than 52 hours in  90 days in California, under 240 hours per quarter in DC, if less than $160 by 1 employer in any 3-month period in Ohio

Entertainers – Musicians exempt pursuant to a service contract in Louisiana, Entertainers in Nevada are exempt.       

Family Farm corporations/ Family enterprises—often listed as optional or elective but coverage may be required for farm hands if a specified number of employees or payroll value is exceeded   

Financial Institutions (Banks)- Banking is exempt from coverage in Manitoba, Ontario, Alberta            

Illegal enterprises or occupations—This is not often specified but may turn on the definition of “illegal”.  Specifically excluded in South Dakota

Independent Contractors-  Often excluded but specific rules may apply for construction; special certification may be requires for exemption as in Montana 

"Less than" exemptions  - Exempt for firms with less than a stated number of employees; 3 in Michigan, 4 in South Carolina, 5 in Missouri. [ NOTE:  Special rules may apply for construction firms]

Maritime workers- Exempt in New Jersey        

Municipal employees – Exempt for firefighters and police cities <500k illinois="" in="" span="">

Newspaper/publication vendors/ distributors—This is a controversial area particularly in Kentucky where a recent law requiring mandatory coverage was overturned             

Non-profit, religious, charitable organizations – This is a common category but there are specific criteria in most jurisdictions     

Outworkers - Exempt if less than 26 hours weekly in  Connecticut.

Owner operators – Truck driver owner operators are exempt in South Carolina.  Exempt in South Dakota if certified as Independent Operators by the Department of Labor.   

Professional sport players / athletes – Exempt in Florida, hockey teams exempt in Rhode Island, Professional sports competitors or athletes are exempt in British Columbia (note, however, managers , coaches, administrators are mandatorily covered).

Real estate agents/licensees/ brokers (commission) and Insurance Agents- licensed- commonly exempted from coverage. 

Sawmill or logging operators - Exempt if  >10 employees who operate less than 60 days over a 6 month period in North Carolina

Self-employed/ Independent Contractor - Very common exclusion but often with optional or voluntary inclusions offered.

Sole proprietorship or partnership (Sole trader in Australia)  - Exempt in most places but in Tennessee, in construction, sole proprietors and partners are required to cover themselves or be listed on the State Exemption Registry

State / provincial employees    - Voluntary for state and political subdivisions in Tennessee, exempt for elected or appointed officials in South Carolina

Teachers – Most teachers in Alberta and Saskatchewan are exempt.    

Volunteer first responders, law enforcement, patrol members or rescue workers  -specifically covered in Minnesota but certain groups like ski patrol persons exempt in North Carolina. 

There are also groups of individuals that may be excluded from some or all coverage under workers’ compensation.  Undocumented workers have been denied coverage for vocational rehabilitation, for example, because of their illegal immigration status  (Ortiz v. Cement Prod., Inc., 708 N.W.2d 610 (Neb. 2005)).  Workers in concurrent employment may have limited coverage (see http://workerscompperspectives.blogspot.ca/2015/06/will-workers-compensation-cover-income.html and "Moonlighters Wanted", Perspectives Magazine, IAIABC, November 2016 ).

Beyond the problems for workers and employers associated with the lack of coverage for certain industries and occupations, the absence of concise, comparative numeric data leaves policy makers to make important decisions on shaky assumptions.  Finding an accurate answer to the question "What percentage of the employed labour force covered by workers' compensation?"  should not depend entirely on indirect calculations.  "Employment" and "employed labour force" are frequently sampled and reported, so choosing a recognized denominator should be straightforward.  In states like New Mexico or Oregon with direct worker premiums or per capita payroll charges for workers' compensation, calculating the numerator should be trivial.  Unfortunately most jurisdictions only collect payroll not employment data so no direct numerator data is available to them.  

In the interests of good public policy and transparency, jurisdictional reporting of the percentage of the employed labour force covered and not covered by workers' compensation should be improved and standardized.  At a minimum, each jurisdiction should be report the number and percentage of employed labour force covered, the number of firms and associated workers covered by "opt in" or voluntary coverage provisions, and the number of firms and associated workers exempted or excluded by waiver or other application process.  

Saturday, March 4, 2017

Are Waiting Periods for TTD compensation universal in workers’ compensation?


Despite having addressed waiting and retroactive periods before, I continue to receive questions about the law and policy surrounding them.  The questions usually contain assumptions that waiting and retroactive periods are universal features of workers' compensation systems and their design is uniform.  Neither assumption is true.  Understanding the variation in waiting and retroactive periods is critical to interjurisdictional comparison, policy analysis and financial risk planning for employers and workers. It is also essential in any comparative exercise on the costs and benefits of workers' compensation systems.  

Waiting periods are not a universal feature of workers’ compensation for temporary total disability (TTD).  While common in US states, waiting periods for TTD compensation are absent from most Canadian workers’ comp and  Australian “WorkCover” jurisdictions.   Where waiting periods are part of the workers’ compensation legislation, they are far from uniform in design. 

A waiting period for TTD workers’ compensation is a specified time frame following a work-related injury for which TTD compensation is not payable.  A few jurisdictions provide exceptions to the waiting period rule in the case of hospitalization (California, Idaho for example) or for certain professions (firefighters in Maine and New Brunswick). 

Closely aligned with waiting periods are retroactive periods.  If there is a waiting period, legislation usually contains a retroactive provision allowing for TTD compensation to be extended to the waiting period if the duration of disability extends beyond a specified period (7 days in Delaware, 6 weeks in Louisiana, for example) .  Some jurisdictions (Rhode Island and Hawaii, for example) have no retroactive period regardless of the duration of TTD. Where there is no retroactive period or where the duration of disability is less than the retroactive period, the injured worker receives no TTD compensation to offset the lost wages.

An uncompensated waiting period is a worker-paid “deductible”.  From the perspective of the worker, the full value of earnings lost during the waiting period represents a financial cost to the worker in addition to the human cost associated with work-related injury.  A waiting period that is waived or paid retroactively  reduces the financial burden of lost earnings but does not make the workers “whole” with respect to lost earnings.  Earning replacement rates and maximum insurable earnings or maximum benefit payments still apply and virtually guarantee that a portion of lost earnings are never recovered through workers’ compensation insurance. 

There is no universal standard for what constitutes an equitable waiting period.  The 1972 report of the National Commission on State Workmen’s Compensation Laws headed by John F Burton, Jr., noted the pressures for reducing and maintaining waiting periods:

The advantage of reducing both the waiting and the qualifying period [for retroactive benefits] is that workers will have a higher proportion of their lost remuneration replaced by benefits. At the same time, the cost of the program increases, both in benefits paid and in administrative expenses. Proponents of the waiting period argue also that a waiting period is necessary to discourage malingering. (Chapter 3 page 59)

The National Commission’s mandate required an evaluation of various aspects of permanent and temporary compensation under state workers’ compensation laws with respect to adequacy and equity.  Its recommendation regarding waiting and retroactive periods provides guidance to policy makers in the US and beyond.  The National Commission summarized its recommendation this way: 

We recommend that the waiting period for benefits be no more than three days and that a period of no more than 14 days be required to qualify for retroactive benefits for days lost.(Ibid.)
The National Commission’s recommendation defines a reasonable “minimum standard”  or threshold  against which policy makers and stakeholders may examine workers’ compensation waiting and retroactive periods.  Using this “no more than” standard, each workers’ compensation jurisdiction may be assigned to one of  three distinct categories of compliance with National Commission’s  recommendation:   Exceeds, Meets, and Fails to meet the minimum recommended by the National Commission.

In February 2017, I retrieved statutes and/or policy documents regarding waiting and retroactive periods for all North American jurisdictions.  I then categorized each according to its compliance with  the National Commission recommendation. [As an aside, most statutes contain no reference to a “waiting period”.  The provisions that give rise to waiting periods are often framed as prohibitions against payment for losses in the initial days following injury or prescribed timeframes for the “commencement” of temporary total disability compensation payments.]   The preliminary results of my analysis are as follows:

  • Exceeds Minimum recommendation:
    • No waiting period or
    • Waiting period of three days and/or retroactive period of less than 14 days or
    • Waiting period less than three days and retroactive period of 14 days or less
      • Wyoming, Wisconsin, West Virginia, Minnesota, Vermont, Connecticut, Delaware, British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, Newfoundland & Labrador, Northwest Territories, Nunavut, Yukon

  • Meets Minimum: 
    • Waiting period of 3 days and retroactive period of 14 days
      • Washington, Oregon, Utah, Colorado, Iowa, Montana, Illinois, Kentucky, District of Columbia, Maryland,  New Hampshire

  • Fails to meet recommendation: 
    • Waiting period of more than 3 days or
    • Waiting period of any length and no retroactive period or
    • Waiting period of any length and retroactive period of greater than 14 days
      • California, Nevada, Idaho, Montana, Arizona, New Mexico, North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Arkansas, Texas,  Louisiana, Mississippi, Alabama, Georgia, Florida, Tennessee, North Carolina, South Carolina, Virginia, Indiana, Ohio, Pennsylvania, Indiana, Ohio, Michigan, New Jersey, New York, Rhode Island, Massachusetts, Maine, New Brunswick, Nova Scotia

More than half of the North American workers’ compensation systems examined in this analysis fail to meet the minimum waiting period and retroactive period recommendation of the National Commission. 


This wide disparity across systems creates inequalities in the financial burden for workers.  It also complicates comparisons of employer costs for workers’ compensation.   Rate comparisons rarely take into account the financial impact of the variation due to system features such as waiting and retroactive periods.  Clearly, the value provided by  workers’ compensation coverage  with no waiting periods (or a short waiting and retroactive periods) should be taken into account when comparing rates and costs to jurisdictions with lengthy waiting periods (and particularly if they  have lengthy or absent retroactive periods).   That said, I can find no published figures or estimates of the uncompensated wage loss due to waiting periods in any state with a waiting period.  There are estimates of the value of “employer deductibles” but worker deductibles in either dollar amounts or uncompensated time (days or weeks) are not reported.

The laws and policies around the commencement of TTD compensation impact every workers' compensation time-loss claim.  More than any other comparative feature, the policies regarding waiting periods and retroactive periods influence the balance of who bears the cost of the most common workplace injuries.  Workers bear the physical and financial costs of those injuries; the portion uncompensated by workers' compensation systems can vary widely with devastating consequences on families and the potential externalization of costs to other insurers, workers, and the community at large.  These externalizations obscure the full cost of work-related injuries--and amount to a subsidy to the cost of production that removes or dilutes incentives toward prevention of injury and disability.  

Where waiting periods have been eliminated, the uncompensated portion of lost earnings is reduced and may be inferred by the reported value of compensation for TTD paid.  Where waiting periods exist, the uncompensated portion of lost earnings will be significantly higher than for otherwise similar injuries and system features. Quantifying the impact may influence safety and outcomes for millions of workers.