Tuesday, May 25, 2010

To include or exclude Professional Sports Competitors from Workers' Compensation Coverage

Who should be covered by workers’ compensation?  In the beginning, coverage was limited to primarily industrial workers but most systems have expanded who is included within the scope of coverage.  In some cases, inclusions are accomplished by specifically identifying the industries (or occupations) to be covered in legislation.  In others, as in British Columbia, the legislation simply defines a principle (inclusion) and the specifics of any exemptions (exclusions) are defined by policy decision. 

Of jurisdictions with universal coverage, the rationale for inclusion is pretty straight forward.  From a prevention perspective, inclusion of all occupations provides an opportunity to strengthen the barriers, safeguards and defenses against personal injury and disease related to earning a living.  By engineering, substitution and administrative controls, the risks that would otherwise harm the worker can be minimized if not entirely eliminated... and the cost of workers' compensation premiums may provide an incentive to invest in these protections (or an added penalty for failing to).

Further, inclusion means all workers have equivalent protections. From a workers’ compensation perspective, insurance for (hopefully) rare events is provided and crystallizes the likely risk of a rare large financial claim or suit to the employer;  the premium and experience rating for a particular employer with workers in and about an industry serves as an added and (more or less) constant pressure to invest in prevention.  A further rationale is that mandatory inclusion prevents the costs of injury (and necessary healthcare) from being externalized to the public purse.

For jurisdictions with exclusions from universal coverage, the rationale may be more complex.  One rationale may be that the risks are very small and the costs of any actual injury or disease arising from the work very low so the benefits of insurance are negligible.  Other jurisdictions suggest that industries with ‘equivalent’ coverage may be exempted from the provision.  Sometimes, exclusion from some aspects of the workers’ compensation plan can be achieved by ‘carve outs’  and to a certain extent, self insurance with self administration, although this avenue is usually allowed only if the firm is large enough, financially stable enough, and ‘safe’ enough in the eyes of the jurisdictional regulator.  It may be necessary to include all firms under prevention standards but the workers’ compensation coverage by this logic would be optional.  On one hand, this should increase the firms motivation to protect workers since they will bear the costs of a suite or suitable settlement.  Unfortunately, this does not protect the taxpayer (in Canada at least) from the potential costs associated with health care and those who may not receive a speedy settlement (or never get the chance).   Exempting an industry or occupation, therefore, should intentionally consider these consequences. 

Professional sports competitors in hockey, football, winter sports like skiing are obviously poor candidates for inclusion.  The inherent risks and latent defects in the safeguards, barriers and defenses that would otherwise protect them from harm are numerous.  It is hard to think of regulating maximal exertion on razor-sharp blades while carrying long sticks  and making body checks safe without taking these essential elements out of professional hockey.  And on the insurance front,  who would you pool the risk of mixed martial arts competitors with?  In these sports, the economic model of what you can get ‘workers’ to do, is really an economic expected value one.  The pay and contracted benefits are going to have to convince the sports competitor (and his agent) that the residual risks of competing are being properly anticipated and compensated while the ownership (and those setting the rules) are going to have to make assurances sound enough to likely fend off potential suits.

Is there a case for their inclusion of sports competitors? Aside from the inherent externalization of necessary health care  costs to the public purse (or  a violation of the Canada Health Act principles if the sports team ownership pays for those services) and the principle of universality on its own,  I don’t think so.  That said, I don’t see any rationale for excluding coverage for the team coach, trainers, managers and other staff.  Their work and risks are not dissimilar from recreation facility staff, fitness instructors and equipment managers in many other sectors (schools, universities, private gyms, community recreation facilities). 

 I would be interested in your views.

No comments: