•January 13, 2016•

By Jim Nowlan
NP Guest Columnist

Whenever talk comes up of compromises necessary to end the lamentable Illinois budget impasse, business-friendly changes in workers’ compensation law are mentioned first.

What is “workers’ comp,” as it is called; why is it important, and should we change it?

A century ago during the Progressive Era, business, workers and insurance companies came together to support laws, soon adopted by all the states, to provide that workers would be compensated on a “no fault” basis for injuries incurred on the job.

Arbitrators employed by each state would determine the severity of each injury and the amount of medical costs and lost wages to be compensated. Employees gave up the right to sue their employer as part of the bargain, and employers were required to buy insurance to cover their claims.

Business benefited by avoiding the possibility of huge jury awards in favor of injured workers. Workers gained from the likelihood of more timely compensation than from a prolonged lawsuit, and insurers wrote more business.

Work is dangerous, some tasks more so than others, so employers engaged in hazardous work such as mining pay more for their insurance than do businesses that employ white collar workers. A company that incurs numerous injury claims see its insurance costs go up, so there are incentives to make the workplace safe.

Workers’ comp (WC) insurance is a major business cost, at about $2 per $100 of workers’ wages nationally in 2014, though much less than health care costs for business, at about $12.52 per $100, according to the U.S. Bureau of Labor Statistics.     Login or Subscribe to read the rest of this story.