A member of the federal government has spoken out against what he calls the “disturbing trend” of allowing employers to opt out of state-regulated workers’ compensation.
“What opt-out programs really are all about is enabling employers to reduce benefits,” US Department of Labor Secretary Thomas Perez said during a recent interview with National Public Radio.
“[Opt-out programs] create really a pathway to poverty for people who get injured on the job.”
Perez vowed that his agency will use its “bully pulpit” to stop the trends, emphasizing that it leaves workers without medical care and wage replacement payments if they are injured on the job.
His comments come as an increasing number of states consider legislation that would allow businesses to design their own workers’ compensation programs rather than purchase insurance in the government-regulated marketplace. While no proposals have been adopted thus far, Perez has been leading a Labor Department investigation of opt-out alternatives that he says are “undermining the basic bargain” for American workers.
The probe focuses on the opt-out option in practice in Texas and Oklahoma that is utilized by thousands of employers. While proponents say the option has saved businesses millions of dollars since inception, the plans provide lower and fewer payments than traditional workers’ compensation insurance plans.
Opt out plans in both states are also said to make it more difficult for workers to qualify for benefits and to choose their own healthcare providers.
All of that means more financial burden on the worker, Perez said.
“If you work in a full-time job, you ought to be able to put food on the table,” he said. “If you get hurt on that job, you still should be able to put food on the able, and these laws are really undermining that basic bargain.”
While the Labor Department Secretary declined to provide details of the probe, Perez said his agency sent a letter last month to Ohio Senator Sherrod Brown disclosing contact with a company that is offering services to employers in Texas and Oklahoma who opt out of workers’ comp.
NPR believes that company may be PartnerSource, a Dallas-based firm that writes and supports nearly all opt-out plans in Oklahoma and about half of the plans in Texas. An agency official confirmed to the news service that PartnerSource is the focus of the investigation, though President Bill Minick has not responded to requests for comment.
