Time to Reform Workers Comp in New York State, Governor Agrees

Published June 1, 2004

New York State employers, in a survey released by The Business Council of New York on April 19, overwhelmingly agree their workers’ compensation costs have “increased in the last five years” and those costs are “limiting employers’ opportunities to grow, hire new workers, and sustain other business investments.”

“New York’s workers’ comp costs have long been above average by every measure we have seen, and this survey confirms that this difference has very negative consequences for New York’s prosperity,” said Daniel B. Walsh, president and CEO of The Business Council. “Other states have enacted reforms to help contain costs, and we agree with Governor Pataki that it’s time for New York to do the same.”

New York Governor George Pataki announced his reform proposal at The Business Council’s Small Business Day March 23 in Albany. The governor’s plan would cut employers’ costs by 15 percent while raising maximum benefits by 25 percent. That reform package, which The Business Council is supporting, has been introduced in the Senate (S 6841) and is pending in the Rules Committee. The bill would:

  • Limit the duration of benefits in cases for which the level of benefits is not defined by statute. Currently, these cases in which benefits are not “scheduled” account for 13.6 percent of claims but more than 76.6 percent of overall costs.
  • Reduce surcharges now imposed on employers’ premiums, called assessments, by adjusting the calculation used to determine assessments. Currently, assessments are based on 150 percent of the previous year’s disbursements from a special fund. The proposed change would lower that rate to 125 percent. The Business Council has strongly supported such a reduction in assessments.

Survey Responses
“More than a third of respondents to the survey said New York’s workers’ compensation costs are encouraging them to consider relocating their business out of state. And about one in five respondents said these costs are forcing their businesses to either leave the state or expand elsewhere,” noted Walsh.

The survey was sent to members of The Business Council and other employer associations in New York. There were 308 responses.

In response to specific survey questions:

  • Ninety-three percent of responding employers who compared New York’s workers’ comp costs to other states said New York’s are significantly (73 percent) or somewhat (20 percent) higher.
  • Fifty-nine percent of respondents said workers’ compensation costs limit their business growth and expansion. Among respondents with 200 or more employees, 68 percent said these costs limit growth and expansion.
  • Fifty-two percent of respondents said these costs prevent them from hiring more workers.
  • Fifty-eight percent of respondents said these costs require them to scale back other business investments to pay workers’ comp costs.
  • Thirty-four percent of respondents said these costs are encouraging them to consider relocating the business out of state. Nearly four of 10 respondents with 200 or more employers said these costs encourage them to consider such a move.
  • Nineteen percent said these costs are already forcing them to leave the state or expand elsewhere. More than one of four employers with 200 or more employees said these costs are having this effect.
  • More than seven of 10 respondents said New York’s workers’ compensation costs in the past five years have either increased somewhat (36 percent) or increased significantly (36 percent). One responding employer said costs had gone down only because it had been forced to trim jobs in large part because of high workers’ comp costs.

Momentum for workers’ comp reform has been building statewide. As of April 19, a New York Web-based “electronic advocacy” campaign had produced 7,972 letters from 1,679 individuals. Those letters, faxed to lawmakers in Albany, express support for reform, thank the governor for his reform proposal, and urge lawmakers to reject a bill that would increase benefits without enacting cost-cutting reforms. The Business Council is conducting the letter-writing campaign with the Chamber Alliance of New York State, dozens of local and regional chambers, and other business associations around the state.

Matthew Maguire is director of communications at The Business Council of New York State, Inc. His email address is [email protected].

For more information …

For a complete tally of responses and tallies of responses by region, company size, and industry, visit http://www.bcnys.org/whatsnew/Map/0416WorkersComp’SurveyResults.htm.

For more information on the letter-writing campaign, visit http://www.lobbynet.com/supporter/chamber.asp?chamber=bizcouncil