We have been following the aftermath of the tragic Station night club fire that took place just over a year ago in Rhode Island. The Providence Journal (registration required) has done a terrific job of tracking the many legal cases emerging from the fire. One hundred people died, including a number of nightclub employees. There are many unresolved liability issues stemming from the fire: is the town liable for negligent fire inspection? who sold the fire-prone tiles to the club? who installed the tiles? how much liability rests with the band, Great White, who started the fire with their pyrotechnics? While these issues are still unresolved, the workers comp situation is starkly clear: Judge Bruce Q. Morin has determined that the nightclub’s owners, brothers Michael and Jeffrey Derderian, and their company, Derco LLC, are “jointly and individually” liable for the workers’ compensation benefits of at least four employees who died in the fire.
At this point, the employees’s families are owed death and dependency benefits totaling over $200,000. The Derderians, lacking insurance, are liable for the benefits themselves. Of course, they plan to appeal, just as they have appealed the $1 million dollar fine slapped on them by a comp judge last year.
In the world of business, insurance is often viewed as an “expense.” And when your profit margins are tight, the temptation to cut expenses can be great. But in the nearly 100 years of coverage in America (beginning in 1910 in New York), workers comp has become a fundamental benefit of employment. You can argue whether the system is working as well as it should and we can all point to abuses on both sides (employer and employee), but few would argue that the program itself is not needed. Indeed, the Derderian brothers have become an object lesson in bad management: while catastrophe may be highly unlikely, that does not mean it cannot happen. And unless you have the nearly infinite resources to absorb the risk, you’d best secure the modestly priced insurance that provides a safety net for your employees.
Archive for March, 2005
Avoid Comp Premiums…and Pay the Price
Friday, March 4th, 20052004 Workers Compensation Premium Rate State Ranking Summary
Wednesday, March 2nd, 2005A reader put our “google-fu’ to a serious test with this question: “I am very interested to know if there is a free website or publication that will show a side-by-side cost comparison showing all 50 states’ workers’ comp insurance rates for the employer. I want to see which states have less expensive rates.”
After some searching, we found a 2004 Workers Compensation Premium Rate Ranking Summary (PDF) put out by Oregon’s Department of Consumer and Business Services. Apparently, this snapshot is issued every two years. It includes a color-coded map and a chart that offers more detailed information, such as the 2002 rates so that you can learn if a state is trending up or down. California, Alaska, and Florida have the dubious distinctions of having the highest rates; they are the only three jurisdictions that exceed $4.00 per $100 of payroll. There are 9 states with premium rates less than $2.00 per $100 in premium. Ranked from lowest to highest, these include North Dakota, Indiana, Arizona, Arkansas, Virginia, Utah, Massachusetts, Kansas, and Iowa.
We invite readers who know of other free resources comparing the 50 states to post them in the comments.
Credit where credit is due: we came by this link from another Northwest source – the Washington State Labor Council, AFL-CIO issues a daily news headline aggregator for local, state, and national news of interest to organized labor. It’s a good resource for tracking employment-related issues.
Are Unhappy Workers at Increased Risk for Prolonged Disability?
Tuesday, March 1st, 2005The Conference Board, a New York-based business research group, recently issued the findings of a job satisfaction survey of American workers. The findings were picked up in newspapers around the country, including the Boston Globe. The results should be of interest — and concern — to workers compensation and disability carriers alike.
The survey of 5,000 households found that only half of all workers are really happy with their jobs, down from nearly 59 percent in 1995. Of those who are happy, about 14 percent say they are very satisfied, on par with the group’s last survey in 2003 and down from 18.4 percent in 1995.
The long-term drop in job satisfaction has been driven by rapid changes in technology, employers’ push for productivity, and shifting expectations among workers, said Lynn Franco, director of the group’s Consumer Research Center.
”As large numbers of baby boomers prepare to leave the workforce, they will be increasingly replaced by younger workers, who tend to be as dissatisfied with their jobs but have different attitudes and expectations about the role of work in their lives,” Franco said. ”This transition will present a new challenge for employers.” And, I would add, insurers.
To be sure, the drop in job satisfaction varies by age and income. The biggest decline in on-the-job happiness was among workers earning $25,000 to $35,000 and among workers between the ages of 35 to 44. It’s not surprising that job dissatisfaction follows low wages and skimpy benefits.
Implications for Insurers
One line in the press release really hit me: “This information reveals that approximately one-quarter of the American workforce is simply