Archive for January, 2007

Independent contractors, Iraq, and insurance: more light on the matter

Wednesday, January 17th, 2007

In his recent article, Contractors in Iraq are a taxpayers’ nightmare, Joseph Neff of The (Raleigh) News Observer presents the most detailed accounting of workers compensation as it relates to Iraqi contractors as I’ve managed to find. We’ve discussed the issue of Iraq contractors and their workers compensation coverage before, but Neff’s investigative journalism kicks things up to the next level.
Everyone knows that private contractors are being employed in Iraq – any who were ignorant of that fact certainly became aware when the grisly details of the deaths of four contractors in Fallujah became public. Private contractors aren’t anything new. The military has relied on contractors to provide support and logistics services in prior wars. But in Iraq, the difference is that contractors are being employed in unprecedented numbers. According to Neff, there are currently 100,000 contractors in Iraq, a number that many might find surprising. As a point of reference, in the 1991 Gulf War, 9,200 contractors were employed to support approximately 1.2 million ground troops.
Because the contracting firms are private, public reckonings can be hard to come by. I would doubt that most Americans are aware that at least 646 private contractors have been killed in Iraq – I certainly wasn’t, despite occasionally searching for this information. Details about fatalities, injuries, rates, and costs have been scarce. Neff’s article explains why – essentially, there is no oversight.

“It is impossible to say how much the insurance costs. No agency regulates the premiums, and no one tracks the overall costs.”

Going to work every day in war zone is pretty risky business and insurers would be loath to provide insurance in such dicey circumstances. The federal government recognized this, and since WW II, has provided a federal backstop in the Defense Based Act (DBA). All military contractors are insured under the provisions of this act, but the insurance is supplied by private insurance firms. The insurer is on the hook for everyday work-related injuries and illnesses, but when an injury or death is war-related, tax dollars pick up the tab.
As Neff notes, when the DBA was enacted, nobody ever contemplated that the number of private contractors might rival the number of deployed forces. That’s one problem. Another problem is this pesky business of oversight.

“These insurance policies differ from conventional workers’ comp in one major way: Domestic workers’ comp is heavily regulated and analyzed, but the contractors’ insurance is not. The U.S. Department of Labor monitors the number of claims and resolves disputes over benefits, but it has no authority over pricing or availability.”

“We are not an insurance commission operation,” said Shelby Hallmark, director of the department’s Office of Workers Compensation. “We are not in the business of controlling or even monitoring prices.”

“The Government Accountability Office, Congress’ watchdog agency, examined contractors’ insurance in 2005 and could not calculate its cost to taxpayers. The auditors couldn’t estimate what impact the insurance costs had on reconstruction activities in Iraq. The GAO found that Department of Defense contractors were being charged premiums between $10 and $21 for every $100 of salary.”

That means taxpayers were paying up to $21,000 a year to insure a worker with an annual salary of $100,000, which is not unusual pay for a private contractor.”

So this is mandated insurance, but there is no regulatory body keeping an eye on things? OK, do this math: $21,000 x 100,000 contractors. That would certainly seem substantial enough for someone somewhere to be paying attention, particularly when tax dollars figure into the equation.
Neff points to at least one official in the Army Corps of Engineers who is paying attention and who has cut some rates by as much as half through a competitive bid process.

“The Corps is only a part of the Defense Department contracting budget, Greenhouse said. Huge savings could be gained in the Army’s huge logistical supply contract, she said.

Houston-based Halliburton holds that contract, which is managed by the U.S. Army Material Command. Since 2003, the Army says, it has spent at least $284 million on contractors’ insurance under the Halliburton contract.

The insurance industry opposes putting the insurance contracts up for bid.”

Having It Both Ways: Coming and Going in Utah

Tuesday, January 16th, 2007

Police Officer Michelle Ross was injured in a car crash outside Salt Lake County while driving with her infant son. She was off-duty, operating a marked police vehicle. (I’ve never seen a police cruiser with an infant carseat.) She crossed the center line of State Road 36 and struck a tractor-trailor, injuring two people. Is she covered by workers comp? Is the city liable for her driving mistake?
You would expect a consistent answer: if Ross was “in the course and scope” of employment, she would collect workers comp and the city would be liable for her negligent driving. If she was truly off duty – “coming and going” – she would not be eligible for comp and the city would be off the hook for the injuries she caused.
Well, as Ralph Waldo Emerson once wrote, “foolish consistency is the hobgoblin of small minds.” No small minds in Utah! Because Officer Ross was part of a “take-home car” program designed to increase the visibility of the police and to speed response time, she was, in effect, on duty at all times, even when driving with her child. So the court ruled that she is entitled to workers comp for her injuries.
If Ross was on duty, then the city is liable for her actions, right? It turns out that prior to the awarding of comp, the state Supreme Court ruled exactly the other way. They overturned a judgment against the city on behalf of the injured parties, Chad and Stacy Ahlstrom. The court ruled that the city cannot be held liable for an employee who is simply “coming and going” from work.
Ross was and was not in the course and scope of employment. The city was liable (for comp) and not liable (for Ross’s negligence). The city has it both ways, at the expense, it appears, of the Ahlstroms. Their heads must be spinning, like vehicles in this week’s ice storm on the slippery roads of Utah.

When Illegal Workers are Injured: Second Class Benefits in a First Class System

Monday, January 15th, 2007

The plight of undocumented workers who are injured on the job brings to mind a quote from the late Groucho Marx. When told a swimming pool was off limits to Jews, Groucho replied: “My son is half Jewish. Can he wade up to his knees?” Our colleague Peter Rousmaniere summarizes the status of undocumented workers in the workers comp systems across the country. They’re lucky if the water covers their ankles.
Most injured undocumented workers never try to access the comp system. They are the phantom workers who self-treat their (relatively) minor injuries. It’s when they are seriously hurt that they try to secure comp benefits. In many states, the medical treatment of undocumented workers is covered by comp, but indemnity payments are routinely denied. And if the workers reach the stage of maximum medical improvement (MMI), they rarely are entitled to permanancy benefits or vocational rehabilitation. The Catch 22, of course, is that tecnically they are not available for work, because they are illegal, so the concept of wage replacement disappears into the mist.
Rousmaniere cites a case in Indiana, where an undocumented Mexican worker has been unable to collect indemnity for his injury. The carrier apparently has cut off his medical benefits as well, claiming he has reached MMI. Logic tells us that an independent medical exam is warranted, but to be eligible for an IME in Indiana, an injured worker must have received total temporary disability. With state law excluding undocumented workers from indemnity benefits, there is no way to challenge the MMI determination.
The blog goes on to quote Jake Knotts, (presumably no relation to Don), a South Carolina lawmaker who is pushing to exclude undocumented workers altogether from his state’s workers’ comp system.”My bill is a very simple bill,” he asserts. “It says that if a person applies for workman’s compensation, they must show that they are a legal citizen.” Simple it is, fair it isn’t.
Truth and Consequences
We may be heading for a fork in the road. One fork will create some form of documentation and recognition for most or all current illegals, thus opening the door to full coverage under each state’s comp law. With President Bush perhaps leaning in this direction (in opposition to much of his party), and with the Democratics in control of Congress, this might actually happen. As we have pointed out before, this is probably the most realistic path, and the most inflationary: the cost of business will go up dramatically as millions of “under the table” workers become eligible for all benefits, including but not limited to comp.
At the other fork, Senator Knott and like-minded state representatives are moving to explicitly exclude illegal workers from comp benefits. That might provide some clarity to the situation, but certainly would not improve it. It’s hardly fair to blame workers for getting hurt, regardless of how they entered the workforce. We need to hold employers of these undocumented workers accountable, not reward them for their ethically-marginal choice of hiring illegal workers. On the other hand, you could argue that if applicants provide false documentation of their status, and if the employer hires them in good faith, then perhaps the illegal workers are guilty of “willful misrepresentation” and as such are not entitled to full benefits.
For the moment the status quo, as ambiguous and unsatisfactory as it is, still trumps the options. The status quo works because it offers a virtually unlimited supply of cheap labor, keeping the cost of business down. Once injured, undocumented workers will continue to receive second class benefits under the comp system. They will stay in the shallow end of the pool, if, indeed, they can get into the water at all.

Treating Strains and Sprains: Don’t Just Sit There, Get Moving!

Friday, January 12th, 2007

Gina Kolata has a provocative article in the New York Times (free registration required), which outlines a very proactive approach to the treatment of strains and sprains. Dr. William Roberts, a sports medicine specialist, says “we want to keep you moving.”
Dr. James Weinstein, an orthopedic surgeon, hurt his back while lifting a box. He was in a lot of pain. He could not sit and after lying down, he could barely get up. (Been there, done that.) So, contrary to conventional wisdom, he decided to go out for a run.
“I took an anti-inflammatory, iced up and off I went.” When he finished running, he felt “pretty good.”
The theory here is that injured tissue heals better if it’s under some sort of stress. Beyond that, if the injury is not severe, resting it will probably prolong recovery. In other words, in treating many of the routine strains and sprains that occur in the workplace, the best course of action may be to keep people active – very active.
Conversely, the worst approach may well be the most common: take a steady stream of anti-inflammatory drugs and stay off your feet. One study suggests that taking anti-inflammatories is fine at the onset of injury (and just prior to vigorous exercise). But once the inflammation has set in, the drugs can make matters worse.
Dr. Weinstein’s advice is pretty radical: Before exercise, take one anti-inflammatory pill. Ice the area for 20 minutes. Then start your usual exercise or activity – the one that caused the injury! When you finish, ice the injured area again. The anti-inflammatory reduces pain and swelling and forestalls new inflammation from the pending exercise. The icing constricts blood vessels before and after exercise, thereby preventing some of the inflammatory white blood cells from reaching the injured tissue.
As one doctor put it, if the pain is no worse after exercising than it is when the person simply walks, then exercise is the preferred course of action. These doctors are operating with a sense of urgency: “If you take athletes or active people out, they get depressed, they get wacky.” The same goes for many disabled workers.
Implications for Workers Comp
This article focuses on athletes in training. While we might like to think of workers as “industrial athletes,” that’s not always the case. People training on their own are highly motivated. Injured workers run the gamut from highly to marginally motivated. Some are in good physical condition; many are not. People exercise for themselves and their own well being. We work, well, to make a living. In too many instances, not working for a while, or performing only very light duty tasks, are more attractive than speeding back to our regular jobs.
I wonder what a return to work plan from Dr. Weinstein might look like. Perhaps a workday divided like this: some time spent in the original, physically demanding job that caused the injury, with icing before and after. Then some time on lighter duty functions that give the affected body parts a rest. Such a plan may seem far fetched, but what strikes me in this situation is the difficulty in “doing no harm.” When the conventional doctor prescribes pills combined with no work or with light duty, he or she may be prolonging disability. It may seem counter-intuitive, but the best treatment plan for the patient immobilized with pain may be to get up and get moving.

News Roundup: Health Wonk Review, unions sue OSHA, medical tourism, NY work violence law, and more

Thursday, January 11th, 2007

Health Wonk Review – Roy M. Poses, MD, hosts Health Wonk Review #23 at Health Care Renewal. This is the first issue of the new year and it’s a meaty one, with 22 participants. While there, check out some of the other posts on Health Care Renewal, a multi-author blog with a focus on addressing threats to health care’s core values.
Unions sue OSHArawblogXport points us to a story in the Chicago Tribune (registration required) about a legal challenge to OSHA filed by the AFL-CIO and the United Food and Commercial Workers for failure to implement a rule requiring employers to supply personal protective equipment for their employees. The rule, which was proposed in 1999, would apply to as many as 20 million workers, and would require employers to supply such equipment as goggles, face shields, gloves, helmets, ear plugs and respirators.
While on the topic of OSHA, see Jordan Barab’s post: OSHA: The Next 35 Years — What Would You Do?
Medical tourism and outsourcing – Joe Paduda at Managed Care Matters points us to a few recent items on medical tourism and offshore health-care outsourcing. By the way, Joe’s informative blog is among the nominees for “Best Health Policies/Ethics Weblog 2006” – why not drop by and give Managed care Matters your vote?
New York Workplace Violence Prevention law – Diane Pfadenhauer of Strategic HR Lawyer gives us the rundown on workplace violence prevention requirements for New York’s public sector employers under the new law, which is scheduled to go into effect on March 7, 2007.
Missouri law upheld – a state court denied labor’s challenge to the 2005 workers compensation legislative reforms, which tightened the standards for compensability. Previously, work needed to be a “substantial factor” in any injury, but the 2005 law raised the bar to the necessity of work being a “prevailing factor. Opponents of the legislation change are likely to appeal this ruling.
Ohio Coingate – Prosecutions continue in Ohio’s rare coin investment scam that bilked the state workers’ compensation fund of about $50 million dollars. This week, Tim LaPointe, Tom Noe’s second in command, was sentenced yesterday to three years in state prison. “Prosecutors have charged 14 people in the Noe-related scandals, first uncovered by The Blade in 2005. In total, 12 have been convicted, including former Gov. Bob Taft, and his former chief-of-staff, Brian Hicks, both of whom pleaded no contest to ethics violations.”

Wilful Intent: The End of “no fault” in workers compensation?

Tuesday, January 9th, 2007

David Gross, 16, had a job at Kentucky Fried Chicken. One of his responsibilities was cleaning a 690 Henny-Penny gas pressure cooker. His preferred approach to the task was to put water in the cooker, seal it and boil away the grease. This was against the manufacturer’s recommendations (written right on the equipment) and against store policy. The boiling water, under pressure, put anyone near the equipment at risk. Gross was warned several times, the last time in writing. Nonetheless, he persisted in cleaning the cooker with water.
On November 26, 2003, he was injured when boiling water spewed from the cooker, causing third-degree burns around his hip and groin and second-degree burns on his arms and back. Two co-workers, who tried to stop him from opening the cooker, were also burned. Gross’s application for workers comp benefits was denied by the Ohio Industrial Commission, based on his willful disregard of safety instructions.
The case went to the Ohio Supreme Court, which upheld the denial of benefits. The court wrote that Gross “willfully ignored repeated warnings not to engage in the proscribed conduct…” Gross “voluntarily abandoned his employment” by ignoring explicit written and verbal warnings not to clean the pressure cooker with water. More than 2 months after the 2003 incident, the operator of the KFC franchise fired Gross for violating those safety warnings.
“When I got the court’s decision, I just thought to myself, ‘This is a sad day for injured workers,'” said Gross’s attorney, Gary Plunkett of Hochman & Plunkett Co. in Dayton, Ohio. (It certainly was a sad day for Mr. Plunkett.) Many people appear to agree with the dissenting opinion of Justice Evelyn Lundberg Stratton, who expressed concern that the ruling represented a slippery slope. “Should the employee’s fault preclude his receiving temporary total disability? The answer to this question is no. Our workers’ compensation laws do not permit the introduction of fault.”
Attorney Plunkett envisions a situation in which a truck driver injured in an accident is denied benefits because he was driving nomially faster than the speed limit in violation of company rules.
Slope or Plateau?
The issue here is one of accountability. In determining that Gross’s repeated ignoring of safety instructions was “willful intent,” the court has not really changed the nature of workers comp. This is less slippery slope than unique plateau. The standard set in this case for transcending the traditional “no fault” of comp is very high indeed: repeated verbal warnings; written warnings on the equipment itself; a written warning to the employee; verbal alarms from co-workers just prior to the event. There is a significant difference between holding employees accountable for their actions and routinely denying them comp benefits when they are injured due to carelessness or simple human error.
The part of this case that puzzles me the most is why KFC allowed Gross to continue on the job after he first violated the safety rules for cleaning the cooker. They should have fired him well before the unfortunate event took place. I question KFC’s wisdom in relying on the judgment of a 16 year old in this type of work situation. The adolescent brain can be very resistant to logic and set procedure. (Some 16 year olds can handle the details; some cannot.) This is surely a lesson that Gross will remember for a long time. Perhaps, now that he has been denied the “exclusive remedy” of comp, Gross can sue KFC for negligent management in allowing him to continue on the job. That would certainly be the American way.

News Roundup: Cavalcade of Risk, safety, traffic losses, fraud, and more

Friday, January 5th, 2007

Cavalcade of Risk – Jason Shafrin hosts Cavalcade of Risk #16 at Healthcare Economist. This issue has a heavy focus on health-care, so if that’s a topic on on your 2007 agenda, go there now! Jason is a pretty smart guy, currently getting his PhD. in Economics at the University of California-San Diego. He regularly blogs on health care policy and economics, the health insurance market and its relationship to labor markets, and public finance in general. He’s also a regular contributor to Health Wonk Review. After you’re done with the Cavalcade, check out some of his other healthcare posts.
Top Ten Workplace Safety Stories of 2006 – Jordan Barab of Confined Space issues his annual wrap-up of the the year’s most important work safety stories. According to Jordan, “It’s always an educational experience for me because I get to look back at everything that’s happened over the past year. But something struck me this year: for thousands of people there was really only one top story of the year – the senseless loss of a husband or wife, daughter, son, father or mother, brother or sister, friend or co-worker. (See number 6 below). The rest is just commentary.”
Traffic-related losses are growing – NCCI recently issued a report showing that traffic accidents’ share of workers’ comp losses is growing. While traffic accident injuries account for about 2 percent of all workers comp claims they represent more than 5.5 percent of total losses due to severity. NCCI also notes that work-related accidents are just the tip of the iceberg in terms of losses. Aggregate costs to employers for both on- and off-the-job motor vehicle accidents topped $60 billion per year from 1998 through 2000; work-related traffic incidents cost about $2 billion per year. Given the combined cost, NCCI suggests that preventive programs hold the potential for enormous loss reduction. NCCI’s full report: Traffic Accidents – a Growing Contributor to Workers Compensation Losses. (PDF)
Fraud watch -Pennsylvania just released its Top 10 Insurance Fraud Cases of 2006, an interesting list, although not specific to workers comp. Workers comp fraud is an industry-wide problem that cuts a wide swath in terms of culprits. Here are a few items that came to our attention that clearly show that it’s a game all parties can play, Curiously, both are crustacean related:
The case of a Maine man trapped by lobsters is a case history of a three-year investigation that led to a felony conviction and a jail term for a claimant.
The case of the shell game of $7 million in under-reported wages that led to $1.8 million in restitution and fines for a California framing business.
Short takes
Indpendent Contractor or Employee PDF, a handy IRS Guide, thanks to Workplace Prof Blog.
Sidecars – new risk management term of the day
Ten reasons employees want to stay with a company – good to keep in my at the start of a new year!
Worst Comic Book Medicine of 2006 – a fun read!
The Executive Coloring Book – more silliness.

Labor Optimization at Walmart: The Big Squeeze, Revisited

Wednesday, January 3rd, 2007

Back in July 2005 we blogged the way Walmart squeezes its vendors to achieve the lowest possible prices. Today we read in the Wall Street Journal (paid subscription required) that the behemoth retailer is instituting a computerized scheduling system that enables it to use the same squeeze tactics on its own employees. Now that’s a shocker!
The plan involves moving workers from predictable shifts to a staffing pattern that is based on the number of customers in stores through the day and week. Workers may be asked to be “on call” to meet customer surges, or sent home because of a lull, resulting, of course, in less pay. The new systems also alert managers when a worker is approaching full-time status or overtime, which would require higher wages and benefits. Such individuals are red flagged – “descheduled” – so payroll costs remain as low as possible. Oh, the marvels of computerization! (I doubt the programmers at Kronos, who devised this system, are subject to similar payroll and benefit caps.)
What does this mean for Walmart workers? They might not know when or if they will need a babysitter or whether they will work enough hours to pay that month’s bills. They might have trouble scheduling doctor appointments. Senior employees, whose hourly rates are higher, might find themselves scheduled for fewer and fewer hours. Rather than working three eight-hour days, someone might now be plugged into six four-hour days, mornings one week and evenings the next. Unless they live near the store, they’re going to spend a lot more time commuting.
The benefits to the company are pretty obvious: lower payroll costs; less time spent on scheduling for local managers; and more people on the floor when you need them, especially during midday and evening shopping surges. The goal of “enhancing the shopping experience” will be readily achieved. As for the problems the new system creates for workers, Walmart apparently will just take their chances. As they say, if you want make wine, you have to crush the grapes.
Compensable “To and Fro”
By instituting this extreme version of flex scheduling, Walmart has inadvertantly opened the door to new workers comp liabilities. Normally, the “to and fro” commuting time for employees is not covered by workers comp. Your workday – and your comp coverage – begin when you arrive at the workplace. However, in most states there is an exception for “on call” workers. Because they have no set schedule, but must appear when called (or leave when no longer needed), workers comp coverage begins when they receive the call and head out to work and it continues when they are sent home. Their coverage includes the commute in both directions. Walmart may have succeeded in reducing the payroll, but they have significantly increased their workers comp exposures. (Given the management style at Walmart, they cannot be comfortable with the fact that commuting itself is totally unsupervised.)
I imagine that Walmart managers will not lose much sleep over this problem. Filing a claim for a work-related injury – whether it occurs onsite or off – is probably a daunting and perhaps even intimidating process. If this new scheduling system succeeds in lowering costs, it will surely be copied by others. Wall Street will love it. It’s good for consumers, eternally in search of bargain prices. It’s good for shareholders: lower payroll costs means higher profitability. Sure, it’s tough on the marginally skilled workers trying to raise families and balance their own budgets. If they don’t like it, they can go work for Target or Radio Shack (where they will find similar systems already in place).

The quiet crisis of diabetes in the workplace

Wednesday, January 3rd, 2007

If you were spending more time lounging with family and friends on the day after Christmas than reading the paper, you might have missed an important health article in The York Times about the tangle of laws confronting diabetics in the workplace. According to the article, diabetes accounts for nearly 5 percent of the 15,000 annual complaints that the Equal Employment Opportunity Commission hears under the the Americans With Disabilities Act of 1990, trailing only back impairment, orthopedic injuries, and depression as a leading complaint. The American Diabetes Association reports about 100 calls a month about workplace problems related to diabetes.
Despite the many federal and state laws, working diabetics may have little in the way of legal protection. Courts have little consistency in interpreting federal and state discrimination laws, and while some related impairment such as blindness may be obvious and protected, other complications may be less apparent and may not be protected. Job restrictions are often framed as a public safety issue, perhaps understandable when applied to pilots or drivers, but this excuse has been used to bar mechanics and food manufacturers from work that they had been successfully engaged in until they crossed the often invisible line into diabetes. And, according to the article, “Establishing discrimination has become harder since 1999, when the Supreme Court held that if a disability can be corrected with medicine or things like prostheses, it is not necessarily protected.”
Employment challenges and costs
The challenges for employers range from broad issues of safety and productivity to mundane daily matters of allocating breaks and allowing food consumption on the job. In terms of health care costs, diabetes is one of “the big three,” trailing only heart disease and hypertension. Trending shows that the issue is likely to get worse, not better, and ironically, the matter may be recursive. A recent study linking work stress to the onset of diabetes shows that the work itself may be a contributing factor to the problem.
One reality that employers must face is that this is an issue that will increase in significance with the aging workplace. The most prevalent form of diabetes is Type 2, or the non-insulin dependent variety. Once referred to as “elderly onset,” this terminology has largely been dropped as this condition affects more and more people at younger ages. Type 2 diabetes is frequently linked to weight and inactivity. To get the full measure of the scope of the problem, we refer you back a year to Diabetes and Its Awful Toll Quietly Emerge as a Crisis, another article in the NYT that described the worsening epidemic of diabetes in New York, where one person in every eight is now a diabetic and where the prevalence is nearly a third higher than in the nation. Nationwide, the Centers for Disease Control estimates that as many as 21 million Americans are diabetic, and 41 million more are prediabetic, meaning that without an alteration in lifestyle, sugar could elevate to diabetic levels.
It’s not an issue that’s going to go away. Some employers are tackling the issue head on through their wellness programs, offering employees health screenings, risk assessments, and exercise and weight control programs. The American Diabetes Association offers suggestions for workplace activities geared to prevention. For other resources, see:
New York Times – ongoing coverage of diabetes
Daibetes at Work
Questions and Answers About Diabetes in the Workplace and the Americans with Disabilities Act (ADA)

Commercial Drivers: Unsafe at Any Speed?

Tuesday, January 2nd, 2007

We begin the new year, alas, with a nightmare: You’re barreling down a three lane highway at 70 mph, when a tractor trailer rig pulls up behind you. All you can see in your rear view mirror is the ominous grill of a Mack truck. What runs through your mind? Do you console yourself with the notion that the driver is at least trained to operate the 10 ton rig? Can you safely assume he knows what he’s doing? Maybe not.
Commercial drivers are supposed to go through an elaborate training and certification process. They are drug tested randomly and after every accident. Prior employers must fully disclose their actual job performance. They must pass bi-annual physicals – and if they fail, there is no protection from the ADA to put them back behind the wheel. That’s reassuring, isn’t it? Well it would be, if the system were being run the way it’s supposed to.
In an alarming article by Stephen Franklin and Darnell Little in the Chicago Tribune, we learn that there are literally thousands of commercial drivers on the nation’s highways who obtained their licenses under suspicious circumstances. In the last five years, the federal government has discovered licensing fraud in 24 states. The payment-for-license schemes usually center on so-called third-party examiners who are hired by states to perform driver testing. In other words, the aggressive driver coming up behind you in a 10 ton rig may have no idea what he’s doing.
There are about about 1.5 million commercial drivers operating in the country. That’s up from just 200,000 in 2002. Commercial driving is one of our fasting growing occupations. Trucking tends to pay well, so it attracts a lot of people who might not otherwise qualify for the jobs. The gap between available jobs and skilled workers gives rise to the entrepeneurial spirit. If you look closely at states with relatively lax enforcement (Illinois under disgraced Governor Ryan, Missouri, Wisconsin), you will find CDL license mills that offer phony certifications (for the right price).
How many commercial drivers are operating with fraudulant licenses? At one point the federal government tallied up 15,000 licenses nationally that it believed were obtained under suspicious circumstances. But it didn’t have any details from the states on nearly 7,000 of those drivers. They have become highway ghosts, beyond detection and potentially lethal. If the government is pretty sure that one percent of the drivers are not qualified. It’s no great extrapolation to assume that as many as three or four percent may be illegitimate: that’s anywhere from 45,000 to 60,000 drivers operating, in the words of one judge,”10 ton torpedoes.” One study of 300 drivers with illegitimate licenses found that 200 of them were certified to haul toxic waste. Does that make you feel any different about the truckers who surround you on your morning commute?
Safe Driving is Essential
One of Lynch Ryan’s fundamental themes is the importance of safe driving. We recommend that employers annually check the licenses and driving records of any and all employees who drive during “the course and scope” of employment, whether or not they operate company vehicles. Your great salesman might be a terrible driver – and because employers are responsible for the actions of their employees, that salesman might become a huge liability. (We blogged one dramatic example here.)
Even if you are confident that your people drive safely, their ultimate well being is dependent upon the actions of other drivers on the road. Given the fraud and abuse in the CDL system, that’s not exactly a reassuring thought.