Why Wait? New Brunswick Debates the Waiting Period

April 25th, 2008 by

A labor group in our neighbor to the North, New Brunswick, Canada, is seeking an end to the three day waiting period for workers comp benefits. “We really believe it is unfair,” said Michel Boudreau, president of the New Brunswick Federation of Labour.
The federation has pitched the idea of scrapping the three-day waiting period, during which employees receive no benefits, to the independent panel commissioned by the government to review the Workplace Health, Safety and Compensation Commission.
Boudreau said the waiting period, which was first introduced in 1993 to stem financial losses within the system, violates the principles upon which workers compensation in New Brunswick was founded.
Labour, he said, entered into the system with industry and government with the understanding that it would provide for them if they were injured. In exchange for that insurance, workers agreed not to sue employers when they are hurt on the job.
The waiting period is universal among the state workers comp systems, ranging anywhere from three to seven days. There is usually a retroactive period, after which coverage reverts back to day one. In Massachusetts, for example, there is a five day waiting period, retroactive to day one after three weeks.
Why Wait?
Does the waiting period serve any purpose? Or is it an undue hardship for injured workers?
While a case can be made that indemnity benefits should begin immediately after an injury, such a “quick trigger” would likely create more problems than it would solve. It is difficult enough to manage a three day waiting period (the shortest duration available among the states); it would create formidable logistical problems for insurers to begin indemnity immediately following lost time from an injury. It’s worth pointing out that many employees can use accrued sick time to fill in the gap between the first day lost due to injury and the beginning of indemnity benefits. A case can be made that the anxiety of not being paid is a positive incentive for an injured worker to return to full or modified duty as quickly as possible. Immediate indemnity removes that sense of urgency.
The waiting period may also serve a psychological function. The transition from wage earning to receipt of indemnity involves a major shift: one moment you are an employee, a worker, and the next you are “disabled.” For most people, this shift is inconsequential, but for some, it involves crossing a profound border from which there may be no return. The moment you become eligible for indemnity, you are being paid not to work. If you are ambivalent about your job, or if the future of the job is uncertain, the comfort of indemnity can be very powerful. Some injured workers convince themselves that the injury and the pain are worse than they really are, because there is a financial incentive to do so. This is rarely a conscious choice. Rather, it involves a “perverse incentive”: it’s financially advantageous not to get better, not to go back to my (unsatisfactory) job.
The Insider recommends that New Brunswick leave the waiting period right where it is, at three days (the generous end of the waiting period spectrum). The gap in payments is not great enough to cause tremendous harm; conversely, the potential hazard of instantaneous benefits would not just increase costs of the system, it could also harm otherwise motivated employees.
Comp is never the best of all possible worlds. It is tempting to tinker with every aspect and every benefit. While I understand where labour is coming from, in this situation the advice of my late mother-in-law might be best: just leave well enough alone.