From the Rapid City Journal, a solution in search of a problem in the area of Worker’s Compensation:
South Dakota doesn’t have a state law that explicitly requires companies to provide workers’ compensation insurance coverage for employees, according to a Rapid City lawyer who represents people who say they’ve been hurt while at their jobs.
“This is unfair not only to the employees, but it’s unfair to the other employers,” attorney James Leach told state government’s Workers Compensation Advisory Council members Monday.
Leach suggested businesses have sidestepped responsibility, sometimes by declaring bankruptcy after a claim was made, but he didn’t know the frequency.
“I don’t think it’s a large number. It’s a small number,” Leach said. “I don’t know what the answer is.”
Don’t get me wrong. I think there are are areas of improvement that could be made in the protection of workers from having to bear the cost of on-the-job injuries. But, without knowing the extent of the problem, how can it be solved?
In one of my other jobs, I manage claims administration for an insurance agency, and write on various insurance related topics when I have time. Trust me, in the insurance industry many are acutely aware of the need for employers to have coverage, primarily because some of the penalties for not having it can be harsh. Arguably, the most draconian would be California:
Failing to have workers’ compensation coverage is a criminal offense. If the Division of Labor Standards Enforcement (DLSE) determines that an employer is operating without workers’ compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, a fine of up to $10,000, or both.
How would you like to go to jail because you don’t carry a type of insurance? South Dakota takes a far different approach than a state such as California, leaving it a bit more open ended in that if you don’t have coverage, you’re self-funding. But that can also be a terribly risky proposition in the face of a worker being injured. It could potentially wipe a business owner out.
Is there a good solution? Hard to tell. It’s a Catch-22 of instituting more government oversight & regulation on one hand, versus leaving a lot of workers having to trust that their employer is smart, and has purchased the insurance coverage they should have if they have employees.