Compromise Would Boost Ariz. Workers’ Injury Benefits

June 11, 2007

A business-labor compromise that emerged at the Arizona Legislature would increase Arizona’s caps on workers’ compensation benefits received by employees hurt on the job.

Under a freshly rewritten workers’ compensation bill given preliminary Senate approval on voice vote last Thursday, the current $2,400 monthly cap on how much of an injured worker’s pay can be used to calculate benefits would rise to $3,000 in 2008 and $3,600 in 2009. It then would be adjusted annually by the annual percentage increase in the mean wage paid in Arizona, up to 5 percent a year.

The bill represents a meeting of the minds on a top-tier concern for both business and labor, with a backdrop of high-stakes politics that could have put the issue before voters next year but now apparently won’t.

Under the pending bill, raising the current cap would benefit workers making more than $28,800 annually.

Workers get benefits for two-thirds of the cap amount. The current $2,400 monthly cap was set in 1999 and translates into a maximum monthly payment of $1,600. The benefits are not taxed.

While business groups’ agreement to the annual adjustments of the benefit caps in future years was a major concession, labor scaled back its demands for higher caps and also signaled a willingness to discuss medical-cost issues of concern to business, participants in the talks said.

Workers’ compensation itself represents a grand bargain between business and labor under the Arizona Constitution, with employers required to pay compensation to employees hurt on the job and the workers barred from suing their employers over the injuries.

The benefits-cap compromise, added to a bill (HB2195) originally dealing only with benefits paid to survivors of workers killed on the job, was hammered out during months of talks between lawmakers and representatives of business and labor groups.

While business interests have had more success at the Republican-led Legislature than unions in recent years, labor interests had leverage this year because they expressed an interest in mounting an initiative campaign for a ballot measure that could both lift the benefit caps and give injured workers the right to sue their employers under some circumstances.

Business interests were motivated to take that possibility seriously because of voters’ passage last year of a labor-backed initiative to institute a state minimum wage, participants in the talks said.

“Minimum wage played a big role,” said Marc Osborn, a lobbyist for the Arizona Associations of Industries.

Last year’s vote was a “pivotal factor in this because it demonstrated that labor could take an issue to the voters on fairness and win,” said Mike Colletto, a negotiator for firefighters and other union members.

The possibility of a ballot measure on workers’ compensation was particularly troubling because of tough constitutional restrictions on what changes legislators can make to voter-approved laws, said Sen. Barbara Leff, R-Paradise Valley.

“Workers comp is just too important to take any changes that something would go on the ballot that would make the system fall apart,” said Leff, who worked on the issue with Republican Rep. John McComish of Phoenix. “There are unintended consequences when we go to the ballot so everyone is gun-shy.”

Colletto said labor representatives will discuss medical-cost issues with both an open mind and a determination to protect injured workers. “If we can make the system more efficient and save the employer money without injuring people, that’s a good thing and we’ll strive to do that,” he said.

The bill was given preliminary approval without debate and now awaits a formal Senate vote, likely early next week. Passage would return the bill to the House, which previously considered a version without the injury benefits increase.

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