Posted on: Wednesday, January 19, 2005
Workers' comp to resurface at Capitol
By Catherine E. Toth
Advertiser Staff Writer
Taxes, disability insurance and the minimum wage are some of the concerns facing Hawai'i's small businesses as the Legislature convenes today.
But among all the issues, one will resonate loud and strong: workers' compensation.
Workers' compensation reform again will be a hot-button topic this session, with local businesses sparring with labor advocates in an effort to reduce rising insurance costs while getting workers back to work healthfully and quickly.
"Workers' comp reform is clearly at the top of everyone's minds," said Rep. Brian Schatz, D-25th (Makiki, Tantalus), who chaired the last Economic Development and Business Concerns Committee. "Premiums are skyrocketing, and I think the Legislature is committed to doing something about it."
Workers' comp costs are one of the biggest complaints of Hawai'i employers, who paid more to replace injured workers' lost wages than for medical care in 2002 compared with the previous year, according to the National Academy of Social Insurance.
Gov. Linda Lingle was unsuccessful last year in pushing through changes to the workers' comp system intended to ease the burden on small-business owners faced with rising insurance costs.
And lawmakers and business advocates are sure the issue will surface again.
"Workers' comp is the big issue because more people are knowledgeable about it now," said Bev Harbin, president of The Employers' Chamber of Commerce and a former small-business owner.
"What I want is for legislators to be educated and understand that the business community is not out to kill their employees. They seem to think the business community has no respect or need for the workforce, when in fact the business community struggles to retain their workforce because that's their biggest asset," Harbin said.
Rep. Kirk Caldwell, D-24th (Manoa), who will head the Labor and Public Employment Committee, said finding a common ground between what business owners and their employees want will be a daunting task.
"Everybody wants to gouge the other person," said Caldwell, who expects to propose that companies be allowed to file temporary restraining orders against employees. "Management wants to take away from labor, and labor points the finger at management. I don't want this whole effort to be a waste of time."
He also plans to revive the idea that companies mostly owned by a single person can opt out of paying for workers' compensation insurance. As it is now, all companies must pay for it.
Lingle is planning to reintroduce her workers' comp reform package with minor — if any — changes. The plan will include lowering costs by reducing fraud by both employers and their workers. The proposal also will increase the penalties for those who attempt to cheat the system.
"It's an anti-fraud bill," said Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), who also heads Small Business Hawai'i. "And it will probably meet the same fate (as last year's failed bills), which is really too bad. All of us suffer from that fraud, not just businesses and employers. This is not a bill aimed at employees. It's aimed at fraud. And fraud affects our rates, which are among the highest in the country."
But without much change to her proposal, which didn't result in reform last year, some lawmakers wonder if both sides will find reason to compromise this time around.
"I think in order for the governor to make good on her promise to work with the Legislature, she needs to demonstrate a willingness to compromise on this kind of legislation," Schatz said. "You can't simply pass workers' comp reform without agreement from the workers. So I think this has to transcend partisan politics."
Audrey Hidano of Hidano Constructions Inc. doesn't expect huge changes to workers' comp. But she does want to see steps toward reform.
"I'm just hoping there's some small reform," said Hidano, whose company employs about 20 workers. She wants to see changes in vocational rehab, in which injured workers who can't return to their trade get training in other fields.
Right now, she said, injured workers can choose a number of different vocations to get training in — without a time limit. The company continues to pay for that injured employee until that person completes training. Typically, because their injury requires them to change careers, the workers don't return to the employer who has paid for their training.
Hidano wants to see limits to the program so businesses aren't spending money for years on an employee who isn't contributing to the company anymore.
She speaks from experience. Her company paid for an injured employee to train in three different vocations for two years only to have that person start his own business and become her competitor.
Workers' comp costs don't affect only construction companies. Every business, no matter how big or small, has to provide workers' comp insurance for its employees. Even nonprofit organizations are required to buy the insurance, which can often be costlier for them, said Schatz, who founded Youth for Environmental Service and serves as executive director for the Hawai'i Elections Project.
"In the nonprofit business, (workers' comp) is very important," he said. "Workers' comp costs go up with risks, and a lot of times nonprofits in psychiatric services or housing or social work employ higher-risk (workers). That affects rates."
But finding common ground won't be easy.
Caldwell estimates that finding agreeable solutions to the problems within the workers' comp system may be lengthy.
"I'm pushing for it, but if it looks like too many divergent views and no one's coming together, I think we'll have to look at this as a two-year process."
Reach Catherine E. Toth at 535-8103 or ctoth@honoluluadvertiser.com.
