IMA Headlines Workers’ Compensation Committee Hearing
The Illinois Manufacturers’ Association testified before the entire House of Representatives at a rare “Committee of the Whole” this week to address the need for real and meaningful workers’ compensation reform that will help make Illinois more attractive for job creators. Illinois currently has the eighth highest cost of workers’ compensation in the United States, creating a major cost impediment for manufacturing companies.
Last week, House Republican Leader Jim Durkin filed workers’ compensation legislation (HB 4068) as part of a “Capitol Compromise” package designed to help end the nearly two-year budget impasse. In addition to workers’ compensation reform, the package includes a budget and spending cap, revenue, pension reform, property tax freeze, local government consolidation, procurement reform, and term limits on legislative leaders.
Appearing before the entire House of Representatives, the IMA’s Mark Denzler noted that the manufacturing sector employs 568,000 workers directly while contributing the single largest share of the Gross State Product. Every manufacturing job supports an additional 2.5 jobs and it is a critical cog in the Illinois economy.
While Illinois has many positive advantages like its central location, skilled workforce, infrastructure system, access to water, and low energy rates, costly and cumbersome state regulations and laws are resulting in the loss of good, high-paying middle class manufacturing jobs. Since June 2009, Illinois has lost nearly 2,000 manufacturing jobs while neighboring states have added tens of thousands of jobs. Many companies leaving Illinois have cited the high cost of workers’ compensation as the deciding factor.
While HB 4068 is not perfect, it is a positive step forward and will build upon changes passed in the 2011 workers’ compensation law. It includes several important changes that the IMA has been championing for years including:
- Create a RBRVS Medical Fee Schedule with targeted reductions in medical costs that are estimated to save more than $100 million annually. Under current law, medical providers charge nearly 300 percent more for a procedure covered by Workers’ Compensation than the identical procedure paid for by private insurance or Medicare.
- Rectifies the Will County Forest Preserve case that had overturned 100 years of precedent. It ensures that the shoulder is considered part of the arm and hip as part of the leg to avoid excessive payments to workers.
- Creates credits for certain injuries so that an injured worker cannot get a benefit when they have previously received payment for an injury to that same body part.
- Establishes a drug formulary for the first time in Illinois history to control costs of pharmaceutical products and compounds while helping reduce abuses including opioids.
- Imposes a 4-year wage freeze on Permanent Partial Disability payments.
- Extends the time frame before Temporary Total Disability payments begin from the current 3 days to 5 working days.
- Increased fraud penalties for workers and employers.
House Democrat lawmakers used the hearing to try and deflect blame for the high cost of workers’ compensation to the insurance sector by claiming that they failed to pass along savings from the 2011 legislation.
Since 2011, the cost of workers’ compensation has been reduced on average from $2.35 per $100 of payroll to $ 2.20 per $100 of payroll. However, Illinois’ cost is still nearly 17 percent higher than the national average of $1.85. Manufacturers pay nearly $8 per $100 of payroll because of the type of work and risk of injuries.
Insurance sector representatives noted that Illinois has more than 325 insurance companies selling workers’ compensation and that the Department of Insurance has declared a competitive marketplace in Illinois.
Democrats previously passed two workers’ compensation bills (HB 2525, HB 2622) that were opposed by the IMA and general business community because they did not constitute reform. HB 2525 actually codified the “a cause” standard by putting it into law rather than creating a real causal standard. Additionally, the legislation requires employers to sue previous employers to recoup costs in the cases of repetitive motion trauma. Finally, HB 2622 takes $10 million of employer money at the Illinois Workers’ Compensation Commission to create a new WC State Fund to compete with the private sector.
House Democrats and Republicans continue meeting to see if they can arrive at a consensus on workers’ compensation reform. IMA members are encouraged to call House lawmakers in support of workers’ compensation reform.
Sierra Club Initiative Seeks to Increase Lawsuits, Subvert Federal Law Changes
The Illinois Manufacturers’ Association convened a coalition of the business, labor, and agricultural sectors this week to fight against legislation initiated by the Sierra Club that would block any changes in federal environmental or worker rights laws from taking effect in Illinois. In addition, the amendment to HB 1438 (Stratton, D-Chicago) would open the floodgates for litigation.
If enacted into law, HB 1438 would allow any person to file lawsuits alleging violations of the Environmental Protection Act, a power currently afforded only to the Attorney General or States’ Attorney. This would allow any person in the world to file a lawsuit that would cost an employer significant time and financial resources to defend in court. Employers could be hit with civil penalties in addition to attorney’s fees, expert fees, and court costs. However, individuals who file harassment or unsuccessful lawsuits would not be required to reimburse the employer for their legal costs.
The primary goal of the Sierra Club’s legislation is to block any changes in environmental law that may be made by the Trump Administration (or any subsequent administration) or Congress. It sets a baseline of January 1, 2017, and would automatically reject any changes to the Clean Water Act, Water Pollution Control Act, Safe Drinking Water Act, Endangered Species Act, or any other federal statute relating to environmental protection, natural resources, or public health.
In effect, this would automatically make Illinois laws stricter than the federal standard and every other state further damaging the state’s competitiveness. It unilaterally takes away authority from the executive and legislative branches of government to pass laws and adopt rules relating to environmental, natural resource or public health issues.
Additionally, the amendment also prohibits any federal law changes related to the Fair Labor Standards Act, Occupational Health and Safety Act (OSHA), Federal Mine Safety and Health Act, and other statutes relating to worker rights and protections from taking effect in Illinois. This change is likely unconstitutional because federal OSHA law pre-empts state regulation of private sector worker safety (See 112 S. Ct. 2374 (1992), Affg National Solid Waste Managements Assn. v. Killian).
In addition to the IMA, there are many organizations opposed to HB 1438 including but not limited to the Chemical Industry Council of Illinois, Chicagoland Chamber of Commerce, Illinois Farm Bureau, Illinois Petroleum Council, Illinois Coal Association, State Chamber of Commerce, NFIB, Grain and Feed Association, Illinois Association of Aggregate Producers, and the Illinois Retail Merchants Association.
HB 1438 was not called for a vote this week but another amendment will likely be filed next week with the potential for a vote in the House Environment Committee.
E-Waste Trailer Bill Introduced
In the spring legislative session both the House and Senate approved SB 1417, an IMA-led effort to re-write Illinois’ extended producer responsibility law for consumer electronic products (E-Waste). Even though the bill passed by wide bipartisan margins in both chambers, there was some remaining opposition from the Illinois Environmental Protection Agency (IEPA) and some industry groups.
For the past three weeks, the IMA has engaged with other stakeholder groups including the Illinois EPA to craft language for a trailer bill to address the outstanding opposition. Those concerns include record keeping and reporting requirements, registration fees, the ability of manufacturers to audit collection programs and penalties.
The agreed language was filed as Senate Floor Amendment #1 so HB 1955. Stakeholders are hopeful that the bill will be passed during the remaining days of special session and can be sent to the Governor along with SB 1417 so the two bills can be considered as a package. If both bills are approved by the Governor and enacted, the Illinois e-waste program will continue as is in 2018 and transition to the new program starting in 2019.
EDGE Discussions Continue
Illinois’ EDGE tax credit expired on April 30 leaving the Department of Commerce & Economic Opportunity without it’s primary incentive to attract and retain companies. While various proposals were introduced in Springfield, lawmakers left town without extending the EDGE program or passing a new economic development program such as THRIVE.
Rep. Mike Zalweski (D-Chicago) and Rep. David Harris (R-Arlington Heights) are leading efforts to pass an EDGE reform bill and extension during the next week. The IMA has been in a continuous discussion with lawmakers and the Department of Commerce & Economic Opportunity to ensure that the final language includes a retention credit to help current Illinois businesses along with removing politically-motivated provisions that require an employer to repay all incentives if they ever move a single job out of state at any time in the future.
The IMA is hopeful that both sides will reach consensus in the coming days and pass a bill to the Governor’s desk.
