Opt-out comes to South Carolina

A Texas-based organization supported by Walmart, Best Buy, Lowe's, and other multistate employers, is exploring pushing for legislation in South Carolina to allow employers to opt out of the workers' compensation system.

The Association for Responsive Alternatives to Workers' Compensation (ARAWC) held an exploratory meeting in March in Columbia, and has also met with the South Carolina Workers' Compensation Commission. At this point there are more questions than answers about how the opt-out plan could work, according to Commission chairman Scott Beck.

ARAWC was among those pushing for an opt-out provision in Tennessee this year. The bill failed to pass but got some attention from supporters and critics. To date, only Texas and Oklahoma allow employers the option of not carrying state-mandated workers' compensation coverage.

ARAWC has said it sees several southeastern states as fertile territory receptive to its opt-out alternative. The group is a trade association of employers who've opted out in Texas and Oklahoma and want to do the same elsewhere.

According to media reports, ARAWC is also supported by Safeway, Macy's, Kohl's, and Sysco Food Services, among other large employers. The group's members include broker AmWins Group, Great American Insurance Group, and Sedgwick. ARAWC offers various levels of membership, ranging from Full Member ($25,000 annual dues) to Friends of ARAWC ($1,000 annual dues).

Opt-out provisions recently received harsh treatment from Mother Jones, the liberal but well-regarded publication. It noted although employers are still required to provide some semblance of workers' compensation, they can write their own rules governing when, for how long, and for which reasons an injured employee can receive medical benefits and wages.

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In Texas, for instance, Walmart has written a plan that allows the company to select the arbitration company that hears claims disputes. In Oklahoma, Dillard's requires workers to report injuries before the end of their shift to be eligible for workers' comp.

The Center for Justice & Democracy at New York Law School also noted the enormous discretion employers enjoy under opt-out plans: An employer can decide whether a worker qualifies for any benefits. It can refuse to approve any treatment. It can completely deny compensation for certain kinds of disability.

"Depending on the law, an employee may retain the right to sue an employer for negligence. However, as a condition of employment, the employer can force the employee to sign a contract so all cases are resolved through an employer-designed, secret arbitration system rather than in court," the center notes.

Legislation introduced in Tennessee this year specified the following minimum benefits:

  • • Medical expenses for up to 156 weeks or three years, up to $300,000 per employee (amended to $500,000).
  • • Temporary disability starting on the fourth day of disability of at least 70% of the employee's average weekly wages but up to 110% of the state's average weekly wage for at least 156 weeks.
  • • Death and scheduled dismemberment benefits up to $300,000 per employee.
  • • A combined single limit that is at least $750,000 per employee and $2 million per occurrence.

The bill allowed workers to sue for higher benefits, including economic and non-economic damages.

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