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NEW YORK STATE‘S 2007 WORKERS‘ COMPENSATION
REFORM: SUCCESS OR FAILURE?
Mary L. D‘Agostino*
I. INTRODUCTION
In comparison to other forms of liability, the notion that an
employer is responsible for compensating an employee for an injury
occurring in the course and scope of his or her employment is a
relatively recent development.1 Germany has long been credited
with enacting the world‘s first workers‘ compensation statute, when
the country enacted the Bismarck Accident Insurance Law of 1884.2
Several years later, in 1910, New York State became one of the first
* Editor-in-Chief; J.D. Candidate, Albany Law School, 2013; Le Moyne College, B.S.
Human Resources Management and Industrial Relations, 2006. My sincerest thank you to
Christine Sgarlata Chung for her continuing support and guidance, the membership of the
Albany Law Review for their editorial support, and to Joshua and Lucca Bennett for their
endless encouragement.
1 At the turn of the twentieth century in the United States, workers injured on the job
were compensated via the ―negligence liability system‖ which was the ―common law rule[] of
negligence combined with the defenses of assumption of risk, fellow servant, and contributory
negligence.‖ PRICE V. FISHBACK & SHAWN EVERETT KANTOR, A PRELUDE TO THE WELFARE
STATE: THE ORIGINS OF WORKERS‘ COMPENSATION 28 (2000). When President Theodore
Roosevelt delivered his State of the Union Address to Congress in late 1908, he noted that
there was no other area where state and national legislation lagged ―so far behind practically
the entire civilized world.‖ Theodore Roosevelt, President, U.S., Eighth Annual Message
(Dec. 8, 1908), reprinted in JOINT COMM. ON PRINTING OF THE HOUSE & SENATE, 16 A
COMPILATION OF THE MESSAGES AND PAPERS OF THE PRESIDENTS 7198, 7208 (1917); see also J.
HAMPDEN DOUGHERTY, CONSTITUTIONAL HISTORY OF THE STATE OF NEW YORK 363 (The
Lawbook Exchange, LTD, 2d ed. 2004) (explaining that President Roosevelt mentioned the
lack of liability and compensation legislation in the United States in his 1908 address).
2 See generally John M. Kleeberg, From Strict Liability to Workers‘ Compensation: The
Prussian Railroad Law, the German Liability Act, and the Introduction of Bismarck‘s
Accident Insurance in Germany, 1838–1884, 36 N.Y.U. J. INT‘L. L. & POL. 53, 61–62 (2003)
(tracing the roots of modern liability schemes by examining them in the context of Germany‘s
enactment of the first modern strict liability act to the first modern workers‘ compensation
act). Other European countries soon followed Germany‘s lead, with Austria enacting a
workers‘ compensation statute in 1887, Norway in 1894, Finland in 1895, and Great Britain
in 1897. E. Clarence Aiken, Accidents—Workmen‘s Compensation, 1 N.Y. ST. B. ASS‘N BULL.
361, 361 (1929). Italy, Denmark and France soon followed suit by enacting laws in 1898. Id.
In addition, Spain, the Netherlands, Greece, and Sweden enacted statutes after the turn of
the century. Id.
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states to enact a compulsory workers‘ compensation scheme.3
Although the New York State Court of Appeals ultimately declared
the statute unconstitutional,4 a series of events had been set in
motion that lead to the passage of a predecessor form of New York‘s
current workers‘ compensation system in 1914.5
Despite New York‘s progressiveness, in the years after the
workers‘ compensation statute was enacted, it was much maligned
and condemned by parties on both sides of an extraordinarily
adversarial system.6 While some of the criticism focused on how
expensive the system is for New York‘s employers,7 other criticism
focused on perceived benefit inequities faced by injured workers.8
These well-founded criticisms were primary driving factors behind
the New York State Workers‘ Compensation Reform Bill, a piece of
legislation passed in 2007, which was aimed at remedying both of
these system denunciations.9
3 See FISHBACK & KANTOR, supra note 1, at 103. All but six states passed some form of a
workers‘ compensation scheme between 1911 and 1920.
REPORT OF THE NATIONAL
COMMISSION ON STATE WORKMEN‘S COMPENSATION LAWS 34 (1972). Mississippi was the last
state to enact a workers‘ compensation statute in 1949. Id. at 45; P. Blake Keating,
Historical Origins of Workmen‘s Compensation Laws in the United States: Implementing the
European Social Insurance Idea, 11 KAN. J.L. & PUB. POL‘Y 279, 301 (2001–02).
4 See infra Part II.A.
Wisconsin, in 1911, was the first state to enact a workers‘
compensation scheme that was able to withstand judicial review. Eston W. Orr, Jr., Note,
The Bargain is No Longer Equal: State Legislative Efforts to Reduce Workers‘ Compensation
Costs Have Impermissibly Shifted the Balance of the Quid Pro Quo in Favor of Employers, 37
GA. L. REV. 325, 325 (2002) (citing Martha T. McCluskey, The Illusion of Efficiency in
Workers‘ Compensation ―Reform‖, 50 RUTGERS L. REV. 657, 669 (1998)). Since the Wisconsin
workers‘ compensation statute was elective for Wisconsin‘s employers, it more easily
withstood a constitutional challenge. See Borgnis v. Falk Co., 133 N.W. 209, 218 (Wis. 1911).
5 Prior to 1978, New York‘s system was commonly referred to as ―workmen‘s
compensation‖ until the title of the law was changed to ―workers‘ compensation.‖ 1978 N.Y.
Laws 5. The change was made to ―obviate any sexist distinction‖ between workers and bring
New York into conformance with other states already using the term ―workers‖ in their
respective statutes. MEMORANDUM OF THE WORKER‘S COMPENSATION BOARD, S. 5049, 201st
Sess. (1978), reprinted in N.Y. STATE LEGISLATIVE ANNUAL 1978, at 103.
6 N.R. Kleinfield & Steven Greenhouse, For Injured Workers and Their Bosses, a Costly
Legal Swamp, N.Y. TIMES, Mar. 31, 2009, at A1 (―New York, a pioneer of the [workers‘
compensation system,] . . . is widely recognized as the most adversarial.‖).
7 See, e.g., Erik Kriss, Local Lawyer Nominated to Head Workers Comp Board, SYRACUSE
HERALD-J., Mar. 14, 1995, at C8 (statement of Governor Pataki) (―‗Skyrocketing workers‘
compensation costs are one of the main obstacles to economic growth and opportunity.‘‖); see
also Alan Wechsler, Proposal Would Cap Payment Length, TIMES UNION (Albany), Mar. 24,
2004, at E1 (―[T]he cost of workers‘ compensation is driving business out of New York.‖).
8 See, e.g., Robert Grey, Op-Ed., The Claim Game, N.Y. TIMES, Oct. 1, 2006, § 14, at 13
(arguing that the benefits received by employees injured on the job are woefully inadequate
and too many premium dollars paid by employers are kept by insurance companies).
9 See generally Press Release, Workers‘ Compensation Legislation Will Reduce Costs and
Increase Benefits (Mar. 13, 2007) (on file with author) (internal quotation marks omitted)
(―[When an agreement was reached, New York State was] reversing a trend that hampered
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In commenting on the passage of the bill, Senator Joseph Bruno,
then the Majority Leader, noted that ―[t]he workers‘ compensation
reform law is a tremendous victory for workers who will receive
increased benefits, and for businesses that will see a significant
reduction in premiums.‖10 Then-Governor Eliot Spitzer expressed a
similar sentiment and hailed the reform legislation as a win for
New York‘s employers as well as a win for New York‘s injured
workers.11 Despite what seemed to have been nearly universal
praise of the bill,12 since 2007, both employers and injured workers
have expressed their unhappiness with the legislation; however, it
seems that it has at least minimally accomplished what it set out to
do: reduce employer premiums and increase injured worker benefit
levels.
This note begins by tracing the history of the workers‘
compensation system in New York and providing a broad overview
of how the system has generally operated since the system was
enacted.13 Part III examines the events, circumstances, and
concerns that lead to the passage of the 2007 reform legislation.14
Part IV examines the changes that were implemented to the system
by the legislation, with a focus on premiums paid by employers and
benefits paid to injured workers.15 Finally, Part V analyzes and
considers whether employers have seen a reduction in workers‘
compensation premiums concomitantly with injured workers seeing
a weekly benefit increase since the 2007 reform legislation was
passed and suggests that New York should consider additional
legislative action to ensure the long-term success of the reforms.16
II. BRIEF HISTORY OF THE WORKERS‘ COMPENSATION SYSTEM IN
business growth for years and‖ will be ―better protecting workers in the event of a job-related
injury.‖).
10 Id.
11 Steven Greenhouse & N.R. Kleinfeld, Deal in Albany Overhauls Pay For Worker Aid,
N.Y. TIMES, Feb. 28, 2007, at A1 [hereinafter Deal in Albany] (statement of Governor Eliot
Spitzer) (―‗This is a remarkable win-win situation for both workers and employers.‘‖); see also
Press Release, Landmark Workers‘ Comp Accord Benefits Business and Labor (Feb. 27, 2007)
(on file with author) (statement of Governor Eliot Spitzer) (―‗[W]e‘ve developed an approach
that will achieve the twin goals of helping injured workers and improving the state‘s
competitiveness.‘‖).
12 See generally Press Release, supra note 9 (providing statements supporting the
legislation from multiple state leaders).
13 See infra Part II.
14 See infra Part III.
15 See infra Part IV.
16 See infra Part V.
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NEW YORK STATE
A. Initial Unsuccessful Attempts
Originally, the common law in New York State provided no
remedy for on-the-job accidents, absent negligence on the part of the
employer.17 In 1909, the New York State Legislature established a
committee, known as the Wainwright Commission, to study
industrial accidents in the state and ultimately make legislative
recommendations.18 More specifically, this committee was charged
with investigating ―the liability of employers to employees for
industrial accidents,‖ the ―efficiency, cost, justice, merits and defects
of [other states‘ and countries‘ workers‘ compensation] laws,‖ as well
as ―the causes of accidents to employees.‖19 Thereafter, those
appointed to the committee were required to report their findings to
the legislature along with their recommendations for ―legislation by
bill or otherwise‖ to the 1910 New York legislature.20
The Wainwright Commission‘s investigation was extensive; it
conducted fourteen executive sessions, eleven public hearings across
the state, examined 121 witnesses, and sent questionnaires to
members of the judiciary, labor organizations, and employers
located in New York.21 When it reported to the legislature, the
Commission advised that it was ―strongly of [the] opinion that the
present legal system of employers‘ liability in force in this State . . .
17 Ives v. S. Buffalo Ry. Co., 94 N.E. 431, 436 (N.Y. 1911); Ives v. S. Buffalo Ry. Co., 124
N.Y.S. 920, 922 (Sup. Ct. Erie County 1910), aff‘d, 125 N.Y.S. 1125 (App. Div. 4th Dep‘t 1910),
rev‘d, 94 N.E. 431 (N.Y. 1911). An early study found that when a fatal industrial accident
occurred, fifty-three percent of families were left without recourse in that they received no
compensation and ―were left by the employer to bear the entire income loss.‖ CRYSTAL
EASTMAN, WORK ACCIDENTS AND THE LAW 121 (Paul Underwood Kellogg, ed., photo. reprint
1969) (1910). Even though employers did not compensate for loss of income, they did tend to
pay for the injured worker‘s medical bills. Id. at 123 (noting that hospital charges were paid
by the employer in eighty-four percent of these cases).
18 1909 N.Y. Laws 1310–11. The Commission consisted of fourteen people: eight appointed
by members of New York‘s legislature and six appointed by the governor. Id. at 1310; see also
Ives, 94 N.E. at 435 (explaining the committee‘s membership). The Commission became
known as the Wainwright Commission after Senator Wainwright, who was elected as
chairman. Ives, 94 N.E. at 436.
19 1909 N.Y. Laws 1310. The Commission was given wide investigatory powers and was
permitted, among other things, to examine witnesses and documents and administer oaths.
Id. at 1311. The Commission was further appropriated ten thousand dollars to conduct its
investigation. Id.
20 Id. at 1310.
21 COMMISSION APPOINTED UNDER CHAPTER 518 OF THE LAW OF 1909 TO INQUIRE INTO THE
QUESTION OF EMPLOYERS‘ LIABILITY AND OTHER MATTERS, FIRST REPORT, S. Doc. No. 38, 133d
Sess., at 2, 73, 107, 108 (1910) [hereinafter WAINWRIGHT COMMISSION, FIRST REPORT].
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is fundamentally wrong and unwise and needs radical change.‖22
The Wainwright Commission noted that almost every country in
Europe had moved away from the fault-based system—then in place
in New York—to a workers‘ compensation system which provided
benefits to injured workers without regard to fault.23
The Wainwright Commission recommended that the legislature
make changes to existing laws, adopt an elective compensation plan
for some categories of employments, and adopt a compulsory
compensation plan for other categories of employments.24 The
Compulsory Compensation Act, as it was envisioned by the
Wainwright Commission, would have provided employees of
―certain very dangerous employments‖ with compensation for their
injuries that would have kept the worker out of ―absolute
destitution.‖25
The legislature heeded the Wainwright
Commission‘s recommendations and passed New York‘s first
workers‘ compensation statute on May 24, 1910.26 Taking effect on
September 1, 1910,27 the Act provided that when an accident arose
―out of and in the course of the employment,‖ the employer was
―liable to pay compensation under . . . the rates set out in‖ the Act.28
On September 2, 2010—the day after the Act became effective in
New York—Earl Ives, an employee of the South Buffalo Railway
Company, injured himself while working as a switchman with the
railroad.29 As a result of his injury, Mr. Ives was incapacitated from
22 Id. at 7. The Wainwright Commission‘s dissatisfaction with the system in place at the
time of the investigation was premised on four objections. Id. at 19. First, it felt that very
few injured workers received substantial compensation. Id. at 19–28 (including data
demonstrating that few workers received substantial compensation). Second, it felt that the
system was extremely wasteful. Id. at 19, 29–32 (containing data on the high litigation and
settlement costs). Third, it found that the system moved at a snail‘s pace, with a lengthy
delay between injury and actual compensation for the injury. Id. at 19, 32–33. Fourth, the
system that was in place caused antagonistic feelings between the employer and the
employee. Id. at 19, 33–36.
23 Id. at 8, 10.
24 Id. at 50. In the Wainwright Commission‘s first report, one member, George W. Smith,
who had been appointed by the governor, wrote separately and expressed his view that while
the research conducted had been extensive, any recommendations were premature and
additional research and investigation were necessary before making an adequate
recommendation. Id. at 1, 69.
25 Id. at 50; see also id. at 50–51 (listing the prospective categories of employment to which
the Act would apply).
26 See 1910 N.Y. Laws 625–33.
27 Id. at 633.
28 Id. at 629.
29 Brief in Support of Workmen‘s Compensation Act, at i, Ives v. S. Buffalo Ry. Co. (N.Y.
1911).
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his position with the railroad for seven weeks.30 Since the statute
provided that benefits did not start until an injured worker had
been either totally or partially incapacitated from gainful
employment for at least two weeks,31 Mr. Ives was due five weeks of
compensation.32
Following his on-the-job injury, Mr. Ives brought suit under New
York‘s newly enacted workers‘ compensation statute.33 In his
action, Mr. Ives alleged that he was injured by virtue of the ―risk or
danger of his employment‖ with South Buffalo Railway Company,34
and was entitled to five weeks of compensation.35 South Buffalo
Railway Company admitted every allegation contained within Mr.
Ives‘ complaint and unsuccessfully advanced three arguments
before the trial court as to why New York‘s statute was an
infringement of both federal and state constitutions.36 First, the
employer argued that the enacted statute was barred by the U.S.
Constitution as it deprived the employer of equal protection and of
due process rights to liberty and property.37 Second, the employer
argued that the statute violated New York State‘s constitutional
protection of the right to trial by jury.38 Third, the employer argued
that the statute violated the New York State Constitution by
―limit[ing] the amount recoverable in actions to recover damages for
injuries resulting in death.‖39 In rejecting the employer‘s assertions,
and directing a judgment for the plaintiff on the pleadings, the trial
court noted that ―every presumption is in favor of the
constitutionality of the act.‖40
After the Appellate Division, Fourth Department affirmed the
judgment without opinion and Justice Williams dissenting,41 the
defendant appealed to the Court of Appeals of the State of New
Id.
1910 N.Y. Laws 631.
32 Weekly benefits to incapacitated workers were capped at ten dollars per week and were
not permitted to extend beyond eight years from the date of injury. Id.
33 Ives v. S. Buffalo Ry. Co., 124 N.Y.S. 920, 922 (Sup. Ct. Erie County 1910), aff‘d, 125
N.Y.S. 1125 (App. Div. 4th Dep‘t 1910), rev‘d, 94 N.E. 431 (N.Y. 1911).
34 Id.
35 Brief in Support of Workmen‘s Compensation Act, supra note 29, at i.
36 Ives, 124 N.Y.S. at 922, 924.
37 Id. at 922.
38 Id.
39 Id.
40 Id. at 923–24.
41 Ives v. S. Buffalo Ry. Co., 125 N.Y.S. 1125, 1125 (App. Div. 4th Dep‘t 1910), rev‘d, 94
N.E. 431 (N.Y. 1911).
30
31
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York.42 After oral arguments were held on January 16, 1911,43 the
Court of Appeals issued an opinion, authored by Justice Werner,
which lauded the thoroughness and excellence of the Wainwright
Commission‘s report,44 but found that the compulsory compensation
statute was void as it unconstitutionally took property from
employers without the benefit of due process by virtue of the
liability imposed by the statute.45 The court took pains to note that
although the system dealing with workplace accidents in New York
State was unlike the systems that existed in other countries; other
countries were constitutional monarchies, unprotected by the
―rigidity of a written Constitution.‖46
B. From the Triangle Shirtwaist Factory Fire to a Constitutional
Amendment
The implications of the Court of Appeals‘ March 24, 1911 decision
in Ives v. South Buffalo Railway Co. were soon realized. On
Saturday, March 25, 1911, the day following the Ives decision, a
rapidly-spreading fire broke out on the eighth floor of the ten-story
Asch Building, located in Greenwich Village at the corner of Greene
Street and Washington Place,47 killing nearly 150 employees of the
Triangle Shirtwaist Company.48
For ninety years—until the
Brief in Support of Workmen‘s Compensation Act, supra note 29, at ii.
Id.
44 Ives v. S. Buffalo Ry. Co., 94 N.E. 431, 435–36 (N.Y. 1911).
45 Id. at 448. Following the Ives decision, the elective compensation scheme remained in
effect, but very few employers subscribed to it. FISHBACK & KANTOR, supra note 1, at 130.
46 Ives, 94 N.E. at 437. This is not to say the Court of Appeals‘ decision was universally
lauded when it was handed down. The decision, in fact, was bitterly divisive and was both
―violently criticised [sic] and vigorously defended.‖ DOUGHERTY, supra note 1, at 364.
Despite the divisiveness, the decision was not at all unusual for a Lochner-era court, which
frequently struck down ―social and economic legislation as unconstitutional encroachments on
the contract and property rights of businesses.‖ Orr, supra note 4, at 367 (citing McCluskey,
supra note 4, at 676) (reiterating that Lochner-era courts rejected such legislation on
constitutional grounds).
47 RICHARD A. GREENWALD, THE TRIANGLE FIRE, THE PROTOCOLS OF PEACE, AND
INDUSTRIAL DEMOCRACY IN PROGRESSIVE ERA NEW YORK 129 (2005); 141 Men and Girls Die
in Waist Factory Fire; Trapped High Up in Washington Place Building; Street Strewn with
Bodies; Piles of Dead Inside, N.Y. TIMES, Mar. 26, 1911, at 1 [hereinafter 141 Men and Girls
Die].
48 In the days, weeks, and months following the tragedy, there was a discrepancy in the
number of lives claimed in the Triangle Shirtwaist factory fire. See, e.g., 141 Men and Girls,
supra note 47, at 1 (noting that 141 employees had perished); 147 Dead, Nobody Guilty,
LITERARY DIG., Jan. 6, 1912, at 6, reprinted in JOANN E. ARGERSINGER, THE TRIANGLE FIRE:
A BRIEF HISTORY WITH DOCUMENTS 110 (2009) (indicating that 147 employees had lost their
lives); New York Fire Kills 148: Girl Victims Leap to Death From Factory, CHI. SUNDAY TRIB.,
Mar. 26, 1911, at 1 (denoting that 148 victims died in the factory fire); Thrilling Incidents in
42
43
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September 11th tragedies occurred at the World Trade Center—the
Triangle Shirtwaist fire notoriously remained New York‘s deadliest
workplace disaster.49
The Triangle Shirtwaist Company was responsible for the
manufacture of ―shirtwaists—inexpensive lightweight bodices made
of cotton or linen that were popular with women at the time.‖50 The
600 employees of the company51 occupied the eighth, ninth, and
tenth floors of the Asch Building.52 The majority of Triangle
Shirtwaist employees were young, female immigrants.53
The building, named after owner Joseph J. Asch, was ten
thousand square feet.54 Based on this size, the building should have
had three staircases, but instead had only two.55 At that time, no
law existed which would have required fire sprinklers to be
installed or fire drills to be held in a factory building such as the
Gotham Holocaust That Wiped Out One Hundred and Fifty Lives, CHI. SUNDAY TRIB., Mar.
28, 1911, at 2 (noting that 150 employees had lost their lives in the fire). Even articles
appearing decades after the fire occurred did not agree on the exact number of employees who
died on that fateful day. See, e.g., Ralph Katz, 50 Years Ago Today, 147 Died in the Triangle
Shirtwaist Fire, N.Y. TIMES, Mar. 25, 1961, at 28 (commemorating the 1911 fire and noting
that 147 people had perished in the disaster); Patricia McLaughlin, 146 Killed in 1911
Triangle Fire Still Remembered, TIMES UNION (Albany), Mar. 25, 1990, at G7 (indicating that
146 had been killed in the fire). In more recent years, it appears widely accepted that 146
employees of Triangle Shirtwaist Company perished on March 25, 1911, as a result of the fire.
See, e.g., DAVID VON DREHLE, TRIANGLE: THE FIRE THAT CHANGED AMERICA 3 (2003); Allen
Abel, Even Before 9/11, New York Was No Stranger to Tragedy, CALGARY HERALD, Sept. 18,
2011, at A11 (―[One hundred forty-six] seamstresses . . . were incinerated.‖); Clyde
Haberman, Choosing Not to Forget What Is Painful to Recall, N.Y. TIMES, Mar. 26, 2010, at
A19 (―[A] fire at the Triangle [S]hirtwaist factory took the lives of 146 garment workers.‖);
Vince Sgambati, Echoes of 1911 Triangle Fire, POST STANDARD, Mar. 31, 2011, at A15
(specifying that 146 employees perished in the blaze); Tom Topousis, Gov Boosts Sweatshop
‗Cops‘ to Help Mark 1911 Factory Fire, N.Y. POST, Mar. 26, 2001, at 12 (―[One hundred fortysix] workers . . . were burned to death.‖).
49 VON DREHLE, supra note 48, at 3; David Von Drehle, Trial By Fire: Vital Records Were
Missing–And Would Have Stayed Missing Were It Not for a Dead Lawyer‘s Vanity,
SMITHSONIAN, Aug. 2006, at 93, 93; see also People v. Gonzalez, 625 N.Y.S.2d 844, 847 n.2
(Sup. Ct. Bronx County 1995) (describing the fire as ―one of the worst‖ in New York City‘s
history). See NEW YORK STATE WORKERS‘ COMPENSATION BOARD, WORLD TRADE CENTER
CASES IN THE NEW YORK WORKERS‘ COMPENSATION SYSTEM 6 (2009), available at
http://www.wcb.ny.gov/content/main/TheBoard/WCBWTCReport2009.pdf,
for
more
information on the impact that the September 11th terrorist attacks had on New York‘s
workers‘ compensation system.
50 Lawrence M. Friedman & Joseph Thompson, Total Disaster and Total Justice:
Responses to Man-Made Tragedy, 53 DEPAUL L. REV. 251, 257 (2003).
51 141 Men and Girls Die, supra note 47, at 1.
52 Id; GREENWALD, supra note 47, at 129.
53 See William Greider, Introduction to LEON STEIN, THE TRIANGLE FIRE, at v–vi (2001)
(asserting that the victims of the fire were immigrant and female).
54 See STEIN, supra note 53, at 22–23.
55 Id. at 23.
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Asch Building.56 Further, the working conditions on the three floors
occupied by the factory were so overcrowded that many workers
were ―performing their jobs literally on top of one another.‖57 A
large pile of scrap fabric that had been accumulating on the eighth
floor for nearly three months further compounded the factory‘s
problems.58 While the exact cause of the fire is not precisely
known,59 it has been suggested that the fire was the result of a
carelessly discarded cigarette.60 The conditions in the factory, in
short, were an accident waiting to happen.
Shortly after four o‘clock that afternoon, on March 25, 1911,61
Joseph Wexler, a company watchman, signaled to employees on the
eighth floor that it was the end of their shift by ringing a bell. 62
Mere minutes after the workers began to file out, employee Eva
Harris noticed that something was burning and notified the
factory‘s production manager, Samuel Bernstein.63 Initial attempts
to put out the fire were unsuccessful64 and the fire spread across the
eighth floor rapidly.65 As the fire spread, so did the employees‘
panic as those attempting to escape the blaze soon discovered the
door to the stairwell had been chained shut.66 Executive employees
56 Id. at 25. Even though by today‘s standards, the laws seem woefully inadequate and
ripe for tragedy, the dangerous conditions of the Asch Building, and other factories in the
area did not go unnoticed. See, e.g., Samuel Gompers, Hostile Employers, See Yourselves As
Others Know You, 18 AM. FEDERATIONIST 353, 356–61 (1911) (outlining several criticisms of
the conditions and noting that a local industrial engineer had written a letter to company
officials offering to train them in conducting fire drills, which had gone unanswered).
57 GREENWALD, supra note 47, at 129.
58 Id. at 129–30; STEIN, supra note 53, at 33. The scrap fabric was the by-product of the
clothing made by employees of Triangle Shirtwaist. STEIN, supra note 53, at 33. A scrap
fabric dealer would stop by the eighth floor every so often to collect and pay Triangle owners
for these scrap pieces. GREENWALD, supra note 47, at 129–30; STEIN, supra note 53, at 33.
Prior to the disaster, a fabric dealer had collected more than two thousand pounds of scrap
fabric in January of 1911. STEIN, supra note 53, at 33.
59 See generally GREENWALD, supra note 47, at 129 (positing that the most likely cause of
the fire was the careless discarding of a cigarette).
60 Id. New York City did not turn its focus to the hazards associated with permitting
smoking in the workplace until more than eighty years after the Triangle fire, when it
enacted the Smoke-Free Air Act of 1995. N.Y.C., N.Y., ADMIN. CODE §§ 17-501–14 (1995).
While the Act still permitted smoking in the workplace in certain limited circumstances, see
id. § 17-505, it significantly curtailed it in other respects, id. §§ 17-501–14.
61 The precise time is unknown. See STEIN, supra note 53, at 30.
62 GREENWALD, supra note 47, at 129; STEIN, supra note 53, at 30, 31.
63 GREENWALD, supra note 47, at 130; STEIN, supra note 53, at 33–34. Eva Harris was the
sister of Isaac Harris, a co-owner of the Triangle Shirtwaist factory. STEIN, supra note 53, at
33–34.
64 Id. at 34.
65 See 141 Men and Girls Die, supra note 47, at 1.
66 GREENWALD, supra note 47, at 130; see STEIN, supra note 53, at 37–39. Blanck and
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of Triangle Shirtwaist, housed on the tenth floor, were able to
escape67 after receiving notice of the fire from the eighth floor, but
failed to notify the 260 employees still working on the ninth floor of
the factory or remove any of the chains from the doors which
blocked the employees‘ exit to safety.68 When the blaze began to
encompass those ninth floor workers, many elected to jump to their
deaths,69 in spite of efforts by New York City‘s firemen to catch the
falling workers.70 Reports have said that it took eighteen minutes
to get the blaze under control,71 but in that short period of time, it
had claimed the lives of nearly 150 Triangle Shirtwaist employees.72
The district attorney swiftly indicted the two owners of the
Triangle Shirtwaist factory, Isaac Harris and Max Blanck, for first
and second-degree manslaughter.73 Max D. Steuer, attorney for
Harris and Blanck, immediately challenged all seven indictments in
the Court of General Sessions.74 In his November 1911 opinion,
Judge O‘Sullivan disallowed all but one of the defendants‘
challenges to the indictment.75 When the defendants proceeded to
trial, Max D. Steuer represented them again.76 After a lengthy trial
in December of 1911 and less than two hours of deliberations, the
jury found the factory owners not guilty on all charges.77
Harris admitted during their later criminal trial that they were concerned with preventing
employee theft, although the value of goods taken over the years was not in excess of twentyfive dollars. Transcript of Record at 1864–68, People v. Harris, 134 N.Y.S. 409 (N.Y. County
Ct. 1911) (No. 82,980), available at http://digitalcommons.ilr.cornell.edu/triangletrans/18
[hereinafter Transcripts of Criminal Trial].
67 141 Men and Girls Die, supra note 47, at 1 (noting that the tenth floor workers were
able to escape the deadly by exiting onto the roof of the nearby New York University building
via the Asch building‘s roof).
68 GREENWALD, supra note 47, at 130.
69 See id.; 141 Men and Girls Die, supra note 47, at 1.
70 GREENWALD, supra note 47, at 133–34; 141 Men and Girls Die, supra note 47, at 1.
71 STEIN, supra note 53, at 73.
72 See note 48, supra, for a discussion on the number of lives lost in the fire.
73 Transcripts of Criminal Trial, supra note 66, at 1.
74 People v. Harris, 134 N.Y.S 409, 410 (Ct. Gen. Sess. N.Y. County 1911).
75 Id. at 416 (―The fourth indictment [was disallowed because it] . . . contain[ed] no
statement of the facts and circumstances which constitute the offense with which the
defendants [were] charged.‖).
76 Transcripts of Criminal Trial, supra note 66, at 1. It was generally felt by not only
members of the judiciary, but by the general public, that if a client set out to hire Mr. Steuer
for representation, then the client was desperate. ARON STEUER, MAX D. STEUER: TRIAL
LAWYER 21 (1950). Mr. Steuer‘s cross-examination during this particular trial has been
lauded by the legal community. Id. at 109; see also Max D. Steuer, Two ―Lurking, if Not
Great, Dangers‖ That Confront a Cross-Examiner, in FRANCIS WELLMAN, THE ART OF CROSSEXAMINATION 193–203 (4th ed. 1986) (discussing the significance of a well-executed crossexamination).
77 See Transcripts of Criminal Trial, supra note 66, at 3, 2204; see also Triangle Owners
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Because the Court of Appeals‘ decision in Ives v. South Buffalo
Railway Co. had struck down New York‘s workers‘ compensation
scheme, the victims of the fire and the victims‘ families were left
with little recourse for the suffered losses.78 Several families of the
victims brought suit against Harris and Blanck and three years
following the duo‘s criminal acquittal, the co-owners settled each of
the twenty-three civil suits for seventy-five dollars per life lost in
the blaze.79
Although New York State had passed a workers‘ compensation
scheme at the Wainwright Commission‘s recommendation, prior to
the Triangle tragedy, the general public simply did not see
industrial accidents as a pervasive problem in need of correction in
New York.80 The fire, coupled with a stream of media coverage
emphasizing the grisliness of the tragedy,81 overwhelmed the
general public‘s collective conscience and brought the issue to a
Acquitted by Jury, N.Y. TIMES, Dec. 28, 1911, at 1 (discussing the jury‘s decision, which found
Harris and Blanck not guilty of first and second-degree manslaughter). The jury had been
asked to decide whether one Triangle Shirtwaist employee, Margaret Schwartz, had
asphyxiated on smoke because Harris and Blanck ―had locked and kept locked the door on the
ninth floor‖ and whether there was a ―cause and effect between [the] locked door on the one
hand, if it was locked, and the death of Margaret Schwartz on the other hand.‖ Transcripts of
Criminal Trial, supra note 66, at 12, 2192, 2194. The general public was outraged at the
acquittal of Harris and Blanck and the District Attorney re-filed charges against the pair in
March of the following year. See Triangle Owners Acquitted by Jury, supra, at 1 (stating that
charges were still pending on other indictments at the time of the acquittal); Discharge
Triangle Owners, N.Y. TIMES, Mar. 22, 1912, at 3. The presiding judge, Judge Samuel
Seabury, ordered the impaneled jury to find for the defendant, citing double jeopardy
principles. GREENWALD, supra note 47, at 152; STEIN, supra note 53, at 205.
78 See Ives v. S. Buffalo Ry. Co., 94 N.E. 431, 448 (N.Y. 1911). In the aftermath of the fire,
the Red Cross Committee collected $103,899.38 for the fire victims‘ families. RED CROSS
EMERGENCY RELIEF COMM., EMERGENCY RELIEF AFTER THE WASHINGTON PLACE FIRE: NEW
YORK, MARCH 25, 1911, at 7 (1912). In granting relief to families, each fire victim was
considered on a case-by-case basis and the Red Cross‘s goal was to avoid a lower standard of
living for a particular family because of the loss sustained. Id. at 8. Of the nearly $104,000
that the Red Cross collected, $80,556.16 in relief had been distributed at the time of the Red
Cross‘ report. Id. at 16. Relief ranged from $50 given to a young Italian woman to
compensate her for the clothing she lost in the fire, id. at 20, to $1,000 to a young Russian girl
paralyzed by the fire, id. at 28.
79 GREENWALD, supra note 47, at 152; STEIN, supra note 53, at 207. Although the amount
paid out to the victim‘s families in the twenty-three civil suits amounted to less than $2000,
GREENWALD, supra note 47, at 152; STEIN, supra note 53, at 207, Harris and Blanck collected
$264,925 in insurance proceeds, which was $64,925 more than their policy limit, Arthur F.
McEvoy, The Triangle Shirtwaist Factory Fire of 1911: Social Change, Industrial Accidents,
and the Evolution of Common-Sense Causality, 20 LAW & SOC. INQUIRY 621, 641 (1995).
80 McEvoy, supra note 79, at 644.
81 See, e.g., 141 Men and Girls Die, supra note 47, at 1 (―[T]hirty bodies clogged the
elevator shaft.‖); New York Fire Kills 148: Girl Victims Leap to Death From Factory, supra
note 48, at 1 (―[A]t dusk firemen and policemen were pulling many half nude and burned
corpses from this hole.‖).
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head.82 In the days following the fire, many local and state agencies
launched investigations into the circumstances and cause of the
fire.83
Specifically, on June 30, 1911, the New York State
Legislature authorized the creation of the nine-member Factory
Investigation Commission (―FIC‖),84 which was charged with
investigating the working conditions for manufacturing operations
across the state.85 With the FIC‘s investigation findings, the
legislature hoped to enact ―remedial legislation . . . to promote the
best interests of the community.‖86 The FIC conducted twenty-two
public hearings, fifteen executive sessions, and visited 1,836
companies in twenty different industries across the State of New
York.87 The scope of the FIC‘s investigation was due in no small
part to the breadth of authority granted to them.88 Ultimately, in
the years the FIC was in existence, it orchestrated the passage of
thirty-six statutes that protected New York‘s employees,89 ranging
from fire safety regulations to sanitation regulations.90
Despite the harsh result to the victims of the fire and the victims‘
families, New York‘s legislature would be unable to enact a workers‘
compensation statute without first amending New York‘s
constitution due to the Court of Appeals‘ prior decision in Ives v.
82 In examining how problems capture the attention of those best-equipped to solve them,
John W. Kingdon noted that ―[c]onditions must deteriorate to crisis proportions before the
subject achieves enough visibility to become an active agenda item.‖ JOHN W. KINGDON,
AGENDAS, ALTERNATIVES, AND PUBLIC POLICIES 100 (1984).
83 GREENWALD, supra note 47, at 145 (―[T]he Fire Department, Building Department,
Office of the Mayor, Coroner‘s Office . . . District Attorney . . . [and] the New York State
Assembly and Senate [opened investigations].‖).
84 1911 N.Y. Laws 1269–70. The Commission was to consist of two members from the
senate, three members from the assembly, and four other governor-appointed members. Id.
at 1269. Famed labor leader and founder of the American Federation of Labor, Samuel
Gompers, was one of the nine members appointed to the Commission. N.Y. FACTORY
INVESTIGATING COMM‘N, PRELIMINARY REPORT, S. 21-30, 135th Sess., pt. 1, at 14 (1912)
[hereinafter FIC, PRELIMINARY REPORT].
85 1911 N.Y. Laws 1269–70. Much like the Wainwright Commission of 1909, the FIC was
appropriated ten thousand dollars to assist it in its investigation. Id. at 1270.
86 Id.
87 FIC, PRELIMINARY REPORT, supra note 84, at 22–24.
88 GREENWALD, supra note 47, at 157. While that Wainwright Commission seemed to have
very broad powers for the time period in New York, the scope of the FIC‘s powers has been
described as ―unprecedented.‖ VON DREHLE, supra note 48, at 212. The FIC had the
authority ―to subpoena witnesses and documents, [employ counsel and] to elect its own
members.‖ Id.; see also 1911 N.Y. Laws 1270 (describing the powers of the commission and
its members).
89 McEvoy, supra note 79, at 646.
90 GREENWALD, supra note 47, at 170–78 (describing various laws passed on different
topics).
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South Buffalo Railway Co.91 In 1913, New York‘s electorate was
asked to vote on ―Amendment No. 2,‖ one of four constitutional
amendments before New York‘s voters that year.92 After the
majority of the voting public approved ―Amendment No. 2,‖ New
York‘s legislature was permitted to ―enact laws to protect the lives,
safety, or health of employees.‖93 Following the amendment‘s
approval, Governor Glynn signed into law a compulsory workers‘
compensation statute for New York‘s employees and employers,94
allowing those affected by workplace accidents to apply for
compensation beginning July 1, 1914,95 a mere three years following
91 See Ives v. S. Buffalo Ry. Co., 94 N.E. 431, 441–42 (N.Y. 1911) (stating that the state
may change statutes and common law to create liabilities that never existed before but such
power must exercised be within constitutional limits). At the time of the Court of Appeals‘
decision in Ives v. South Buffalo Railway Co., the process of amending New York‘s
constitution was governed by Article XIV of the Fourth Constitution of New York, 1894. N.Y.
CONST. OF 1894, art. XIV, §§ 1, 2. Article XIV provided that the constitution could be
amended at a constitutional convention, which could either be called by the legislature or a
majority of New York‘s voters answering yes to the question: ―Shall there be a convention to
revise the [c]onstitution and amend the same?‖ Id. § 2. Alternatively, the New York State
Assembly or New York State Senate could propose a constitutional amendment. Id. § 1. If
certain requirements are met, the proposed amendment is then submitted to the electorate
for consideration. Id. The proposed amendment would take effect only if the majority of
voters approved it. Id. While these two methods are substantially similar to the
constitutional amendment process that is in place under New York‘s current constitution, for
a more thorough discussion of the evolution of the amendment process in New York, see
Jerald A. Sharum, Comment, A Brief History of the Mechanisms of Constitutional Change in
New York and the Future Prospects for the Adoption of the Initiative Power, 70 ALB. L. REV.
1055 (2007).
92 See 1912 N.Y. Laws 1382–83; S. 1521, 136th Sess. (1913), reprinted in NEW YORK
LEGISLATIVE RECORD AND INDEX 657 (1913); see also The Four Amendments, N.Y. TIMES, Nov.
3, 1913, at 8 (listing each of the four amendments).
93 N.Y. CONST. of 1894, art. I, § 19 (1913); The Four Amendments, supra note 92, at 8; see
also N.Y. CONST. art I, § 18 (―Nothing contained in this constitution shall be construed to
limit the power of the legislature to enact laws for the protection of the lives, health, or safety
of employees; or for the payment . . . of compensation for injuries to employees or for death of
employees . . . .‖). Despite the fact that the enactment of the statute was preceded by the
constitutional amendment, challenges to the constitutionality of the newly passed workers‘
compensation law were still brought, albeit unsuccessfully. See Jensen v. S. Pac. Co., 109
N.E. 600, 604 (N.Y. 1915) (―[The enacted statute] is plainly justified by the amendment to our
own state [c]onstitution, and [does not violate] the Constitution of the United States.‖), rev‘d
on other grounds, 244 U.S. 205 (1918); N.Y. Cent. R.R. Co. v. White, 243 U.S. 188, 208–09
(1917) (affirming the Court of Appeals‘ decision and finding that the U.S. Constitution was
not violated by the enactment of the workers‘ compensation statute).
94 1914 N.Y. Laws 216; Compensation Bill Is Signed By Glynn, N.Y. TIMES, Mar. 17, 1914,
at 1.
95 1914 N.Y. Laws 250–51. The first claim for benefits under the new Act was filed by
Sadie Althen, whose husband, William Althen, fell twenty-two stories to his death on July 1,
1914, as he traversed a building‘s framework with lumber. Walter Gellhorn & Louis Lauer,
Administration of the New York Workmen‘s Compensation Law (Part I), 37 N.Y.U. L. REV. 3, 7
(1962).
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the Court of Appeals‘ decision in Ives v. South Buffalo Railway Co.96
C. New York‘s Workers‘ Compensation System
When it was originally enacted in 1914, New York‘s Workers‘
Compensation Act was fairly limited in scope, applying only to those
industrial injuries and deaths occurring in one of the forty-two
statutorily enumerated hazardous occupations.97 Since the original
enactment, however, the breadth of the law has expanded
significantly.98 Presently, employees engaged in most types of
employment are covered.99
The statute is often referred to as a ―no-fault‖ statute because
eligible injured workers are entitled apply for and receive benefits
without regard to whose negligence resulted in the accident.100
Under most circumstances, the Act is an employee‘s exclusive
remedy, meaning that an injured worker or deceased worker‘s
family cannot sue an employer for remuneration via civil process in
state or federal court.101
96 The rapidity of the constitutional amendment and enactment of the law has been
deemed impressive. DOUGHERTY, supra note 1, at 365–66; see also PETER J. GALIE, ORDERED
LIBERTY: A CONSTITUTIONAL HISTORY OF NEW YORK 206 (1996) (describing how quickly the
amendment passed). New York was one of seven states to amend their state constitutions in
order to temper constitutional challenges to workers‘ compensation schemes. Keating, supra
note 3, at 300.
97 See 1914 N.Y. Laws 217–20. Those employees not employed in one of the enumerated
―hazardous‖ occupations were precluded from a benefits award. See, e.g., Schmidt v. Berger,
116 N.E. 382, 383 (N.Y. 1917) (reversing the appellate division and finding that a building
superintendent who broke his arm after a fall from a stepladder was precluded from workers‘
compensation benefits because he was not engaged in a hazardous occupation); see also
Martin Minkowitz, Practice Commentaries, in N.Y. WORKERS‘ COMP. LAW § 2 (McKinney
2012) (―The Workers‘ Compensation Law was originally conceived only to provide coverage for
employees engaged in a limited number of specified hazardous employments.‖).
98 Gellhorn & Lauer, supra note 95, at 16.
99 N.Y. WORKERS‘ COMP. LAW § 2(5) (McKinney 2012) (―‗Employment‘ [is defined broadly
and] includes employment in a trade, business or occupation carried on by the employer for
pecuniary gain.‖); see also Martin Minkowitz, Practice Commentaries, in N.Y. WORKERS‘
COMP. LAW § 3 (McKinney 2012) (observing that workers‘ compensation coverage has
expanded over the years to include ―almost all employees‖ employed in the state).
100 N.Y. WORKERS‘ COMP. LAW § 10 (McKinney 2012). However, employers are not liable
for willful injuries or injuries which result solely from the use of controlled substances or
alcohol. Id.
101 Id. § 11. This doctrine of exclusive liability has been found inapplicable in the case of
uninsured employers and employer-caused intentional/deliberate injuries. See Martin
Minkowitz, Practice Commentaries, in WORKERS‘ COMP. § 11 (McKinney 2012) (explaining the
uninsured employer exception in certain circumstances). In addition, an employee may still
bring suit against a third party that is responsible for injuries, even if the injury occurred on
the job. Burns v. Varriale, 879 N.E.2d 140, 144 (N.Y. 2007) (quoting WORKERS‘ COMP. §
29(1)).
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Under the statute, an injured employee is generally entitled to
two types of benefits: medical and indemnity benefits.102 Medically,
employers must furnish injured employees with causally related
medical care for as long as it is medically necessary to treat the
injury.103 Injured workers are generally permitted to select their
own medical provider to treat them for their work-related
injuries,104 as long as whomever they select has been authorized to
treat by the Workers‘ Compensation Board.105 In addition to
medical treatment, employers are required to provide indemnity
benefits to injured workers, the amount of which will vary
depending on whether the injury results in the worker‘s total or
partial disability and whether that disability is temporary or
permanent.106
Administratively, the Workers‘ Compensation Board is comprised
of thirteen members, appointed by the governor, with at least four
members of the Board being admitted to practice law in the State of
New York.107 The Chair is the administrative head of the Board
and is vested with a wide array of powers to assist in the function of
the Board, ranging from designating the place and time for claim
hearings to issuing and revoking certificates of authorizations for
doctors.108
An administrative law judge, who has been appointed by the
Chair to hear claims, makes decisions on all claims for
102 See supra notes 100–01 (requiring employer to provide compensation to disabled
employees); infra notes 103–05 (requiring, inter alia, that an employer must provide
treatment and health care for employees, and allow for employees to select physician of his or
her choice). If an injured worker is killed in the course and scope of his or her employment,
the surviving spouse and children are entitled to death benefits. WORKERS‘ COMP. § 16.
Parents or siblings might be entitled to benefits if there is not a surviving spouse or child. Id.
103 WORKERS‘ COMP. § 13.
104 Id. § 13-a.
Other states, in contrast, do not permit injured workers to select their
medical provider. See, e.g., ALA. CODE § 25-5-77 (2012) (allowing the employer to select the
injured workers‘ medical provider and allowing the injured worker to switch providers once if
dissatisfied with selected physician); MO. REV. STAT. § 287.140 (2012) (providing that an
employee has the right to select his or her own medical provider ―at his own expense‖).
105 WORKERS‘ COMP. § 13-b.
There are certain exceptions to the Board-authorization
requirement, including those medical providers rendering emergency care. Id. It has been
estimated that only one third of New York‘s active and licensed physicians are authorized to
treat workers‘ compensation claimants. Greenhouse & Kleinfield, supra note 6, at A22.
106 WORKERS‘ COMP. § 15; see also Martin Minkowitz, Practice Commentaries, in WORKERS‘
COMP. § 15 (explaining that benefits are determined based on the extent and duration of a
worker‘s injury).
107 WORKERS‘ COMP. § 140. As initially enacted, the law provided for five commissioners.
1914 N.Y. Laws 236.
108 WORKERS‘ COMP. § 141.
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compensation.109 Determinations made by a law judge may be
appealed to a three-member Board Panel.110 The Board Panel‘s
decision is final unless one of the parties to the action elects to file
an appeal to the Third Department, Appellate Division.111 The
Third Department‘s determinations are reviewable only by New
York‘s highest court, the Court of Appeals.112
III. PROBLEMS LEADING TO THE PASSAGE OF THE 2007 REFORM BILL
When Governor Spitzer delivered his annual message in early
2007, he explained that the workers‘ compensation system in New
York had failed parties on both sides.113 As it stood, employers in
New York paid ―some of the highest premiums in the country‖ while
injured workers received ―some of the lowest benefits.‖114 Spitzer‘s
sentiments were echoed by others, saying that workers‘
compensation ―embod[ies] the worst of all possible worlds in New
York state: the benefits are way too low; the premiums are way too
high.‖115
A. Low Benefits
New York‘s workers‘ compensation system is premised on the idea
that those workers who are injured on the job should be
compensated for lost wages at an amount that is equal to two-thirds
of their earnings.116 In spite of this legislative intent, maximum
109 Id. § 150(a), (b); Martin Minkowitz, Practice Commentaries, in WORKERS‘ COMP. § 150.
However, the Board reserves ―broad authority to resolve factual issues based on credibility of
witnesses and draw any reasonable inferences from the evidence in the record.‖ Myers v.
Eldor Contracting Co., 705 N.Y.S.2d 108, 109 (App. Div. 3d Dep‘t 2000). The Board ―[is] not
bound by the [administrative law judge]'s credibility determination[] and [is] entitled to make
its own findings.‖ Ortiz v. Five Points Corr. Facility, 762 N.Y.S.2d 535, 535 (App. Div. 3d
Dep‘t 2003) (emphasis added).
110 WORKERS‘ COMP. § 23; Martin Minkowitz, Practice Commentaries, in WORKERS‘ COMP. §
23. One of the three Board Panel members must be licensed to practice law. Minkowitz,
supra. If a party elects to undertake an appeal to the Board Panel, the application must be
filed with the board within thirty days of the decision. Id.
111 WORKERS‘ COMP. § 23. Similar to the time frames set forth with respect to appeals to
the Board Panel, those parties electing to appeal to the Appellate Division, Third Department
must do so within thirty days after the Board renders its final decision. Minkowitz, supra
note 110.
112 See WORKERS‘ COMP. § 23.
113 2007 N.Y. Sess. Laws 1446 (McKinney).
114 Id.
115 Jon Coppelman, Comp in New York: Death Spiral Finally at an End?, WORKERS‘ COMP
INSIDER (Jan. 25, 2007), http://www.workerscompinsider.com/archives/000615.html.
116 GOVERNOR‘S PROGRAM BILL MEMORANDUM, Assemb. 7946, 213th Sess. (1990), reprinted
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benefit levels in New York have been historically slow to change,
frequently failing to keep pace with New York‘s average weekly
wage.117 Due to the cap on maximum weekly benefits, many injured
workers did not receive two-thirds of their earnings.118
Quite simply, New York‘s benefit levels have only increased when
the legislature undertook active measures to increase it.119 Prior to
the 2007 reform legislation, the last time the benefit rate had been
increased in New York was nearly fifteen years prior, in 1992, when
maximum benefit levels were increased to $400 per week.120 Upon
the passage of the 1992 benefit increase, the governor noted that
the prior ―compensation structure [was] inadequate.‖121
The
governor further noted that the benefit level increase was ―long
awaited and much overdue.‖122
As noted, New York‘s maximum benefit level remained at $400
for more than a decade, as the legislature failed to take action to
increase it since the previous change in 1992.123 In 2006, just prior
to the 2007 reforms, the $400 maximum benefit level was a mere
36.52% of the state‘s average weekly wage of $1,095.124 Although
in NEW YORK STATE LEGISLATIVE ANNUAL 1990, at 455 [hereinafter GOVERNOR‘S BILL
MEMORANDUM]. New York is one of thirty-six states that compensate an injured worker at
two-thirds of his or her gross earnings. H. Allan Hunt, Benefit Adequacy in State Workers‘
Compensation Programs, 65 SOC. SECURITY BULL., no. 4, 2003–2004, at 24, 25.
117 See GOVERNOR‘S BILL MEMORANDUM, supra note 116, at 456.
118 See id. at 455; GOVERNOR‘S APPROVAL MEMORANDUM, Assemb. 7946, 213th Sess.
(1990), reprinted in NEW YORK STATE LEGISLATIVE ANNUAL 1990, at 456 [hereinafter
GOVERNOR‘S APPROVAL MEMORANDUM]. A worker who earned in excess of $600 per week
would receive a maximum of $400 per week, despite the fact that two-thirds of his or her
earnings would be in excess of $400. See GOVERNOR‘S APPROVAL MEMORANDUM, supra.
119 See WORKERS‘ COMP. § 15(6) (setting maximum benefit level at four hundred dollars per
week for dates of accident after July 1, 1992).
120 Id.
121 GOVERNOR‘S BILL MEMORANDUM, supra note 116, at 455.
122 GOVERNOR‘S APPROVAL MEMORANDUM, supra note 118, at 456.
Elsewhere in the
country, states have had the foresight to build a mechanism in their workers‘ compensation
schemes whereby benefit levels are automatically increased, at least annually, by tying
maximum rates to the state‘s average weekly wage. See, e.g., IDAHO CODE ANN. § 72-409
(2012) (setting the maximum benefit level at ninety percent of the state‘s average weekly
wage to be reassessed on or before the first of June every year); ME. REV. STAT. tit. 39-A, § 211
(2012) (setting the maximum benefit level at ninety percent of the state‘s average weekly
wage to be reassessed yearly by the Department of Labor); UTAH CODE ANN. § 34A-2-410
(LexisNexis 2012) (setting the maximum benefit level at one hundred percent of the state‘s
average weekly wage at the time of the injury, to be reassessed on or before the first of June
every year).
123 See WORKERS‘ COMP. § 15(6). Prior to the increase for the injured occurring in 1992,
the maximum benefit level had remained untouched since 1983, when the benefit level was
capped at $300 per week. GOVERNOR‘S BILL MEMORANDUM, supra note 116, at 456.
124 See infra Table 3. Other estimates have put the $400 benefit level at forty percent of
New York‘s average weekly earnings. See Deal in Albany, supra note 11, at B6.
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only the District of Columbia had an average weekly wage that was
higher than New York‘s,125 forty-eight states had higher maximum
benefit levels than New York in 2006.126
B. High Premiums
The significant cost of employer workers‘ compensation premiums
were said to have been a large ―impetus for [employers] leaving the
state.‖127 The premium amount paid by an employer is a complex
actuarial calculation that involves multiple components, including
the nature of the employer‘s business, compliance with the law, the
existence of safe work practices, New York-mandated premium
assessments, payroll amounts, and the history and amount of
losses.128
In a comparison study conducted by the State of Oregon
Department of Consumer and Business Services for calendar year
2006,129 it was found that New York employers paid some of the
highest premium rates in the country.130 The study ranked the
amount of employer premiums paid by the states and the District of
Columbia as follows, from most expensive to least expensive:131
Table 1: 2006 Employer Premium Levels By State
2006
Ranking
State
Premium for every
$100 in payroll132
1
2
3
4
Alaska
California
Delaware
Kentucky
$5.00
$4.13
$3.91
$3.78
See infra Table 3.
See infra Table 3.
127 Deal in Albany, supra note 11, at A1.
128 See Components of Workers‘ Compensation Premium, N.Y. STATE INS. FUND,
http://ww3.nysif.com/Workers_Compensation/Policyholders/About_WC_Premium_and_Billing
/Components_of_WC_Premium (last visited Oct. 14, 2012).
129 The 2006 study, which the State of Oregon has conducted every two years since 1986,
was used since it was the most recent study preceding the 2007 reforms. OR. DEP‘T OF
CONSUMER & BUS. SERV., OREGON WORKERS‘ COMPENSATION PREMIUM RATE RANKING:
CALENDAR
YEAR
2006,
at
3
(2007)
available
at
http://www.cbs.state.or.us/imd/rasums/2083/06web/06_2083.pdf.
130 See infra Table 1.
131 See infra Table 1.
132 OR. DEP‘T OF CONSUMER & BUS. SERV., supra note 129, at 4.
125
126
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6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
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Montana
Florida
Vermont
Maine
Alabama
New York
Louisiana
Ohio
Oklahoma
Connecticut
Hawaii
District of Columbia
Texas
Pennsylvania
New Hampshire
Illinois
Minnesota
Rhode Island
New Jersey
Missouri
South Carolina
Tennessee
New Mexico
Wyoming
Colorado
Nevada
Mississippi
Idaho
Nebraska
West Virginia
Wisconsin
Washington
North Carolina
Utah
$3.69
$3.32
$3.24
$3.21
$3.17
$3.15
$3.10
$3.00
$2.96
$2.90
$2.89
$2.86
$2.84
$2.80
$2.75
$2.69
$2.69
$2.68
$2.52
$2.50
$2.50
$2.48
$2.41
$2.40
$2.40
$2.36
$2.29
$2.29
$2.25
$2.20
$2.18
$2.17
$2.17
$2.06
385
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39
40
41
42
43
44
45
46
47
48
49
50
51
Michigan
Maryland
Georgia
Oregon
Kansas
South Dakota
Iowa
Arizona
Massachusetts
Arkansas
Virginia
Indiana
North Dakota
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$2.05
$2.03
$2.02
$1.97
$1.84
$1.83
$1.75
$1.73
$1.70
$1.59
$1.52
$1.24
$1.10
The study found that for every $100 in payroll paid by a New
York employer, $3.15 went towards workers‘ compensation
premiums, making it the tenth most expensive workers‘
compensation premium in the United States.133 That is, premium
rates were lower in forty other states, plus the District of Columbia,
than they were in New York.134
IV. THE 2007 REFORMS
When Governor Spitzer assumed his gubernatorial office in early
2007, he expressed his desire to work with both business leaders
and labor leaders to come to a workable solution to those difficulties
faced by New York‘s workers‘ compensation system.135 His goal was
to confront those issues complained about by business and labor: the
benefit amounts received by injured workers and the premium
amounts paid by employers for their workers‘ compensation
coverage.136
133
134
135
B3.
See supra Table 1.
See supra Table 1.
Danny Hakim, Spitzer Speech Will Urge Fiscal Restraint, N.Y. TIMES, Jan. 3, 2007, at
136 Id.; see also Greenhouse & Kleinfield, supra note 6, at A22 (―New York‘s system [is] . . .
among the most expensive for business and the stingiest to workers.‖); Deal in Albany, supra
note 11, at A1 (―[T]he workers‘ compensation system in New York [is] an unfathomable mess,
with insurance premiums that are among the nation‘s highest even while worker benefits are
very low.‖).
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By all accounts, the 2007 reforms, which became law on March
13, 2007,137 were broad, sweeping, and touched several facets of
New York‘s system.138 Governor Spitzer summarized the 2007
reforms as changing the existing statute in the following manner:
(1) increasing maximum and minimum benefits for injured
workers and indexing the maximum to New York‘s average
weekly wage; (2) dramatically reducing costs in the workers‘
compensation system, making hundreds of millions of dollars
available annually to be translated into premium reductions;
(3) establishing enhanced measures to combat workers‘
compensation fraud; (4) replacing the Special Disability
Fund with enhanced protections for injured veterans; (5)
preventing insurances carriers from transferring costs to
New York employers by closing the Special Disability Fund
to new claims; and (6) creating a financing mechanism to
allow for settlement of the Fund‘s existing liabilities.139
A. Increased Benefits to Injured Workers
The 2007 reforms addressed injured worker‘s indemnity benefits
by increasing the maximum amount payable and ultimately tying
the maximum amount payable to New York State‘s average weekly
wage.140 The maximum benefit amounts received by injured
workers were increased as follows:
Table 2: Maximum Benefit Amounts by Date
Date of Accident
On or after July 1, 2007
On or after July 1, 2008
On or after July 1, 2009
On or after July 1, 2010
Maximum Benefit Amount
$500.00 per week141
$550.00 per week142
$600.00 per week143
$739.83 per week144
2007 N.Y. Laws 54.
GOVERNOR‘S PROGRAM MEMORANDUM #9, Assemb. 6163, 230th Sess. (2007), reprinted
in N.Y. STATE LEGISLATIVE ANNUAL 2007, at 4–5 [hereinafter GOVERNOR‘S MEMORANDUM #9].
139 Id. at 5.
140 2007 N.Y. Laws 56; see also WORKERS‘ COMP. § 15 (providing specific compensation
schedules). The initial benefit amount increases were set by statute; however, starting on
July 1, 2010, the maximum benefit amount was tied to New York‘s average weekly wage.
2007 N.Y. Laws 56.
141 2007 N.Y. Laws 56; WORKERS‘ COMP. § 15(6).
142 2007 N.Y. Laws 56; WORKERS‘ COMP. § 15(6).
143 2007 N.Y. Laws 56; WORKERS‘ COMP. § 15(6).
137
138
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On or after July 1, 2012
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$772.96 per week145
$792.07 per week146
B. Premium Reductions
The 2007 reforms brought forth several multi-faceted changes to
New York‘s workers‘ compensation system, which were designed to
reduce premium amounts paid by New York‘s employers. Each of
these changes is discussed more thoroughly in the ensuing sections.
1. Combating Fraud
Fraud, both by employers and workers, put a huge cost tension on
the workers‘ compensation system, and the 2007 reforms sought to
address the issue.147 With respect to employers, in early 2007, the
Fiscal Policy Institute suggested that New York‘s employers were
seriously deficient in that they failed to pay roughly anywhere from
$500 million to $1 billion in workers‘ compensation premiums
annually.148
Underpayment and non-payment of workers‘
compensation premiums result in increased system costs because
those employers who are fully compliant with the law bear the cost
of noncompliance by virtue of paying higher premiums since
employees will be compensated whether or not appropriate
premiums have been paid.149 To address this issue, the reforms
contained a provision that prohibited employers who were found to
be in violation of specific provisions from bidding on public works
144 Robert E. Beloten, New Maximum Weekly Benefit Rate Effective July 1, 2010, N.Y
STATE
WORKERS‘
COMPENSATION
BOARD,
http://www.wcb.ny.gov/content/main/SubjectNos/sn046_416.jsp (last visited Oct. 13, 2012).
145 Robert E. Beloten, New Maximum Weekly Benefit Rate Effective July 1, 2011, N.Y.
STATE
WORKERS‘
COMPENSATION
BOARD,
http://www.wcb.ny.gov/content/main/SubjectNos/sn046_465.jsp (last visited Oct. 13, 2012).
146 Robert E. Beloten, New Maximum Weekly Benefit Rate Effective July 1, 2012, N.Y.
STATE
WORKERS‘
COMPENSATION
BOARD,
http://www.wcb.ny.gov/content/main/SubjectNos/sn046_481.jsp (last visited Oct. 13, 2012).
147 See GOVERNOR‘S MEMORANDUM #9, supra note 138, at 5.
148 FISCAL POLICY INST., NEW YORK STATE WORKERS‘ COMPENSATION: HOW BIG IS THE
COVERAGE SHORTFALL? 15 (2007), available at http://fiscalpolicy.org/new-york-state-workerscompensation-how-big-is-the-coverage-shortfall; see also Steven Greenhouse, Study Says
Many Firms Cheat New York Workers‘ Comp System, N.Y. TIMES, Jan. 25, 2007, at B1 (―A
new study estimates that employers cheat New York State‘s workers‘ compensation system
by not paying $500 million to $1 billion a year in required insurance premiums, forcing other
employers to pay higher premiums.‖).
149 Coppelman, supra note 115.
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contracts for a period of one year from the conviction.150 The
reforms also increased the penalty for employer noncompliance from
$250 for each ten-day period to $1000 for each ten-day period.151
Worker fraud can also drive up the premium costs paid by
employers.152 While worker fraud can take on many different
forms,153 commonly, an injured worker will continue to receive
benefits even though he or she might not be entitled to them
because he or she has returned to work and is earning a salary. 154
In paying out unjustified benefits, higher premiums are passed on
to employers.155 While the exact cost of worker fraud is unknown,
some estimate that twenty percent of claims filed contain some
element of fraud.156 To address this matter, the 2007 reforms
contained a provision that increased the number of personnel
assigned to investigate fraud.157 Further, the statute was amended
to allow coordination between state agencies to facilitate the combat
150 2007 N.Y. Laws 63; WORKERS‘ COMP. § 141-b; see also Deal in Albany, supra note 11, at
B6 (―To reduce fraud, the deal calls for prohibiting employers that cheat the system [by
committing felony fraud] from receiving state and municipal contracts for five years.‖).
151 2007 N.Y. Laws 60; see also WORKERS‘ COMP. § 52(5) (indicating the current noncompliance penalty for employers is $2000).
152 Press Release, Dep‘t of Fin. Servs., Superintendent Lawsky Reports on Latest Results
of Drive to Save Businesses Money by Fighting Workers‘ Compensation Fraud (Dec. 9, 2011),
available at http://www.dfs.ny.gov/about/press/pr1112091.htm.
153 While not an exhaustive list, the following actions would fall under the purview of
worker fraud: ―deliberate injury, faked injury [by m]ultiple [or single c]laimants, . . .
[f]abricated [t]reatment, [n]on-[w]ork [r]elated or [p]rior [i]njury, . . . [or m]isrepresentation of
[w]age [l]oss.‖ Richard A. Derrig, Insurance Fraud, 69 J. RISK & INS. 271, 274 (2002). A
cursory database search reveals no shortage of factual scenarios dealing with worker fraud in
New York State. See, e.g., Jordan v. Saratoga Cnty. Pub. Health Nurses, 846 N.Y.S.2d 409,
410 (App. Div. 3d Dep‘t 2007) (―Despite being specifically questioned concerning previous
injuries . . . [the injured worker] failed to inform any of the numerous medical professionals
that she saw in connection with this injury that she had suffered from prior work-related
injuries.‖); Clarke v. Lomasney Combustion, Inc., 809 N.Y.S.2d 633, 634 (App. Div. 3d Dep‘t
2006) (―Business records, tax documents and [injured worker]‘s own admissions reveal that he
was operating a delicatessen prior to his testimony at a hearing held in June 2001, at which
he denied engaging in any kind of employment.‖); Dieter v. Trigen-Cinergy Solutions of
Rochester, 787 N.Y.S.2d 499, 500 (App. Div. 3d Dep‘t 2005) (―[The injured worker] admitted
that he informed the carrier that he had not returned to work since his injury when in fact he
had.‖); Michaels v. Towne Ford, 780 N.Y.S.2d 234, 236 (App. Div. 3d Dep‘t 2004) (―The injured
worker] refused to cooperate during the [independent medical] examination, stated that he
could not move his neck, back or legs, walked with a slow gait while in the office and then,
upon leaving the office, ‗walked as well as anyone else walked,‘ entered his vehicle without a
problem and turned his neck to back out of his parking spot.‖).
154 Press Release, Dep‘t of Fin. Servs., supra note 152.
155 Id.
156 See, e.g., Peter Kerr, Vast Amount of Fraud Discovered in Workers‘ Compensation
System, N.Y. TIMES, Dec. 29, 1991, at 1.
157 Deal in Albany, supra note 11, at A1.
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of fraud.158
2. Closure of the Special Disability Fund
When it was originally created in 1945, the Special Disability
Fund (―the Fund‖) was designed to be ―an anti-discriminatory tool to
protect injured veterans‖159 by ―encouraging the employment of
disabled veterans.‖160
Under section 15, subject to certain
conditions, the Fund would reimburse employers for certain benefits
paid by employers when certain workers with pre-existing
conditions were permanently disabled as a result of their workrelated injuries.161 Although the Fund reimbursed employers for
certain benefits, the reimbursement money came from the pockets
of New York‘s employers, who were required to deposit money into
the Fund in the form of assessments paid by insurance carriers,
self-insured employers, and the State Insurance Fund.162 The 2007
reforms started the process of phasing out the Fund, by closing it
down to any new claims with a date of accident subsequent to July
1, 2007 and disallowing evidence for reimbursement claims after
July 1, 2010.163
3. Settlement of Existing Liabilities
In addition to closing out the Special Disability Fund, the reforms
created an entity known as the Waiver Agreement Management
158 WORKERS‘ COMP. § 136 (permitting disclosure of information to various state fraud
bureaus as an exception to general policy of non-disclosure by the inspector general).
159 GOVERNOR‘S MEMORANDUM #9, supra note 138, at 6.
160 1945 N.Y. Laws 1982.
The 2007 reforms enacted several protections for veterans,
presumably in response to the closure of the Special Disability Fund. First, the reforms
amended section 125, which was a relatively new provision to the workers‘ compensation
statute, having been previously enacted by the legislature in 1991. 1991 N.Y. Laws 2936.
Section 125 was added to combat ―job discrimination against employees who have filed for or
received compensation benefits.‖ Id. The 2007 reforms added language that also made it
unlawful to discriminate against an individual who was an injured veteran. 2007 N.Y. Laws
89–90; WORKERS‘ COMP. § 125. Further protections for veterans were added with the
enactment of section 125-a. 2007 N.Y. Laws 90. The section made it a class A misdemeanor
to knowingly and intentionally discriminate against a veterans who was injured during the
court of his or her service because of veteran status or the injury. 2007 N.Y. Laws 90;
WORKERS‘ COMP. § 125-a.
161 WORKERS‘ COMP. § 15; see also Martin Minkowitz, Practice Commentaries, in WORKERS‘
COMP. § 15 (―[When] a worker has a permanent physical impairment from a prior accident or
disease . . . the statute . . . [was] intended to provide an incentive to employers to hire such
workers.‖).
162 WORKERS‘ COMP. § 214.
163 2007 N.Y. Laws 95; N.Y. WORKERS‘ COMP. LAW § 15 (McKinney 2012).
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Office (―WAMO‖).164 WAMO was created and empowered ―to
negotiate and seek [b]oard approval for waiver agreements on
behalf of the [S]pecial [D]isability [F]und.‖165 The thought was that
settling claims currently under the purview of the Special Disability
Fund would either reduce or eliminate those previously discussed
assessments, resulting in a cost-savings to employers.166
4. Benefit Caps
In passing the legislation, the dilemma became: how can
employer premiums be reduced if employee benefits are increased at
the same time?167 Prior to 2007, New York‘s system was anomalous
in comparison to other state systems because an injured worker
could potentially collect benefits for life if he or she sustained a
permanent, partial disability.168 Under the 2007 reforms, a benefit
cap was instituted such that workers with permanent partial
disabilities were limited to between 225 and 525 weeks of benefits,
depending on the worker‘s wage-earning capacity.169
V. IMPACT OF THE 2007 REFORMS AND CONCLUSIONS
Since the 2007 reforms were enacted, parties on both sides of the
system seem to agree on one thing: the 2007 reforms have fallen far
short of expectations.170 While the legislation touched many facets
of New York‘s workers‘ compensation system, the focus of this
section will be on the two problematic areas most often complained
about: workers‘ benefit levels and employer premium levels and
whether the legislation was successful.171
164 WAMO Frequently Asked Questions, N.Y. STATE WORKERS‘ COMPENSATION BOARD,
http://www.wcb.ny.gov/WAMO_FAQs.pdf (last visited Sept. 3, 2012).
165 Id.; N.Y. WORKERS‘ COMP. LAW § 32(e) (McKinney 2012).
166 WAMO Frequently Asked Questions, supra note 164.
167 See supra Part III.B. Since the loss amounts are a factor in premium calculations, it
would be illogical to assume that paying out more money for workers‘ compensation claims
would lead to realization of a premium reduction.
168 Greenhouse & Kleinfeld, supra note 6, at A22; see also KAN. STAT. ANN. § 44-510f (2012)
(capping the amount payable by an employer for an injury at $155,000).
169 2007 N.Y. Laws 57–58; N.Y. WORKERS‘ COMP. LAW § 15(3)(w) (McKinney 2012).
Because labor leaders were concerned about certain workers losing their benefits after the
durational caps tolled, certain workers could apply for cap extensions and cap exemptions.
See Deal in Albany, supra note 11, at B6.
170 See, e.g., Rick Karlin, When Reform Doesn‘t Reform, TIMES UNION (Albany), Nov. 8,
2011, at A1 (―[The reforms have] ‗not worked out the way that many people on both sides of
the equation had expected . . . .‘‖).
171 See infra Parts V.A, V.B.
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A. Benefit Levels
When New York‘s statute was initially enacted, the workers‘
compensation system was designed to provide benefits equivalent to
two-thirds of an injured worker‘s average weekly wage.172 By tying
maximum benefit levels to the average weekly wage, as opposed to a
statutorily set maximum amount, New York‘s practices are more in
line with how states across the country set maximum benefit
rates.173 In 2006, New York‘s average weekly wage was $1095.00
per week,174 while the maximum benefit rate was $400.00 per
week,175 making the discrepancy between the two amounts one of
the largest in the country.176 As previously noted, in 2006, the
$400.00 maximum benefit level represented 36.53% of New York‘s
average weekly wage, while nationally, the median amount was
94.42%,177 and the average amount was 93.22% of a state‘s average
weekly wage.178
In contrast, in 2011, New York‘s average weekly wage was
$903.30 per week, while the maximum benefit rate was $772.96 per
week.179 This maximum benefit level represented 85.57% of New
York‘s average weekly wage, while nationally, the median amount
was 104.05%180 and the average amount was 106.95% of a state‘s
average weekly wage.181
See 1913 N.Y. Laws 2285.
See, e.g., FLA. STAT. § 440.12 (2012) (providing that the maximum payable benefit
amount is equal to one hundred percent of Florida‘s average weekly wage); IDAHO CODE ANN.
§ 72-409 (2012) (subjecting the maximum benefit amount to a cap that is equivalent to ninety
percent of the state‘s average weekly state wage); UTAH CODE ANN. § 34A-2-410 (LexisNexis
2012) (providing that the maximum weekly benefit amount is equal to one hundred percent of
the state‘s average weekly wage); W. VA. CODE § 23-4-6 (2012) (capping the maximum benefit
amount at one hundred percent of the average weekly wage of West Virginia).
174 See infra Table 3. Only the District of Columbia had a higher average weekly wage at
$1259.00 per week. See infra Table 3.
175 See infra Table 3. Only Arizona and Mississippi had lower maximum benefit rates than
New York, at $369.23 and $364.57 respectively. See infra Table 3.
176 See infra Table 3. By way of comparison, the average discrepancy between average
weekly wage and maximum benefit rate was $50.94, while the median was $39.00
(Connecticut). See infra Table 3.
177 See infra Table 3. The median was Pennsylvania, where the maximum benefit level in
2006 of $745.00 represented 94.42% of the state‘s average weekly wage of $789.00. See infra
Table 3.
178 See infra Table 3.
179 See infra Table 3.
180 The median was Minnesota, where the maximum benefit level of $850.00 represented
104.05% of the state‘s average weekly wage of $816.88. See infra Table 3.
181 See infra Table 3.
172
173
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Table 3: Maximum Weekly Benefit Rates vs.
Average Weekly Wage by State (2006 vs. 2011)
2006
Average
Weekly
Wage183
Alabama
2006
Maximum
Benefit
Rate (per
week)182
$651.00
2011
Average
Weekly
Wage185
$683.00
2011
Maximum
Benefit
Rate (per
week)184
$755.00
Alaska
$875.00
$780.00
$1,062.00
$873.39
Arizona
$369.23
$760.00
$603.19
$790.24
Arkansas
$488.00
$612.00
$575.00
$643.21
California
$840.00
$919.00
$986.69
$925.86
Colorado
$719.74
$840.00
$828.03
$827.03
State
$710.08
182 Unless otherwise indicated, the 2006 maximum benefit rate was compiled from the
Social Security Administration.
DI 52150.045 Chart of States‘ Maximum Workers‘
Compensation (WC) Benefits, SOC. SEC. ADMIN. (last updated Jul. 23, 2012),
https://secure.ssa.gov/poms.nsf/lnx/0452150045 [hereinafter SOC. SEC. ADMIN.]. Please note,
in those states where the maximum benefit level was increased during 2006, the highest
amount is presented here.
183 The numbers presented in this column were computed based on information compiled
from the United States Department of Labor, Bureau of Labor Statistics Website. BUREAU OF
LABOR STATISTICS, U.S. DEP‘T OF LABOR, EMPLOYMENT AND WAGES, ANNUAL AVERAGES 2006,
tbl. 6 (Apr. 3, 2008), http://www.bls.gov/cew/ew06table6.pdf. This figure is presented for
comparison purposes only and will likely vary from the figure that the individual state uses
when setting the maximum benefit rate for workers‘ compensation. See, e.g., IOWA CODE §
85.37 (2012) (capping the weekly benefit amount at 66.6% of the state‘s average weekly wage
as determined by Iowa‘s Department of Workforce Development); ME. REV. STAT. tit. 39-A, §
211 (2012) (capping maximum weekly benefit amount at 90% of the state‘s average weekly
wage as determined by Maine‘s Department of Labor); VA. CODE ANN. § 65.2-500(B) (2012)
(providing that Virginia‘s average weekly wage will be determined by the Virginia
Employment Commission pursuant to the statutorily described formula).
184 Unless otherwise indicated, the 2011 maximum benefit rate was compiled from the
Social Security Administration. SOC. SEC. ADMIN., supra note 182. In those states where the
maximum benefit level was increased during 2011, the highest amount is presented here.
185 The numbers presented in this column were computed based on information compiled
from the United States Department of Labor, Bureau of Labor Statistics Website. BUREAU OF
LABOR STATISTICS, U.S. DEP‘T OF LABOR, HOURS AND EARNINGS, ANNUAL AVERAGES 2011 1,
tbl. 4, http://www.bls.gov/sae/eetables/sae_annavg411.pdf (last visited Oct. 13, 2012).
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Connecticut
$1,038.00
$1,077.00
[Vol. 76.1
$1,168.00186
$957.43
Delaware
$571.64
$890.00
$622.05
$738.50
District of Columbia
$1,155.84
$1,259.00
$1,355.00
$1,257.15
Florida
$683.00
$727.00
$782.00
$747.10
Georgia
$450.00
$785.00
$500.00
$757.45
Hawaii
$654.00
$691.00
$731.00
$738.31
Idaho
$508.50
$623.00
$581.40
$703.99
Illinois
$1,120.87
$882.00
$1,261.41
$815.01
Indiana
$600.00
$704.00
$650.00
$722.28
Iowa
$1,264.00
$652.00
$1,457.00
$687.10
Kansas
$483.00
$696.00
$555.00
$706.99
Kentucky
$631.22
$672.00
$721.97
$692.58
Louisiana
$478.00
$709.00
$592.00
$748.36
Maine187
$555.34
$638.00
$634.13
$678.01
Maryland
$801.00
$856.00
$940.00
$887.11
Massachusetts
$1,000.43
$1,016.00
$1,135.82
$914.07
Michigan
$706.00
$807.00
$742.00
$763.91
Minnesota
$750.00
$814.00
$850.00
$816.88
Mississippi
$364.57
$589.00
$427.20
$652.10
Missouri
$718.87
$719.00
$811.73
$721.73
Montana
$545.00
$565.00
$649.00
$681.30
Nebraska
$600.00
$643.00
$698.00
$711.04
Nevada
$721.84
$752.00
$789.74
$665.86
New Hampshire
$1,153.50
$827.00
$1,317.00
$762.66
New Jersey
$691.00
$988.00
$792.00
$869.50
New Mexico
$585.89
$642.00
$699.01
$690.95
186 The maximum benefit rate in the state of Connecticut in 2011 varied depending on
when the on-the-job injury occurred. While it is $1168.00 for dates of injury that are in or
after July of 1993, it is $1,494.00 for dates of injury between October 1987 and June of 1993.
SOC. SEC. ADMIN., supra note 182; see also Weekly Benefit Tables for October 1, 2011–
September 30, 2012, STATE OF CONN., WORKERS‘ COMPENSATION COMMISSION,
http://wcc.state.ct.us/download/acrobat/Benefit-Rate-Table-2011-2012.pdf (last visited Oct. 13,
2012) (indicating the maximum weekly compensation benefit from October 1, 2011 through
September 30, 2012 was $1168.00).
187 The maximum benefit rate in the State of Maine varies depending on the date of the onthe-job injury occurred. The amounts provided here are applicable to injuries that occurred in
or after January 1993. SOC. SEC. ADMIN., supra note 182.
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New York
$400.00
$1,095.00
$772.96188
$903.30
North Carolina
$730.00
$717.00
$836.00
$716.12
North Dakota
$624.00
$597.00
719.00
$730.13
Ohio
$704.40
$733.00
$783.00
$710.70
Oklahoma
$577.00
$656.00
$735.00
$721.67
Oregon
$721.43
$725.00
$842.52
$735.19
Pennsylvania
$745.00
$789.00
$858.00
$731.49
Rhode Island
$845.00
$745.00
$972.00
$784.17
South Carolina
$616.48
$649.00
$689.71
$715.49
South Dakota
$550.00
$574.00
$648.00
$646.45
Tennessee
$750.00
$723.00
$867.90
$710.39
Texas
$674.00
$832.00
$787.47
$807.68
Utah
$631.00
$668.00
$747.00
$808.54
Vermont189
$974.00
$672.00
$1,122.00
$776.80
Virginia
$773.00
$840.00
$905.00
$873.33
Washington
$942.34
$817.00
$1,123.78
$941.53
West Virginia
$587.35
$615.00
$711.38
$654.16
Wisconsin
$744.00
$701.00
$820.00
$723.74
Wyoming
$678.00
$698.00
$872.00
$800.57
Of course, given the nuances behind an individual state‘s workers‘
compensation scheme, there are bound to be some differences and
discrepancies that cannot be controlled when comparing one state to
another.190
At the barest level, however, injured workers
complained about low benefit levels and Governor Spitzer and the
New York State Legislature sought to address these injured
workers‘ concerns.191 In less than five years‘ time, the maximum
benefit level was increased by $372.96, from $400.00 in 2006 to
188 Robert E. Beloten, New Maximum Weekly Benefit Rate Effective July 1, 2011, N.Y.
STATE
WORKERS‘
COMPENSATION
BOARD
(May
4,
2011),
http://www.wcb.ny.gov/content/main/SubjectNos/sn046_465.jsp.
189 The maximum benefit rate in the State of Vermont varies depending on date of the onthe-job injury occurred. The amounts provided here are applicable to injuries that occurred
on or after July 1, 1986. Rule 16—Minimum and Maximum Compensation Rates—Annual
Change,
DEP‘T
OF
LABOR,
STATE
OF
VT.,
http://labor.vermont.gov/Rule16HistoricalWageRates/tabid/362/Default.aspx (last visited Oct.
14, 2012).
190 See sources cited supra note 173.
191 See GOVERNOR‘S MEMORANDUM #9, supra note 138, at 5.
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$772.96 in 2011.192 The discrepancy between New York‘s maximum
benefit amount and New York‘s average weekly wage was thereby
reduced from $695.00 in 2006 to $136.08 in 2011.193
B. Premium Levels
Comparing premium rate data from calendar year 2006 to
calendar year 2010—the most recent year for which data is
available—New York‘s employers did realize a premium reduction
of $0.81 per every $100 spent by employers on payroll.194 The states
and the District of Columbia ranked as follows in comparison with
the data that was available from 2006:
Table 4: Comparison of 2006 vs. 2010 Premium Levels by
State
2010
2006
Ranking
Ranking
State
2006
2010
Premium
Ranking
Premium
Premium
change
based on
for every
for every
between
premium
change
$100 in
$100 in
2006—
payroll195
payroll196
2010
1
5
Montana
$3.69
$3.33
-$0.36
26
2
1
Alaska
$5.00
$3.10
-$1.90
2
3
20
Illinois
$2.69
$3.05
$0.36
51
4
13
Oklahoma
$2.96
$2.87
-$0.09
40
5
2
California
$4.13
$2.68
-$1.45
6
6
14
Connecticut
$2.90
$2.55
-$0.35
27
7
23
New Jersey
$2.52
$2.53
$0.01
45
8
8
Maine
$3.21
$2.52
-$0.69
14
See supra Table 3.
See supra Table 3.
194 See infra Table 4.
195 OR. DEP‘T OF CONSUMER & BUS. SERVICES, OREGON WORKERS‘ COMPENSATION PREMIUM
RATE
RANKING:
CALENDAR
YEAR
2006,
at
4
(2007),
available
at
http://www.cbs.state.or.us/imd/rasums/2083/06web/06_2083.pdf.
196 OR. DEP‘T OF CONSUMER & BUS. SERVICES, OREGON WORKERS‘ COMPENSATION PREMIUM
RATE
RANKING:
CALENDAR
YEAR
2010,
at
4
(2011),
available
at
http://www.cbs.state.or.us/imd/rasums/2083/10web/10_2083.pdf.
192
193
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9
10
19
397
Alabama
$3.17
$2.45
-$0.72
13
New
$2.75
$2.45
-$0.30
30
Hampshire
12
17
Texas
$2.84
$2.38
-$0.46
21
12
25
South Carolina
$2.50
$2.38
-$0.12
39
13
10
New York
$3.15
$2.34
-$0.81
11
14
18
Pennsylvania
$2.80
$2.32
-$0.48
20
15
4
Kentucky
$3.78
$2.29
-$1.49
5
16
21
Minnesota
$2.69
$2.27
-$0.42
22
17
12
Ohio
$3.00
$2.24
-$0.76
12
18
7
Vermont
$3.24
$2.22
-$1.02
9
19
35
Wisconsin
$2.18
$2.21
$0.03
46
20
26
Tennessee
$2.48
$2.19
-$0.29
32
21
30
Nevada
$2.36
$2.13
-$0.23
35
23
37
North Carolina
$2.17
$2.12
-$0.05
43
23
39
Michigan
$2.05
$2.12
$0.07
49
24
41
Georgia
$2.02
$2.08
$0.06
47
25
11
Louisiana
$3.10
$2.06
-$1.04
8
26
36
Washington
$2.17
$2.04
-$0.13
38
28
22
Rhode Island
$2.68
$2.02
-$0.66
15
28
44
South Dakota
$1.83
$2.02
$0.19
50
29
32
Idaho
$2.29
$1.98
-$0.31
29
30
33
Nebraska
$2.25
$1.97
-$0.28
34
31
31
Mississippi
$2.29
$1.96
-$0.33
28
32
27
New Mexico
$2.41
$1.91
-$0.50
19
33
24
Missouri
$2.50
$1.90
-$0.60
18
34
3
Delaware
$3.91
$1.85
-$2.06
1
35
34
West Virginia
$2.20
$1.84
-$0.36
26
36
45
Iowa
$1.75
$1.82
$0.07
49
37
28
Wyoming
$2.40
$1.79
-$0.61
16
38
46
Arizona
$1.73
$1.71
-$0.02
44
40
6
Florida
$3.32
$1.70
-$1.62
3
40
15
Hawaii
$2.89
$1.70
-$1.19
7
41
42
Oregon
$1.97
$1.69
-$0.28
34
42
40
Maryland
$2.03
$1.63
-$0.40
24
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43
43
Kansas
$1.84
$1.55
-$0.29
32
44
47
Massachusetts
$1.70
$1.54
-$0.16
36
45
38
Utah
$2.06
$1.46
-$0.60
18
47
29
Colorado
$2.40
$1.39
-$1.01
10
47
49
Virginia
$1.52
$1.39
-$0.13
38
48
16
District of
$2.86
$1.32
-$1.54
4
Arkansas
$1.59
$1.18
-$0.41
23
Columbia
49
48
50
50
Indiana
$1.24
$1.16
-$0.08
42
51
51
North Dakota
$1.10
$1.02
-$0.08
42
While the $0.81 premium rate reduction that has been realized in
New York is certainly impressive, it is important that this reduction
not be viewed in a vacuum. New York was one of forty-four states
and the District of Columbia to realize a rate reduction between
2006 and 2010.197 The premium rate reductions ranged from $2.06
for every $100 spent on payroll (Delaware) to $0.02 for every $100
spent on payroll (Arizona).198 Even in those remaining seven states
that saw an increase in their premium rates, the increase was
negligible, ranging from $0.01 for every $100 spent on payroll (New
Jersey) to $0.36 for every $100 spent on payroll (Illinois).199
Other factors could have certainly contributed, or even caused,
the rate reduction—specifically, the number of claims filed by
employees.200 The National Council on Compensation Insurance
(―NCCI‖) noted that the economic recession from 2007–2009 has had
significant implications on the workers‘ compensation industry and
suggests several reasons why.201 First, in a downtrodden economy,
those workers that are gainfully employed will typically work fewer
hours overall, resulting in a smaller window for an on-the-job injury
197 See supra Table 4 (noting that only Illinois, South Dakota, Michigan, Iowa, Georgia,
Wisconsin, and New Jersey realized rate increases between 2006 and 2010).
198 See supra Table 4.
199 See supra Table 4.
200 A basic tenet of insurance law is that when fewer claims are filed, lower premium rates
result and premium rates for workers‘ compensation insurance is certainly not an exception.
See generally Components of Workers‘ Compensation Premium, supra note 128 (noting that
when calculating a workers‘ compensation premium in New York State, a credit or surcharge
is given depending on the prior number of claims filed and this amount is multiplied or
credited depending on the actual versus expected number of injuries).
201 JIM DAVIS & YAIR BAR-CHAIM, WORKERS COMPENSATION CLAIM FREQUENCY 1 (2011),
available at https://www.ncci.com/documents/2011_Claim_Freq_Research.pdf.
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to occur and, consequently, a smaller number of claims filed.202
Data available for New York shows that the average number of
hours worked by an employee was reduced from 34.1 hours in 2007
to 33.9 hours in 2010.203 Second, NCCI suggests that many injured
workers were fearful of losing their employment in a depressed
economy and, therefore, postponed filing claims for their on-the-job
injuries.204
Data available from the New York‘s Workers‘
Compensation Board seems to support this hypothesis as calendar
year 2008 and calendar year 2009 had some of the lowest numbers
of new assembled claims in recent years.205 Concomitantly with this
hypothesis is the idea that once the economy begins to turn around,
those injured proceed with filing workers‘ compensation claims.206
Again, data available from the New York‘s Workers‘ Compensation
Board supports this idea as calendar year 2010 saw a slight uptick
in new claims.207 NCCI also reported that on a national level, while
there was an overall downward trend with respect to the number of
workers‘ compensation claims that have been filed over the past
twenty years, there was a three percent increase in the number of
claims filed in 2010.208
C. Conclusions
As noted previously, when the 2007 reforms were enacted,
Governor Spitzer hailed them as advantageous for both workers and
202 See id. at 3. This hypothesis has been echoed by other agencies as well. See generally
ISHITA SENGUPTA ET AL., WORKERS‘ COMPENSATION: BENEFITS, COVERAGE, AND COSTS, 2009,
at
5
(2011),
available
at
http://www.nasi.org/sites/default/files/research/Workers_Comp_Report_2009.pdf (―The decline
in employer costs reflects the overall decline in employment in 2009.‖). On the other side, in
periods of economic improvement, those workers who are both inexperienced and accidentprone make up a larger portion of the workforce, resulting in more accident and workers‘
compensation claims. Leslie I. Boden & John W. Ruser, Workers‘ Compensation ―Reforms,‖
Choice of Medical Care Provider, and Reported Workplace Injuries, 85 REV. ECON. & STAT.
923, 926 (2003).
203 DAVIS & BAR-CHAIM, supra note 201, at 21. Nationally, in the five years prior to 2007,
―average weekly hours remained relatively stable.‖ Id. at 20.
204 Id. at 5.
205 N.Y. STATE WORKERS‘ COMP. BD., 2010 ANNUAL REPORT, at A-3 (2011), available at
http://www.wcb.ny.gov/content/main/TheBoard/2010AnnualReport.pdf. The claims assembled
in 2008 and 2009 were 128,342 and 119,122 respectively. Id. In contrast, in the four years
prior, the lowest number of claims assembled was 140,109 in 2006. Id.
206 DAVIS & BAR-CHAIM, supra note 201, at 5.
207 N.Y. STATE WORKERS‘ COMP. BD., supra note 205, at A-3. In 2010, 122,062 new claims
were assembled, an increase of 2940 new claims from the previous calendar year. Id.
208 DAVIS & BAR-CHAIM, supra note 201, at 2–3.
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employers.209 In the years since the legislation was passed,
however, there have been lingering complaints that the reforms
have fallen far short of what was anticipated.210 In spite of these
misgivings, the two main goals of the legislation have more or less
been realized. That is, New York‘s injured workers have seen an
increase to their maximum weekly benefits while New York‘s
employers have seen a reduction to their premium levels.211 Since
maximum weekly benefits are now tied to New York‘s average
weekly wage, injured worker benefit levels should remain adequate
for the foreseeable future.
New York‘s employers, however, are unlikely to see continued
reduced (or even stagnant) premium levels, particularly as the
economy begins to pick up. As previously discussed, in the shortterm, New York‘s employers have realized lower workers‘
compensation premiums, but a long-term continuation of this trend
is improbable when employer premium levels are procyclical in
relation to employee benefit levels.212 That is, empirical studies on
workers‘ compensation systems have almost universally
demonstrated that higher benefit levels result in higher premiums
rates.213
Conversely, when employers see low workers‘
compensation premiums, it is because injured worker benefit levels
209
A22.
See Deal in Albany, supra note 11, at A1, B6; Kleinfield & Greenhouse, supra note 6, at
210 Karlin, supra note 170, at A1, A7; see also Press Release, Bus. Council of N.Y. State,
Don‘t Make New York‘s Already Expensive Workers‘ Comp System More Expensive (June 14,
2012), available at http://www.bcnys.org/whatsnew/2012/061412dont-make-new-yorksworkers-comp-more-expensive.html (―Workers‘ Compensation rates continue[] to rise in New
York.‖).
211 See, e.g., Press Release, N.Y. State Dep‘t of Fin. Servs., Governor Cuomo Announces
First Reduction in Workers‘ Compensation Rates Since 2008 (July 17, 2012), available at
http://www.dfs.ny.gov/about/press/pr1207171.htm (―[W]orkers‘ compensation rates will . . .
decrease in the upcoming policy year.‖). Although the New York Compensation Insurance
Rating Board requested a rate increase to manual loss costs of 11.8%, New York‘s
Department of Financial Services found that it was ―clear‖ that the request should be denied.
Workers‘ Comp. Ins. Loss Cost Application of the N.Y. Comp. Ins. Rating Bd., at 1, 4 (N.Y.
State Dep‘t of Fin. Servs. July 16, 2012) (op. & decision), available at
http://www.dfs.ny.gov/insurance/hearing/wc_06252012/wc_06252012_Opinion_Decision.pdf.
212 See generally Dean J. Haas, Falling Down on the Job: Workers‘ Compensation Shifts
From a No-Fault to a Worker-Fault Paradigm, 79 N.D. L. REV., 203, 206–07 n.17 (2003)
(noting that low benefit rates translate into low premium rates). Nationally, when workers‘
compensation premium rates reached ―crisis levels‖ in the late 1980s, states reacted by
restricting and reducing benefit levels into the mid-1990s. McCluskey, supra note 4, at 684–
90, 705, 710–11. Thereafter, the reduced benefit rates resulted in lower employer premium
rates. Id. at 710–11.
213 See id. at 685–88 (―[R]ising benefit costs contribute[] significantly to employers‘ rising
[premium] costs.‖).
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are low.214
Ultimately, there is a tangled and dependent connection between
employee benefit levels, the number of claims filed, and employer
premium levels.215 Simply, the higher benefit levels in New York
will cause a chain reaction leading to injured workers filing a larger
number of workers‘ compensation claims,216 which ultimately
translates into higher premiums for New York‘s employers. The
economic conditions that were present immediately following the
2007 reforms can only stave off the number of claims filed by
injured workers for so long.
This is not to say that the new benefit levels should be reduced or
remain stagnant. To reduce the number of claims being filed, even
in the wake of higher employee benefits, New York should consider
looking to a state that has consistently seen lower employer
premium rates alongside fewer claims: Oregon.217 While the Oregon
reforms, like New York‘s, were comprehensive, two areas addressed
by the Oregon reforms warrant further consideration for application
and implementation in New York to reduce the number of claims
filed. First, Oregon strengthened health and safety programs
within the state, including the bulking up of enforcement
procedures with the state‘s Occupational Safety and Health
Division.218 Second, Oregon reduced the types of compensable
See id. at 710–11.
See id. at 685–88.
216 See, e.g., Richard J. Butler, Wage and Injury Rate Response to Shifting Levels of
Workers‘ Compensation, in SAFETY AND THE WORK FORCE: INCENTIVES AND DISINCENTIVES IN
WORKERS‘ COMPENSATION 62 (John D. Worrall ed., 1983) (reporting a positive relationship
between benefit levels and claims based on empirical research); Frank Neuhauser & Steven
Raphael, The Effect of an Increase in Worker‘s Compensation Benefits on the Duration and
Frequency of Benefit Receipt, 86 REV. ECON. & STAT. 288, 288 (2004) (noting a line of studies
which have found an increased probability that a worker will file a workers‘ compensation
claim when benefits have been increased); see also Alan B. Krueger, Incentive Effects of
Workers‘ Compensation Insurance, 41 J. PUB. ECON. 73, 80 (1990) (―The decision to file an
injury report will be influenced by the generosity of workers‘ compensation benefits.‖); John
W. Ruser, Workers‘ Compensation Insurance, Experience-Rating, and Occupational Injuries,
16 RAND J. ECON. 487, 487, 501 (1985) (listing several studies which conclude that there is a
positive relationship between benefits and claims).
217 Emily A. Spieler, Perpetuating Risk? Workers‘ Compensation and the Persistence of
Occupational Injuries, 31 HOUS. L. REV. 119, 260 (1994). Prior to the reforms, Oregon had the
sixth-highest employer premium rate in the nation. Id. at 260 n.534. Indeed, the State of
Oregon ranked as having one of the lowest employer premiums in the nation in 2006 and in
2010. See supra Table 4.
218 Spieler, supra note 217, at 260–61.
See, e.g., OR. REV. STAT. § 654.191(1) (2012)
(establishing a grant program to help develop education and training programs for employees
that deal with workplace safety); OR. REV. STAT. § 654.176 (2012) (requiring public and
private employers to establish safety committees).
214
215
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claims covered by workers‘ compensation plans.219
Given the comprehensiveness and complexity of any state‘s
workers‘ compensation scheme, there is no one right answer for
reducing the number of claims filed, thereby reducing employer
premium rates. However, given the long-term success that Oregon
has had as a result of these reforms, New York should give some
consideration to strengthening health and safety programs and
enforcement and reducing the types of claims that are deemed
compensable under the workers‘ compensation statute—both areas
which were untouched by the 2007 reforms.
219 Spieler, supra note 217, at 261–62.
See, e.g., OR. REV. STAT. § 656.802(3) (2012)
(restricting the compensability of mental stress claims to only those claims which arise out of
real and objective employment conditions as established by clear and convincing evidence);
OR. REV. STAT. § 656.005(7) (2012) (eliminating coverage for diseases caused by a combination
of work and non-work-related hazards).