Senate Committee Considers Cost of Living Increase to Certain Workers' Compensation Recipients Legislation introduced in the State Senate, S1967, was considered by the Senate Labor Committee last week. This legislation would provide an Annual Cost of Living Adjustment [COLA] to the Weekly Workers' Compensation Benefit Rate for any worker who has become totally and permanently disabled due to a workplace injury, and to dependents of workers who died as a result of a workplace injury after 1980.
According to the sponsors of the bill, Senate President Steve Sweeney and Senator Fred Madden, the chairman of the Senate Labor Committee, the bill is intended to provide disabled workers and survivors of those whose lives were lost because of workplace accidents to have cost-of-living increases that allow them to keep pace with growing expenses. The adjustment is similar to the COLA that is already in place for benefits arising from an injury or from death that occurred prior to 1980. The current law that requires annual adjustments to be paid only for injuries sustained prior January 1, 1980 was put into effect when the Workers' Compensation Act was overhauled in 1980 that created a progressive chart of disability benefits that is adjusted annually in relation to the state average weekly wage. Prior to 1980, weekly benefits for total disability were at a fixed rate, much lower in comparison to post 1980 standards. The proposed legislation would create a COLA for any claim for total disability and dependency benefits, for accidents occurring post 1980.
The legislative proposal called for the COLA to be funded entirely through the Second Injury Fund, which is financed through an annual assessment levied on all employers who are workers' compensation and employer's liability insurance policyholders, or who are self-insured employers under the workers' compensation law. Cost estimates of the bill prepared by the Office of Legislative Services ranged from $18.7 million in 2017 to $59.5 million in 2019. The COLA would not be provided to any individual who qualified for benefits under the Federal Old Age or Survivors and Disability Act, but does not receive them.
While the bill was approved by the Senate Labor Committee at the September 13, 2018 meeting, it is not expected to be fast tracked, and at this time, legislation has not moved in the Assembly.
Comment: One of the concerns of this proposal is whether New Jersey would lose its option that allows for workers' compensation benefits for total disability benefits to be offset by Social Security Disability benefits. Supposedly, the atest version of the bill addresses that concern; however, there is no guarantee that Federal Law may be amended to preempt that offset allowance. Furthermore, the cost estimates noted would be passed down to businesses in the form of increases in workers' compensation insurance premiums.
For more information, please contact Mark S. Setaro at msetaro@wglaw.com or 856.779.6010.