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Coverage Gaps

While most early workers' compensation laws were less than comprehensive, with only ultrahazardous employments subject to coverage, and in some states only elective laws, currently the scope of the states' workers' compensation laws is comprehensive for most employers and workers. Notwithstanding the expansion of workers' compensation laws, there remains a problem since statutory workers' compensation laws do not provide an adequate remedy for all work-related injuries. Remaining gaps in coverage importantly affect agricultural workers, domestics and smaller employers, sole proprietors and partners, casual workers, and volunteers to name a few.

The National Commission on Workers' Compensation Insurance, which was created by the Occupational Health and Safety Act of 1970, released its critique of American workers' compensation after a year of intensive hearings and studies. The report contained many recommendations, 19 of which it considered essential for implementation across the country. Three broad categories were covered: full mandatory coverage for all work-related injuries and diseases; ad equate levels of benefit compensation; and full medical care and rehabilitation.

By now most of the 19 recommendations called essential have been implemented by a majority of states. Full coverage for all medical benefits and the dramatic increase in benefit levels are the most significant areas of improvement; but many states still need law changes to require compulsory coverage for all workers.

I will attempt in the following to briefly address some of the state exemptions to workers' compensation laws that should be included within the scope of the laws and/ or afforded insurance coverage by endorse ment to the standard workers' compensation and employers' liability policy:

* States where employers are exempt be cause of size. For example, Seven states do not include employers with fewer than three full-time employees; two states fewer than four employees, and four states with fewer than five employees.

* Executive officers are considered employees in most states. But they can elect to be excluded as employees. In most states, the premium charge for executive officers is subject to a maximum individual remuneration based upon a formula of four times the state's average weekly wage. The minimum remuneration is subject in most states to a factor of one-half the state's average weekly wage.

* Partners are generally not covered employees. But they can elect coverage in 38 states.

* Sole-proprietors are generally not covered employees, although they can elect coverage in 39 states.

* Casual employees frequently are excluded or coverage is elective. The term has three possible definitions, depending on the state. In some states, casual is synonymous with not in the usual course of business. A number of jurisdictions define casual employees according to a limited number of days or hours worked or income earned.

* Volunteers may be covered. Being paid is the main distinction between a volunteer and an employee. Volunteers are typically excluded from workers' compensation by definition. A few states, however, mandate coverage for certain types of volunteers. For example, some states provide coverage for volunteer firefighters. Some courts have found either an explicit or implicit employment contract in which the unpaid workers received some agreed-upon remuneration in exchange for their services. The remuneration can be incidental, such as lunch and transportation expenses or room and board.

* Part-time domestic employees, agricultural workers and emergency relief workers and others can also obtain workers' compensation and employers' liability insurance coverage by agreement between their employer and an insurance carrier.

* Separate and distinct benefits or liability systems are available to rail road workers, who are subject to the Federal Employers Liability Act. This is not a workers' comp law but rather a liability act that permits employers' liability suits. Federal employees are covered by Federal Employers Compensation Act. Longshore and harbor workers are covered by the U.S. Longshore and Harbor Workers Act. Masters and members of a crew of a vessel are subject to maritime law (Jones Act, a liability system).

Donald T. DeCarlo is a partner in the law firm of Lord, Bissell & Brook in New York.
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Publication:Risk & Insurance
Date:May 1, 2001
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