Providing Workers Compensation to New Mexico s Agricultural Workers

Transcription

1 Providing Workers Compensation to New Mexico s Agricultural Workers For additional information, please contact Gail Evans or Maria Martinez of the NM Center on Law and Poverty at (505)

2 The NM Workers Compensation Act covers all workers except agricultural workers and private domestic servants. An amendment to this Act is needed to end discrimination against agricultural workers. This amendment will simply strike the exemption for the agricultural industry while protecting small and family farms. 2

3 The NM Workers Compensation Act Existing law requires that employers of 3 or more employees purchase insurance to provide limited amounts of compensation to covered workers who are injured or killed on the job. By providing basic benefits to people injured at work, the Act benefits employees. By precluding other remedies for injuries on the job, for example, lawsuits, it protects the employer. Workers compensation provides (for injuries or death sustained on the job): Full payments for medical treatment Limited payments to the worker as a partial substitute for lost wages In the case of death of a worker: survivor benefits to dependent family members and an allowance for funeral expenses In New Mexico, the Workers Comp Act treats two industries differently: Businesses in the construction industry must purchase this insurance regardless of how many workers they employ, and The agricultural industry is entirely exempted from the Act. 3

4 Amending the law will cause most agricultural workers to be covered while providing special protections to our family and small farms. An amendment will apply only to farms and ranches with 3 or more nonfamily employees. Family-run businesses will be given special consideration. They will not have to provide workers compensation to employees who are family members Family members will not count toward the maximum 3 employees for exemption. An amendment to the Workers Compensation Act will impact less than 9% of all agricultural businesses. Out of the 20,930 agricultural businesses in NM only 1,973 agricultural businesses 9% have 3 or more workers. (Source: 2007 U.S. Census of Agriculture) However, these farms employ 83% of all agricultural workers. 4

5 The agricultural industry in NM can afford the coverage Separate estimates by the Workers Compensation Administration and the National Council on Compensation Insurance* lead to a similar conclusion: the estimated cost of premiums to cover agricultural workers industry-wide is about 10 million dollars per year. HOWEVER According to the NCCI, 29% of farm and ranch workers are already covered by workers compensation, due to their employers electing to purchase coverage voluntarily. Thus, it will only require an additional approximately $7.1 million more to cover the remaining farm and ranch workers. This is less than 1% of the average annual net farm income in New Mexico. According to the New Mexico Department of Agriculture, net farm income in New Mexico over the past five years averaged over $786 million per year. In 2008, net farm income surpassed $829 million. * National Council on Compensation Insurance, Inc. manages the nation s largest database of workers compensation insurance information. NCCI analyzes industry trends, prepares workers compensation insurance rate recommendations, determines the cost of proposed legislation, and provides a variety of services and tools to maintain a healthy workers compensation system. 5

6 Agriculture in NM can afford the coverage - 2 The agricultural industry enjoys other business advantages that others do not. The agricultural industry is largely exempt from New Mexico Minimum Wage laws. The agricultural industry receives annual federal farm subsidies. In 2008 the industry received over $74 million. (Source: NM Department of Agriculture, 2008 Agricultural Statistics) NMSU Professor Al Berryman, in his 2008 report Insurance Aspects of Adding Agricultural Workers to the NM Workers Compensation System concluded: The Cost of workers compensation coverage for agricultural workers is moderate and comparable to the construction industry. 6

7 Agriculture in NM can afford the coverage - 3 Almost all of the states that produce more of New Mexico s leading commodities than we do, provide workers comp for agricultural workers. - For example: In our # 1 commodity, dairy products, NM is ranked 8 th in the nation. 6 of the 7 states that are ahead of us provide workers compensation to all or many of their agricultural workers. - In our # 2 commodity, cattle, NM is ranked 13 th in the nation. 9 of the 12 states that are ahead of us provide workers comp to agricultural workers. - Regarding chile, which makes up less than 2% of New Mexico s agricultural cash receipts but is an important part of our state culture, in 2007, only California had a greater value of chile production than New Mexico did. Arizona was a distant third. Both California and Arizona provide workers compensation to agricultural workers. 7

8 The majority of states require workers comp for agricultural workers 33 states (plus D.C., Puerto Rico, and the Virgin Islands) require mandatory workers compensation for farm workers.* In the southwest: California, Colorado and Arizona require mandatory coverage for all farm workers Utah requires coverage for workers on farms with more than $50,000 in payroll Texas doesn t mandate workers compensation for any industry including farms/ranches. *some states exempt small farms and part-time employees. 8

9 States that require coverage for farm & ranch workers as they do for all other workers. Arizona California Colorado Connecticut D.C. Hawaii Idaho Massachusetts Montana New Hampshire New Jersey Ohio Oregon Washington (except kids) States that require coverage for larger farms Florida Iowa Maryland Michigan Minnesota Nebraska New York North Carolina Oklahoma Pennsylvania Rhode Island Utah Vermont Virginia West Virginia Wisconsin States that require coverage for full time employees Alaska Illinois Louisiana Maine Office of Workers Compensation Programs, U.S. DOL

10 Costs of covering agricultural workers with workers compensation According to the National Council on Compensation Insurance rates, effective April 1, 2008: 63% of crop workers work less than 150 days per year. The annual average wages for these workers is about $6,400. The workers compensation rates vary accodring to specific work classifications, however: The workers compensation rate for these farm workers is $10.22 per $100 of payroll in the assigned risk pool and an average of $6.98 per $100 of payroll in the voluntary market. The average annual cost to cover these farm workers is $654 per year in the assigned risk pool and $447 per year in the Voluntary market. For the remaining 37% of farm workers who work more than 150 days a year the costs vary depending on what type of business they work for and how much they are paid. The workers compensation rates for a dairy worker are $7.49 per $100 in the assigned risk pool and an average of $5.77 per $100 in voluntary market. The cost of covering a dairy worker earning $18,600 per year would be about $1,393 per year in the assigned risk pool and $1,073 per year in the voluntary market. Ranch work is more dangerous than field work and would cost more to cover with workers compensation. $18.63 per $100 of payroll in the assigned risk pool and an average of $15.28 per $100 in the voluntary market. Assuming that ranch workers earn approximately $19,000 per year, the cost of coverage is $3,540 in the assigned risk pool and $2,903 in the voluntary market Remember, small farms and ranches will be entirely exempt. 10

11 Administering the Workers Comp Program An amendment to the Workers Compensation Act would not require an appropriation. Every quarter, employers in the system are required to pay $2.30 per worker, and every covered worker is required to pay $2.00. These payments are made to the Workers Compensation Administration. From these fees, $4.00 per quarter is used to cover administrative and personnel costs. According to the Department of Workforce Solutions and the Workers Compensation Administration, the number of agricultural workers that would fall under the new law is approximately 10,000. This means that the annual revenues that the WCA will receive from the personnel assessment fees will total approximately $160,

12 The Uninsured Employers Fund the UEF The UEF provides workers compensation benefits to a worker entitled to such benefits when that person s employer has failed to maintain workers compensation coverage because of fraud, misconduct or other failure to insure or otherwise make compensation payments (C). The Uninsured Employers Fund is funded by fees paid by employers (thirty cents per employee per quarter) as well as all income derived from investment of the fund (B). No state appropriation is required to fund the UEF. The Workers Compensation Act provides that the fund replenish itself: the funds that the UEF must spend on a claim shall be recouped from the employer who was supposed to be insured (G). The Workers Compensation Act specifically states that the liability of the state, the Workers Compensation Administration and the state treasurer for payment under the fund is limited to the assets in the fund, and they are not otherwise liable for any payment (H). 12

13 The UEF will not be depleted by farmers and ranchers. Over the past three years there was an average of 30 compensable claims per year filed under the UEF roughly 1 claim for every 22,500 employees covered under the fund. This amendment would add approximately 10,000 agricultural workers. If these workers file claims consistent with the average number of claims usually filed under the UEF, this would amount to less than 1 claim per year. Even if agricultural work will have triple the average number of claims, there would only be 1-to-2 compensable UEF claims per year from the agricultural employees covered by the law. According to the National Council on Compensation Insurance, the average cost of a Workers Compensation claim for Farm and Ranch laborers is $5,300. Idaho, a state that the New Mexico Workers Compensation Administration uses for comparison because it is similar to New Mexico and has recently begun covering agricultural workers, only had only one (1) UEF-type claim between 2007 and Still, even though it is safe to estimate that approximately one-to-two claims per year will be brought under the UEF by farm or ranch workers, even if many more claims were brought, the money could be recouped from the employers and ultimately, no state appropriation is required since the statute specifically limits liability to the funds available (see previous slide). 13

14 Workers compensation for agricultural workers is doable Agricultural work is similar to work in other industries where there are subcontractors and frequent changes in employers such as construction and the service industry Current law directs that contract laborers and seasonal, temporary and parttime employees must be covered. It contains provisions on how to calculate benefits for employees who are less than full time. See section Current law directs how claims filed by workers who work for multiple employers will be handled. It ensures that the employee must prove that an injury was caused at a particular job. See section other states include the agricultural industry under their workers compensation law. New Mexico can too. 14

15 Farming is one of the more dangerous occupations in the United States. Work-related deaths in the farming industry account for a high proportion of the workrelated deaths in New Mexico. 1 Mechanical, chemical and environmental hazards underlie the risk of accidents for agricultural workers. 2 According to a survey taken in 2003, 21% percent of farm workers in West Texas and New Mexico reported having been injured at least once while working in agriculture. 3 This same survey reported that 57% of farm workers in west TX and NM believed they had suffered symptoms of pesticide exposure while working in agriculture. Symptoms reported included skin rash, eye irritation, nausea, diarrhea, breathing problems, headache and confusion National Agriculture Safety Database Review 04/2002 Farm-Related Injury and Mortality in New Mexico 2. National Safety Council 3 & 4. Characteristics of Selected Migrant Farmworkers in West Texas and Southern New Mexico,

16 Covering workers is good public policy All other industries in New Mexico, including the construction industry that also involves seasonal, dangerous work, are required to provide workers compensation coverage. Inclusion in the workers compensation system promotes a safer work place. Employers who voluntarily provide workers compensation for their agricultural workers are at a competitive disadvantage. When injured agricultural workers get uncompensated care in emergency rooms, the cost of their care is borne by the tax paying public. When disabled agricultural workers cannot work and receive public benefits, the burden of sustaining them and their families is borne by the public. 16

17 This issue has been reviewed extensively. In the 2007 session, House Memorial 52 created The Farm and Ranch Worker Task Force to study the fiscal and policy implications of requiring workers compensation for farm and ranch workers. At its August 2008 meeting, it passed the following resolution: The Farm and Ranch Task Force agree that as a matter of principle employers should provide insurance coverage to workers injured on the job. The task force was not able to reach agreement on how to accomplish this goal. As a result of this the members of the task force have agreed to make no further recommendation for legislative change. At a December 2008 meeting, the Task Force endorsed amending the Workers Compensation Act to include protection for agricultural workers on a 5 to 4 vote. The Business and Labor Coalition of the Workers Compensation Advisory Council has endorsed the proposed legislation. On February 3, 2009, the Workers Compensation Advisory Council tabled the proposed amendment, requesting that the task force continue to try to reach an agreement. 17

18 Endorsers of a change in the law include: AFSCME Council # 18 Albuquerque Health Care for the Homeless Business and Labor Coalition Catholic Charities Central New Mexico Labor Coalition Colonias Development Council Communications Workers of America State Employee Alliance Local 7076 Dolores Huerta and the Dolores Huerta Foundation El Centro de Igualdad y Derechos Enlace Communitario Health Action New Mexico HELP-New Mexico, Inc. Hispano Round Table de Nuevo Mexico Hospital and Healthcare Workers Union District 1199 NM Lutheran Advocacy Ministry-NM MAFO - National Partnership of Rural and Farmworker Organizations Mexican American Law Student Association Mexican American Legal Defense and Educational Fund (MALDEF) Mexicano Land Education and Conservation Trust National Association of Community Health Centers National Center for Farmworker Health, Inc. National Center for Law and Economic Justice National Employment Law Project National Health Law Program NM Building and Construction Trades Council NM Conference of Catholic Bishops -Archbishop Michael Sheehan -Bishop Ricardo Ramirez NM Conference of Churches NM Center on Law and Poverty NM Coalition to End Homelessness NM Disability Coalition NM Federation of Labor, AFL-CIO NM Hispanic Medical Association NM Land Grant Council NM Land Grant Forum NM Law Access NM LULAC NM Public Health Association NM Protection and Advocacy System Pegasus Legal Services for Children Sapien Law, LLC Sargent Shriver National Center on Poverty Law Somos un Pueblo Unido Southwest Creations Collaborative. Southwest Network for Environmental and Economic Justice Synod of the Southwest Presbyterian U.S.A. United Farmworkers of America 18