February 16, 2018

NCCI Releases Update on Alternative Workers Compensation Mechanisms/Opt-Out

Boca Raton, FL – NCCI recently announced the release of a new update Alternative Workers Compensation Mechanisms, or “What’s Happening With Opt-Out?”

Workers compensation was created more than a century ago to protect injured employees, and their employers, from lengthy and expensive litigation resulting from workplace injuries, with a focus on return-to-work and defined benefits.

Supporters of the state-based system say it continues to work as intended, fulfilling the “grand bargain.” In recent years, the concept of alternative workers compensation mechanisms, or “opting-out” of workers compensation, appeared to be gaining traction and generated debate at workers compensation stakeholder meetings across the country.

However, it now seems to be mentioned sparingly, which raises the question—what is happening with opt-out?

State Opt-Out Activity
Several states introduced opt-out-related legislation over the years, keeping opt-out on the agenda, although no bills advanced as of the close of 2017.

Oklahoma

  • Reform law took effect in 2014
  • Allowed “qualified employers” to use an alternative mechanism to workers compensation
  • The Oklahoma Supreme Court ruled the opt-out law unconstitutional in 2016
  • Additional legislation was considered in 2017 but did not pass

Tennessee

  • In 2015, introduced legislation that would have allowed certain employers to opt-out of workers comp
  • Bills did not advance
  • No new opt-out legislation introduced in 2017

South Carolina

  • In 2015, introduced legislation similar to Tennessee, allowing certain employers to opt-out of workers comp
  • Bills did not advance
  • No new opt-out legislation introduced in 2017

Florida

  • A bill was proposed to create a system similar to the Texas system, where workers compensation insurance coverage is not mandatory
  • That bill was not formally introduced in 2017

Arkansas

  • Introduced shell legislation in 2017 proposing to establish an optional alternative system
  • System would finance and administer employee benefits compensation regarding health, disability, and death benefits
  • The bill did not advance

Click here to read the full update: NCCI: Alternative Workers Compensation Mechanisms – What’s Happening With Opt-Out?

Source: NCCI

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