Friday, September 5, 2014

Crossing the Freeway

A couple of days ago I posted about a Labor Day report from research group Economic Roundtable. The study showed that the number of "informal" laborers − those that the employer either doesn't report or misclassifies as independent contractors − grew 400% from 1972 to 2012.

Yesterday the University of Southern California in conjunction with the California Immigrant Policy Center, released a study concluding that the undocumented immigrant population in California comprised nearly 10% of the state workforce.

According to the study, based on Census data and other statistics, including data from the departments of Labor and Homeland Security, there are 2.6-million immigrants living in California without the required paperwork.

Particularly in Los Angeles County (which has been cited by the California Workers' Compensation Institute and other research groups as having much higher claim frequency than the rest of the state), of the 4.4 million immigrants living in the greater Los Angeles region, 1.1 million are here without permission, according to the report.

38% of the agriculture industry is comprised of undocumented workers, as is 14% of the construction industry, according to the report.

The Labor Day report from Economic Roundtable concluded that 16% of the construction industry was made up of illegal labor, resulting in lost premium of about $264 million.

Demonstrating how deeply ingrained into society the undocumented population is, the USC study found that half of these immigrants have already been in the state for 10 years or more.

And 58% of that population lacks any health insurance.
Typical signage along I-5 near San Onofre, CA, warns of immigrants crossing the freeway.

This has obvious implications for workers' compensation in California, which may be a primary source for medical treatment to that population. Though provision of return to work services would not be applicable based on both state and federal case law, just because one does not have immigration papers does not mean that workers' compensation benefits are inapplicable.

A larger issue is really the failure of the employers that use this labor because no payroll is generally associated with it, or falsified payroll information is provided - so not only are employment taxes avoided or discounted, so is workers' compensation premium.

With agriculture and construction having significant undocumented work forces, the impact is greater because of the high risk categories in such industries.

A headline in this morning's WorkCompCentral News highlights the issue - a Marin County contractor pleaded guilty to charges of working without a license, evading income taxes and failing to provide workers' compensation insurance.

Ronald Vernon Cupp of Corte Madera and his brother were hired to construct a sewage line at a shopping center in Mill Valley in February 2013. According an article in the Marin Independent Journal, Cupp paid his employees in cash, didn't report them on his taxes and didn't cover them through workers' compensation insurance.

About 1700 miles away from Sacramento, the Business and Industry Committee of the Texas House of Representatives continues to study the issue of worker misclassification.

Stephanie Gharakhanian, the Workers Defense Project’s research and policy director, told WorkCompCentral the organization is hoping that as a result of the committee’s report, the Legislature will consider “a more expansive misclassification bill” after the successful passage of House Bill 2015 last session.

That bill, which took effect at the beginning of this year, levied a $200 fine per worker on any Texas employer caught misclassifying employees on a public project.

A series of articles on worker misclassification in various states by news service McClatchyDC estimates that 37.7% of Texas construction workers are misclassified, based on a survey of 4,987 employees with 1,881 misclassifications found.

It also estimated a total of 316,793 misclassified workers statewide, listing as its source “Integrated Public Use Microdata Series 2011 Census records and McClatchy survey of workers” and says that its estimates are “derived from specific rates of misclassification over 12 specialties.”

Those interviewed for the WorkCompCentral story said the estimate sounds accurate based on anecdotal experiences; some said too high, some said too low ... must be just about right.

The impact of undocumented workers is both on the premium collection side, and on the work injury claim side - and probably not what you might think.

According to WorkCompCentral columnist, Peter Rousmaniere, in 2010 roughly 40% of work injuries and illnesses do not result in a workers’ comp claim. That might amount to well over 1 million claims that never were submitted, each year.

Though he doesn't engage any reasoning as to why there may not be reporting of an occupational injury or illness, saving that for another column, the fact of illegal work status is likely a big contributor.

At some point the political hot potato of immigration reform is going to have to be addressed. And the workers' compensation industry is going to have to keep a close eye on what ultimately gets decided by Congress.

1 comment:

  1. Supposing immigration reform does happen in the foreseeable future, knowing that the immigrants don't all speak English, are not aware of the Workers' Comp system, as Joe Paduda and I have reported, plus the potential physician shortage under the ACA, it would be logical and cost-effective to have these injured workers treated, at least as far as expensive surgeries are concerned, in their home countries or similar countries, where language and customs are not as strange to them as English and American customs are to them. And finally, they can have family and friends visit them in these medical travel facilities so that they would know that their friend and relative is well cared for, and their recovery time would be shorter.