These Workers’ Comp Regulatory Trends Are Changing the Future of the Industry

Regulatory trends can leave a lasting impact on workers’ comp. The economy and technological advancement are two ways in which the industry is changing. But that's not all.
By: | November 7, 2018

Regulatory trends and changes within policy can have a far-reaching and lasting impact on workers’ compensation. Both the economy and technological advancement are just some ways in which the industry is changing. But that’s not all.

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The gig economy, the growing opioid crisis, use of artificial intelligence, changing attitudes on recovery approaches and the constitutionality of workers’ comp law are molding the way comp professionals and regulators talk about the industry.

“The genesis of this topic came from conversations in the workers’ compensation regulator community and those conversations where about the future of workers’ comp,” said Abbie Hudgens, the administrator of the Bureau of Workers’ Compensation of the State of Tennessee Department of Labor and Workforce Development.

“The future of work is changing,” added Frank R. McKay, the chairman and chief appellate court judge of the State Board of Workers’ Compensation in Georgia. “We see that jobs have already disappeared. There’s a shift from the industrial age to a technical revolution.”

Hudgens and McKay will be speaking on this changing regulatory landscape on Dec. 5 during the National Workers’ Compensation and Disability Conference® & Expo (NWCDC) in Las Vegas at the Mandalay Bay.

They will be joined by Jennifer Wolf Horejsh, executive director of the IAIABC, where she works to find solutions to reduce harm and aid recovery from occupational injuries and illnesses. The NWCDC session is called “On the Horizon: Policymaker Perspectives” and will cover how the regulatory environment continues to evolve alongside health care, technology and employment changes. It will be a panel discussion, open for questions from the audience.

“There’s a lot going on in the regulatory community that can have an impact on the workers’ comp space and its employers,” said Hudgens. “I’m hoping for interesting questions from the audience. It gives us the opportunity to learn from each other.”

Two Hot-Topic Regulatory Trends to Watch

1) The Gig Economy

The gig economy is a major trend on Hudgens’ radar: “It’s an issue we see emerging right now as employees leave the standard model of working for companies and are working for themselves. They don’t have the protections ‘regular’ employment provides.”

It also leads to questions surrounding what makes a person a gig worker versus an “employee.” Hudgens pointed to a series of bills put through by the company Handy. In these bills, Handy, which links gig employees who provide home-based cleaning and handyman services to consumers, proposed that gig workers should be considered freelancers or independent contractors. So far, at least eight states have introduced these bills and three states already signed them into law.

This hurts workers in that they no longer have access to the labor protections employees have, including workers’ comp benefits.

“And there are instances where persons considered independent contractors by a company are actually employees according to state law,” said Hudgens. “There’s a changing environment of the working economy in general. Employers may be outsourcing instead of handling work internally. Regulators are having an increase in the problem of employers not following the law and not providing workers’ comp for their legal employees.”

She said this is particularly true in construction, where honest employers are paying for workers’ comp, unemployment insurance, FICA taxes and safety measures while others are writing their employees off as independent contractors to avoid those same payments and gain a competitive edge.

2) Artificial Intelligence

For McKay, the introduction of artificial intelligence (AI) into the workplace is a regulatory trend to watch.

“We’re seeing it in our own industry,” he said, referring to Fukoku Mutual Insurance in Japan. There, the company decided to let go of 34 adjusters in favor of AI workers with the hope of increasing productivity by 30 percent.

“It’s a big issue in the workers’ comp industry, because a lot of jobs disappearing are manual labor type jobs,” McKay said. “If we look at the history of the country, the history of workers’ compensation, a hundred years ago we went from agriculture to the manufacturing. Now it’s manufacturing to the technological age.

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“The future of workers’ comp is actually already here. We all carry a smartphone now. It’s amazing what you can do without involving another person.”

McKay did add that AI and other technological advances still have their pros, primarily in cost:benefit analyses. His worry stems from the possibility of human jobs becoming obsolete. Are the number of jobs going to shrink due to growing AI acceptance in the workplace?

“We need to see where we are now as an industry and where we’re headed and anticipate the needs of people in the future. That’s something we’re going to have to figure out.”

Hudgens, McKay and Horejsh will evaluate these issues and other policymaker actions expected to emerge across the country during their session at NWCDC 2018. &

Autumn Heisler is the digital producer at Risk & Insurance®. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]