US Department of Labor Urges Major Changes in the Nation's Workers' Compensation System

As The Path to Federalization of the US workers' compensation system broadens, the US Department of Labor has published a report urging expansion of the Federal role in reforming the entire patchwork of state systems. As the Presidential Election Cycle moves ahead, the ultimate outcome will impact the the nation's struggling workers' compensation scheme. Based on historical statements both "Hillarycare" or "Trump Medical," (lead by his advisor, Former Speaker Newt Gingrich,  will focus on this issue. See  my prior blog posts below.


"State-based workers’ compensation programs provide critical support to workers who are injured or made sick by their jobs. These programs are a key component of the country’s social benefit structure and of occupational safety policy, and the only major component of the social safety net with no federal oversight or minimum national standards. This Report provides an introduction to these programs, but it also sounds an alarm: working people are at great risk of falling into poverty as a result of workplace injuries and the failure of state workers’ compensation systems to provide them with adequate benefits. 

"Despite the sizable cost of workers’ compensation, only a small portion of the overall costs of occupational injury and illness is borne by employers. Costs are instead shifted away from employers, often to workers, their families and communities. Other social benefit systems – including Social Security retirement benefits, Social Security Disability Insurance (SSDI), Medicare, and, most recently, health care provided under the Affordable Care Act – have expanded our social safety net, while the workers’ compensation safety net has been shrinking. There is growing evidence that costs of workplace-related disability are being transferred to other benefit programs, placing additional strains on these programs at a time when they are already under considerable stress. As the costs of work injury and illness are shifted, high hazard employers have fewer incentives to eliminate workplace hazards and actually prevent injuries and illnesses from occurring. Under these conditions, injured workers, their families and other benefit programs effectively subsidize high hazard employers......” 

"'If you work hard in America, you have the right to a safe workplace. And if you get hurt on the job, or become disabled or unemployed, you should still be able to keep food on the table.” –President Barack Obama

Click here to read the complete US Department of Labor Report.

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Recalling the Forgotten Provision of the ‘Grand Bargain’

Today's guest post is authored by Jon Rehm, Esq. * of the Nebraska Bar. 

Jon Rehm

The Oklahoma and Florida supreme courts both overturned anti-worker changes to their state workers’ compensation laws based in whole or in part on their state constitutions. Workers’ compensation laws, for the most part, are state laws. This post seeks to explain why workers’ compensation laws are state laws and what that could mean for workers’ compensation laws in the future.


The vast majority of workers’ compensation attorneys and industry observers know the term “Grand Bargain.” In the “Grand Bargain,” employees gave up the right to sue their employers in tort for work injuries in exchange for defined benefits regardless of fault.

Workers’ compensation laws emerged roughly a century ago. However, Congress did not have the power to enact the “Grand Bargain” because of how the U.S. Supreme Court interpreted the Commerce Clause. In 1895, the court held in United States v. E.C. Knight that manufacturing was not commerce. In 1918, the court overturned a law prohibiting child labor on similar grounds and additionally held that the effects of child labor did not have enough of an impact on interstate commerce to justify regulation.

The Supreme Court did uphold the constitutionality of workers’ compensation laws in the case of New York Central Railroad v. White. However, the court upheld workers’ compensation laws based on a state’s so-called “police powers” under the 10th Amendment.

During the New Deal era in the 1930s, the Supreme Court’s interpretation of the interstate commerce clause changed so that workers’ compensation laws could have been enacted by the federal government. But by then, most states had workers’ compensation laws, so a general federal workers’ compensation law was unnecessary.

‘Federalization’ in the Post-New Deal Era

In the 1970s, Congress passed laws regarding occupational safety (Occupational Safety and Health Act) and employee benefits (Employee Retirement Income Security Act) under its authority granted by the interstate commerce clause. But neither OSHA nor ERISA were intended to interfere with state workers’ compensation laws.

The 1970s also saw an ultimately failed effort to impose federal minimum standards on state workers’ compensation. It was in this era that the term “federalization” and the concerns about the impact of federal laws on state workers’ compensation systems emerged.

Federalization re-emerged as an issue in the 2000s when concerns arose that the costs of workers’ compensation injuries were being shifted onto Medicare, and the federal government tried to fashion remedies to shift the cost back onto the workers’ compensation system. The effect of the Affordable Care Act on workers’ compensation was another federal issue that was hotly debated in workers’ compensation circles.

Finally in President Obama’s second term, OSHA issued many rules about medical care and drug testing that could have affected workers’ compensation laws. Democratic presidential candidate Bernie Sanders and other elected leaders also wrote a letter to the Secretary of Labor pointing out the failure of state-based workers’ compensation systems.

Conventional wisdom is that the election of Donald Trump paired with a Republican Congress will end the Obama era efforts at federalization of the workers’ compensation system. There is probably a fair amount of truth to this idea, but the Trump era may not spell the end of federalization of workers’ compensation.

In the 2010s “sharing economy,” companies such as Uber and Lyft emerged. The business model of these companies is premised on workers being independent contractors. However, this has created litigation and uncertainty for these companies. In 2015, the Democratic-aligned Brookings Institute hosted a discussion about the “reforming” labor laws for companies like Uber. Though workers’ compensation laws are traditionally state-based laws, there is no constitutional prohibition on designing workers’ compensation systems at a federal level. Unfortunately, it seems as some Democrats could find common ground with Donald Trump and House Speaker Ryan to amend ERISA and the Fair Labor Standards Act to exempt Uber drivers and other sharing economy workers from laws such as workers’ compensation.

* Jon Rehm represents employees across the state of Nebraska in workers compensation and wrongful termination cases. He is a member of the Nebraska Association of Trial Attorneys, the American Association of Justice, the American Bar Association, the Nebraska State Bar Association as well as the Lincoln Bar Association.

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Safeguarding Injured Workers From Cybersecurity Breaches

Under new Federal proposals, injured workers will be protected from cybersecurity breaches. The impact will be greater responsibilities and costs for law firms and, employers and their insurance companies.

Workers' Compensation stakeholders will be required to maintain better cyber hygiene, have better application update procedures and establish an adequate plan to respond to  breaches. Client and governmental agencies will require more secure networks and procedures for handling data transmission, access, and storage.

Hacking is an increasing concern for workers' compensation stakeholders. Some of the attacks by nation states are difficult to contain. Other attacks, by criminal ventures and amateurs, are less invasive. All the attacks can be hazardous, disruptive and costly. In the future, they will probably advance from the invasion of Personal Protective Information (PPI) to industrial ("Internet of Everything"), and national attacks, ie. WannaCry, and WannaCry (2nd wave).  See also, Envisioning the Hack That Could Take Down New York City  NYMag June 10, 2016  and "A Cyberattack "the World Isn't Ready For," NY Times, June 25, 2017.

The scope of potential exposure to injured workers is enormous. It extends from the hypothetical breach of a cardiovascular  (ie. medical device security) implant portrayed on the television series, Homeland, to real-world breaches of Personal Protected Information (PPI). An example of which is the breach of 32,599 patient records resulting in a $4.124 million class action settlement. Columbia Cas. Co. v. Cottage Health System, 2015 WL 4497730 July 15, 2015 Not Reported in F.Supp.3d. "The Court, therefore, DISMISSES the Complaint WITHOUT PREJUDICE, so that the parties may pursue alternative dispute resolution under the terms of the policy." The cybersecurity policy contained an exclusion for "failure to follow minimum required practices." See also the press releases from the NY State Attorney General.

Insurance carriers are not immune from liability as a result of cybersecurity data breaches. A $115 Million proposed class action settlement as a result of a cybersecurity attack on health insurer Anthem, Inc. has been announced. It is the largest data breach settlement in history,

More specifically, a recent American Bar Association opinion mandates that attorneys must take reasonable cybersecurity measures to protect client data. ABA Formal Opinion 477 (May 11, 2017). 

National regulation initiatives have been given a mandate through Presidential Executive Orders. Presidential Executive Order on Improving Critical Infrastructure Cybersecurity 13636 February 13, 2013 and Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure  May 11, 2017. An Introduction to Data Security  (NIST) June, 2017. Digital Idenity Guidlines 800-63 Rev 3, (NIST) June, 2017.

The National Institute of Standards and Technology (NIST) has initiated a "Framework for Improving Critical Infrastructure Cybersecurity." This voluntary model is rapidly gaining acceptance throughout industry and government.

A Federal statutory cause of action has evolved under the Defense of Trade Secrets Act. 18 USC §1836, et. seq., as well as the Cybersecurity Act of 2015. See also, Cybersecurity Enhancement Act of 2014  P.L.113-274 .

The recent initiatives in electronic security were highlighted at the recent NJ ICLE 2nd Annual Cyber Security Conference. The Presidential initiatives operationalized by National Institutes of Standards and Technology. The Cybersecurity Framework: Implementation Guidance for Federal Agencies - Draft NISTIR 8170 (NIST) May 12, 2017 Comment period through June 30, 2017 . Cybersecurity Framework Workshop 2017 , Addressing Gaps in Cybersecurity: OCR Releases Crosswalk Between HIPAA Security Rule and NIST Cybersecurity Framework  February 23, 2016.

The NIST Framework is being integrated into the infrastructure by the Executive Branch. Adoption and integration is anticipated by Health and Human Services  (HHS) (HIPAA-Office of Civil Rights), and Securities and Exchange Commission (SEC), Food and Drug Administration (FDA).

"An overriding question remains whether lawyers will be able to effectively protect their client’s confidentiality interests at any cost. Clients are becoming more sophisticated and they now demand that law firms adhere to security standards that will prevent a breach and if a breach occurs that the law firm will take adequate action to provide notice and, mitigate the potential damage."
"The ethical responsibility of lawyers, in most jurisdictions, is to take reasonable care to protect the personal information of clients in accordance with well-defined constitutional, statutory and administrative regulations, ethics opinions and the common law phraseology of the Restatement of Torts." See, Cybersecurity is an imminent and costly threat to lawyers and their clients.

Cybersecurity in workers' compensation remains in its infancy.  Cybersecurity is again placing the Federal government yet again in the lead on privacy and confidentiality as workers' compensation moves along the Path to Federalization. Going forward, increased regulation and stricter controls will safeguard injured workers.

This article is based on my presentation on Cybersecurity  at the NJ ICLE seminar on Hot Topics in Workers' Compensation Law 2016. The 2017 supplement to the treatise Workers' Compensation Law provides extensive and expanded coverage on this topic.

Jon L. Gelman of Wayne NJ is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise, Modern Workers’ Compensation Law (2017 West-Thomson-Reuters). 

For over 4 decades the Law Offices of Jon L Gelman  1.973.696.7900  jon@gelmans.com  has been representing injured workers and their families who have suffered occupational accidents and illnesses.

Updated: 06/29/17 06:30 am