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Legislative Memo

BILL:

 S.3798-A (Leibell)/ A.1305-A (Nolan)

Support

SUBJECT:

Increases the maximum disability benefit

 

DATE:

June 16, 2006

 

This bill would amend the state workers' compensation law and increase the maximum statutory disability benefit to $380 per week on July 1, 2007 and to $440 per week on July 1, 2008. The Business Council opposes this bill.

Higher Maximum Benefits are already possible
New York State is one of only five states in the country that has a statutory disability insurance requirement. So, the vast majority of employers in the country are able to deal with income replacement for short term absences voluntarily. Although the last increase in the maximum statutory disability benefit was enacted in 1989 to $170 per week, it has been and remains possible for employers to purchase disability insurance policies or institute salary continuation programs far above the current $170 per week maximum or the 50% of average weekly wage level. Disability benefits are one of a range of fringe benefit arrangements that comprise an employer's total benefit package. Employers and their employees or collective bargaining representatives are best left to determine the proper level of benefits for a particular employer and employee group based on industry, location and affordability.

Higher benefits bring higher costs
Increasing the maximum disability benefit will, as a simple economic issue, increase the amount of benefits paid and, in turn, increase costs for everyone's disability insurance. This is especially significant since the maximum benefit amount is increasing by 123% in 2007 and then another 16% in 2008. With no system reforms to balance the increased costs with increased savings, this additional cost will be recouped by either increasing the cost of the goods or services provided by the business to its customers or by reducing the level of other existing or anticipated employee fringe benefits. It is puzzling that no fiscal implications were noted on the sponsor's memo.

System reforms are needed
For several years, The Business Council has supported a package of workers' compensation system reforms that have included increases to the maximum statutory disability benefit. The -over- need for system reform is greater than ever and we would like to see a change in the maximum disability benefit remain a part of an overall reform package. Certainly, it is easier to simply peel off the disability benefit portion and move on it but we need system reform. We re-issue our challenge to take the tougher road and improve the whole workers' compensation system.

For these reasons, The Business Council opposes this legislation and respectfully urges that it not be enacted.