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March 1, 2006

Council and others in a coalition urge Albany to enact workers' comp reform this year

A new coalition of business leaders and associations Wednesday urged state lawmakers to enact cost-cutting workers’ compensation reforms.

“New York State’s broken workers’ compensation system is costing jobs, hurting businesses, and treating injured workers unfairly, and it is in desperate need of reform,” the coalition said in a release. The coalition includes The Business Council, the New York Workers’ Compensation Action Network (NYCAN), the National Federation of Independent Business (NFIB), and individual business leaders across the state.

“The workers’ compensation system in New York is at a critical point,” said Elliott Shaw, the Council's director of government affairs. “The comp crisis is real and getting worse. It’s fundamentally undermining our competitiveness. We are losing jobs in the private sector, and we are losing opportunities to create new jobs. Reform is happening in other states. It needs to happen in New York, and it needs to happen this year.”

“New York’s workers’ compensation costs for employers are second highest in the nation,” said Larry Gilroy, chairman of NYCAN. “The cost of workers’ compensation is one of the leading causes that businesses point to when they are forced to eliminate jobs or create new jobs in other states. The Governor has proposed meaningful and realistic reforms and now the Legislature must do its part and make those reforms a reality.”

“Workers’ comp costs are a fundamental, inescapable cost of doing business, and since premiums are based on payroll, it can be the one cost that stops job-creation in its tracks,” said Mark Alesse, state director of NFIB. “Workers and employers have an identical interest in getting workers’ comp costs under control. Workers need jobs, and small businesses can only create those jobs when this fundamental cost is lower than it is today.”

The coalition highlighted individual businesses’ stories of the crushing burden that workers’ compensation costs impose on them and their enterprises.

One example came from Scott Millbower, safety manager from CONMED Corporation, a global medical technology company, with facilities in New York and several other states.

“While only 40 percent of our company’s 3,100 employees are based in New York State, they account for nearly two-thirds of our workers’ compensation costs,” Millbower said. “That means that our compensation costs are significantly higher for a New York employee than for an employee in any other state in which we do business.

“We need meaningful workers’ compensation reform if CONMED, which is self-insured for workers’ compensation, is going to be able to expand our operations and hire new workers in the state where our company was founded and built,” he said.

The Pawling Corporation, based in Dutchess County, is a manufacturer of architectural and engineered products, employing 300 workers.

“We’ve seen our self-insured workers’ compensation rates skyrocket 26 percent this year despite a decrease in the number of injuries and their related costs,” Ralph Skokan, CFO and chair of the executive safety committee of Pawling Corp., said. “Pawling Corp. has been doing business in New York for 60 years, yet if we were operating in virtually any other state our workers’ comp costs would be substantially lower. In fact, in most states our costs would be less than 50 percent of what they are in New York.”

Marriott International, Inc. is a leading worldwide hospitality company with more than 125,000 employees around the globe, including thousands in New York.

“We are delighted that the New York business and labor community is seriously addressing fundamental and necessary workers compensation reform,” Bob Steggert, vice president of casualty claims for Marriot International, said. “New York’s benefit structure system incentives - the ones that actually promote return-to-work - and health care delivery should be modernized in the interest of both injured workers and an economically vibrant business environment.”

Owl Wire & Cable, Inc., a Canastota, New York-based company, is one of the premier manufacturers of copper wire for a wide range of industries throughout the world.

“It’s hard for us to consider expansion in New York State when our workers’ compensation rates have risen by 30 percent recently,” said Robert Raiti, president of the firm. “Particularly when we compare that with Georgia—where we operate another production facility—and have seen our workers’ comp rates there reduced for the second year in a row.”

“I hear from my members - small, medium and large companies - everyday about the crushing cost
of workers’ compensation,” William Guglielmo, president of the Rome Area Chamber of Commerce, said. “If something is not done to fix this broken system soon, I am convinced that upstate will continue to lose jobs and see our economy and people continue to suffer.”

“Employers are doing everything they can to ensure safe working conditions for their employees and we need to see that reflected in the workers’ comp rates we are paying,” Tom Smith, a representative of the Mohawk Valley Safety Professionals Consortium, said. “We are a coalition of 70 employers with more than 25,000 workers in manufacturing, health care, retail, and other fields. Our ability to retain existing jobs and create new ones is directly affected by the costs we pay for workers’ compensation. The goal of the Consortium is to partner with New York State to develop a cost-effective workers’ compensation system that benefits both injured workers and employers.”

At $16,114, (up from $11,739 just three years ago) New York’s average workers’ comp claim is the second highest in the nation—86 percent above the national average, according to data from the National Council on Compensation Insurance (NCCI).

NCCI data also show that average workers’ comp premiums in New York are 15 percent above the national average.

Permanent partial disability (PPD) claims account for only 15 percent of claims in New York, yet they account for 81 percent of the aggregate cost of workers’ comp. New York is one of only nine states that does not limit the duration of PPD awards. Key reform proposals have focused on reining in costs in this area while continuing to offer injured worker ample benefits.