A proposal to change the basis of employers' workers' comp premiums from payroll to "hours worked" has been rejected by the Legislature.
The Business Council had strongly opposed the hours-worked proposal, arguing that since workers' comp is intended to replace lost wages, employers' taxes for workers' comp should be based on wages.
Lawmakers passed a compromise bill that would put a payroll cap on employers' workers' comp premiums.
Construction industry advocates had argued that payroll-based premiums make it harder for some high-wage firms to submit competitive bids-because their higher workers' comp premiums force their bids up.
The compromise bill is designed to help these companies bid competitively. It would cap the maximum weekly wage taxed, for workers' comp purposes, at $900 a week as of 1999.
The cap would fall to $750 over the next three years.
To account for different costs in different regions, the state would be divided into three regions, with different premiums in each region.
Construction firms that work only on one- and two-family homes would be exempt from the program.
The program will expire in 2005.
The compromise bill would mean a much smaller increase in workers' comp costs statewide than would have resulted from premiums based on hours worked.
June 25, 1998