Lawmakers Debate Changes in Federal Workers’ Compensation Benefits

May 28, 2015

Worker's compensation

The U.S. Department of Labor recently presented lawmakers with a set of proposed reforms to the federal workers’ compensation benefits system.

Proponents say the reforms would lead to savings and better use of taxpayer dollars. However, opponents say the price paid for those savings would be increased hardship on disabled federal workers and their families.

As Government Executive reports, the director of the Labor Department’s Office of Workers’ Compensation Programs presented a set of proposed statutory amendments on May 20 to the Houston Education and Workforce Subcommittee on Workforce Protections.

Reforms to the Federal Employees Compensation Act (FECA) that the Labor Department is seeking include:

  • Creating a flat 70 percent rate in wage-loss benefits – Under current law, a worker with dependents who is injured on the job and deemed to be “fully disabled” may receive wage-loss benefits that total 75 percent of their pre-injury earnings. Disabled workers without dependents can receive 66 2/3 percent of the wages they were earning prior to their injury. The Labor Department seeks a flat rate “to bring equity” to the workers’ compensation system, Government Executive reports.
  • Reducing wage-loss benefits for retirement-age employees – The Labor Department also would like to cut wage-loss benefits for employees who have reached Social Security retirement age to 50 percent of their pre-injury earnings.

Safety & Health Magazine reports that the Labor Department would also like to increase data sharing among federal agencies and “increase incentives for agencies lowering their injury and lost time rates.”

According to Government Executive, a Labor Department official gave lawmakers a “conservative estimate” that the proposed reforms would lead to $360 million in savings over the next decade.

Debate Surrounds Proposed Federal Workers’ Compensation Reforms

One lawmaker who supports the Labor Department’s proposed changes is Rep. Tim Walberg (R-Michigan).  He previously sponsored FECA reform legislation that passed the House but stalled in the Senate, according to Government Executive.

Walberg said during the subcommittee meeting that changes to FECA must be made, and he conceded that the reform process will involve “tough choices.”

However, some lawmakers expressed skepticism. In particular, Rep. Mark Pocan (D-Wisconsin) expressed doubt that the reforms would remove “disincentives” that keep federal employees from returning to work after an injury.

As Government Executive reports, Pocan pointed out that around 98 percent of federal workers who receive FECA benefits end up returning to work within two years after being injured on the job.

As a firm that works with injured and disabled federal employees across the U.S. and abroad, Harris Federal joins those who are concerned that the Labor Department’s proposed reforms would do more harm than good.

It’s interesting to note that one argument in favor of the reforms is that they would align median FECA benefits with median retirement benefits. In other words, they would remove a federal worker’s incentive to collect tax-free FECA benefits instead of taxed retirement income.

However, Government Executive notes that the Government Accountability Office (GAO) found that FECA benefits under the proposed reforms would actually be significantly less than retirement benefits – in fact, as much as 35 percent less.

While modernization of the federal workers’ compensation program may be inevitable, we agree with a statement attributed to the president of the National Active and Retired Federal Employees Association: Reforms should never “punish the very people struggling to recover after a debilitating injury in service to their country.”

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