New York State's 2007 Workers' Compensation Reform: Success or Failure?
D'Agostino, Mary L., Albany Law Review
In comparison to other forms of liability, the notion that an employer is responsible for compensating an employee for an injury occurring in the course and scope of his or her employment is a relatively recent development. (1) Germany has long been credited with enacting the world's first workers' compensation statute, when the country enacted the Bismarck Accident Insurance Law of 1884. (2) Several years later, in 1910, New York State became one of the first states to enact a compulsory workers' compensation scheme. (3) Although the New York State Court of Appeals ultimately declared the statute unconstitutional, (4) a series of events had been set in motion that lead to the passage of a predecessor form of New York's current workers' compensation system in 1914. (5)
Despite New York's progressiveness, in the years after the workers' compensation statute was enacted, it was much maligned and condemned by parties on both sides of an extraordinarily adversarial system. (6) While some of the criticism focused on how expensive the system is for New York's employers, (7) other criticism focused on perceived benefit inequities faced by injured workers. (8) These well-founded criticisms were primary driving factors behind the New York State Workers' Compensation Reform Bill, a piece of legislation passed in 2007, which was aimed at remedying both of these system denunciations. (9)
In commenting on the passage of the bill, Senator Joseph Bruno, then the Majority Leader, noted that "[t]he workers' compensation reform law is a tremendous victory for workers who will receive increased benefits, and for businesses that will see a significant reduction in premiums." (10) Then-Governor Eliot Spitzer expressed a similar sentiment and hailed the reform legislation as a win for New York's employers as well as a win for New York's injured workers. (11) Despite what seemed to have been nearly universal praise of the bill, (12) since 2007, both employers and injured workers have expressed their unhappiness with the legislation; however, it seems that it has at least minimally accomplished what it set out to do: reduce employer premiums and increase injured worker benefit levels.
This note begins by tracing the history of the workers' compensation system in New York and providing a broad overview of how the system has generally operated since the system was enacted. (13) Part III examines the events, circumstances, and concerns that lead to the passage of the 2007 reform legislation. (14) Part IV examines the changes that were implemented to the system by the legislation, with a focus on premiums paid by employers and benefits paid to injured workers. (15) Finally, Part V analyzes and considers whether employers have seen a reduction in workers' compensation premiums concomitantly with injured workers seeing a weekly benefit increase since the 2007 reform legislation was passed and suggests that New York should consider additional legislative action to ensure the long-term success of the reforms. (16)
II. Brief History of the Workers' Compensation System In New York State
A. Initial Unsuccessful Attempts
Originally, the common law in New York State provided no remedy for on-the-job accidents, absent negligence on the part of the employer. (17) In 1909, the New York State Legislature established a committee, known as the Wainwright Commission, to study industrial accidents in the state and ultimately make legislative recommendations. (18) More specifically, this committee was charged with investigating "the liability of employers to employees for industrial accidents," the "efficiency, cost, justice, merits and defects of [other states' and countries' workers' compensation] laws," as well as "the causes of accidents to employees." (19) Thereafter, those appointed to the committee were required to report their findings to the legislature along with their recommendations for "legislation by bill or otherwise" to the 1910 New York legislature. …