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Last fall's congressional victories by Democrats open the door further for the feds to regulate workers' compensation. Washington will not seek outright control; it is not even directly interested in workers' comp. But their electoral and legislative ambitions will encourage the Democrats to expand work disability safeguards. This could trigger the most sweeping increase in workers' comp protections since a federal commission in the 1970s scared many states into reforms.

The Senate favors immigration reform to increase the legal supply of foreign workers. The new House leadership appears to endorse this approach, one that the White House has wanted all along. Most of the 7.5 million illegal workers would be allowed to stay, within the confines of a guest-worker program.

This program gives to these workers full workers' comp protections. It will sweep away a clutter of prohibitions and unintended barriers caused by law or court precedent in many states. And it will make it illegal for guest workers to be other than an employee: i.e., independent contractor status will be prohibited. This measure is designed to eliminate gray labor markets. It affords these workers more protections than many legal workers, including Fed Ex drivers.

I expect the protective impulse of the guest-worker program to penetrate labor markets for millions of legal workers. The state of California got it right in 2006 when it conducted a study of "low-wage immigrant" labor, not just illegal labor. Jobs requiring relatively little education continue to grow in numbers, and risk management for working immigrants is responding. Last year, for example, a construction industry executive proposed that supervisors learn how to speak Spanish, rather than expect workers to speak English well enough to take instructions.

TRIA

On another note, it is not widely understood how expansion of workers' comp benefits sits like a time bomb within the Terrorism Risk Insurance Act of 2002, and its extension in 2005. I inferred from a conversation I had last year with an influential Democratic representative that Congress may begin to pay more attention to holes in coverage for work-related terrorist losses.

The next major terrorist act may involve biological agents. Some covered workers will die, more will be made physically ill and many will suffer mental anguish. Estates of those killed will receive death benefits. The physically ill will have to claim disease benefits, typically a torturous legal process. Those with posttraumatic stress disorder will maybe be precluded from workers' comp awards because their state laws either forbid or discourage "mental" claims.

Sooner or later, a Democratic Congress will conclude that TRIA is good policy only if workers are reasonably assured of having their claims accepted within the workers' comp system. Otherwise, the losses turn into fodder for third-party liability suits. We can see this scenario playing out among the World Trade Center cleanup work force. Congress may write into TRIA a requirement that states expand coverage to meet the real scope of terrorist risk.

PETER ROUSMANIERE, a Vermont-based consultant and writer, is the workers' comp columnist for Risk & Insurance®. He can be reached at riskletters@lrp.com.

January 1, 2007

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