Royal Commission on Workers' Compensation in BC

Title:

Affiliation: WCB

Staff Present: TR, GG, OE, GS, SN, PL

Notetaker: Steven Noble

Date: Wednesday, April 8, 1998

 

 

JOHN STEEVES

Section 7: Compensation and Adjudication

BACKGROUND

  1. Health and Status of Work
  1. There is a powerful connection between health and the social and the physical environment, " In particular, the correlation between social status and health is well established. Higher status individuals live longer and healthier lives than lower status people". (page 6).
  2. The significance of this for workers' compensation is reflected in the Whitehall studies in Britain. The first study (starting in 1967 and tracking over a 10-year period) found that office workers in the highest employment category had about one-third of the mortality of office workers in the lowest category. In Whitehall II, twenty years later, the results were the same and they had other findings such as workers in lower status positions were more at risk for ischaemic heart disease, chronic bronchitis and chronic cough. (page 8). Another study has concluded that "there is something that powerfully influences health and that is correlated with hierarchy per se." (page 10)..
  3. These Studies counter the suggestion that factors external to the work are only responsible for certain diseases. Occupational position and job factors play a large role in disease causation. (page 13).
  1. Cardiovascular Disease
  1. "Workers who face high psychological demands, on the one hand, and who have low decision latitude and little control over job demands or how to use their skills, on the other hand, are at an elevated risk for cardiovascular disease" (page 16).
  2. The highest risk for heart disease for men in both blue and white-collar occupations has been found to be associated with hectic work, combined with few possibilities to learn new things and low influence on planning of work and working hours. (page 17).
  3. These findings suggest that systemic factors involving how the work is organized can be of causative significance in cardiovascular disease.
  1. Musculoskeletal Pain
  1. The authors note the pervasive nature of back pain, which affects 80% of adults some time in their life. In the United States, it is the second most common reason for work absenteeism, the third leading cause of total work disability and the leading cause of activity limitation in young adults. The rate of disability due to low back pain is increasing at a tremendous rate. (page 20).
  2. The tendency in workers' compensation is to seek discrete, precipitating events for personal injuries in order to establish causation. However, it is plain that back pain and other musculoskeletal diseases are multi-factorial in origin and, therefore, the search for a specific, precipitating event may be fruitless in the majority of cases. (page 21). We note that this may not be true in BC since back strain claims have been relatively constant since 1987 (taking into account claims volumes). (See 1996 Annual Report, page 53).
  3. One possibility is that the stress generated by high demand/low control jobs may affect an individual's ability to cope not only with the emotional pressures but also with the physical and mechanical loads of the workplace. Workplace features such as monotonous work, time pressure, perceived high workload and little control over one's job have been linked with musculoskeletal conditions such as back pain and other musculoskeletal injuries. (page 23).

 

SECTION 8 - BENEFIT LEVELS

  1. BACKGROUND
  2. I think Mr. Chairman not to - we are not giving any confidence away - the parties are generally joined on this issue and this is where a lot of your work and thinking is to be applied.
  3. As background we offer this as a description of just where the parties are joined. And it seems to me where we've talked about this so far that where workers and business are joined on the issue of benefit levels is whether workers should lose money while on compensation or not.
  1. There is lost compensation entitlement for vacation and statutory holiday entitlement. If we take the bare minimum of two weeks holiday and 11 statutory holidays this can be a significant amount of money to a worker.
  2. Benefits are not covered. Benefit packages can be of significant value to a worker, amounting to 30% of wage amounts. For workers on compensation for a long time this can mean considerable expense if contributions run out, and for example, dental work is required for children. Alternatively, the dental work doesn't get done. As well, once contributions to a benefit plan run out there is often a waiting period to go through once the worker returns to work.
  3. Future promotions are not generally covered by compensation. Young workers expect that they will start off at a low rate and work themselves into better paying and more responsible positions over the years. This is specifically mentioned in Section 40 - future promotions are not calculated in a loss of earnings calculation. This enables them to support their families and retire with some security. An injury at work can destroy this kind of life. A young worker who suffers a permanent disability from a work related injury or disease will not be able to have those same expectations and the system does not compensation for that loss. This is real economic cost to workers, their families, and society as a whole.
  4. Compensation does not include contributions to Canada Pension Plan or Employment Insurance or private insurance plans. The economic security that is provided by these plans is reduced or lost to workers on compensation.
  5. Workers with compensable disabilities cannot make the contributions to their households that they used to do. There is an economic cost to the inability to look after house repairs and doing the laundry or cooking for the family. The responsibility for these tasks is shifted on to other members of the family. Apart from the economic costs, this commission has heard from workers who have explained the cost on marriages and children of not being able to make a contribution to the home.
  6. For workers earning more than the statutory maximum there simply is no compensation for the difference between the maximum and their actual earnings. Tab 17 of the BCFL documents is an example of a worker who earned $70,000. If there was no statutory maximum this worker would have received almost $10,000 more compensation per year. This under compensation extends to all benefits under the Act. It is specifically onerous and leads to quite artificial results when a worker's loss of earning pension is calculated on the basis of the statutory maximum rather than actual pensions.
  7. We currently have up to a one-day waiting period because section 5.2 of the Act says compensation cannot be paid for the day of the injury.
  1. If we look at Table 5B from the Board's briefing paper on Compensation rates it is worth considering the 25 levels of incomes under the statutory maximum of $57,000. Of these 25 levels 11 are receiving less money on compensation taking into account the affect of the tax system. Workers earning $19,000 receive 87% of that amount while on compensation. Fourteen of the levels have more than 100%, the highest being 106%.
  2. In table 5B of those workers earning more than 100% of their pre-injury income the bottom four have to be adjusted downwards because of the recent surcharge in the last federal budget for low income earners so there may be 15 levels which receive less on compensation and 10 which receive more. The current provincial budget has further personal tax reductions. [That's one of the reasons why you'd want to stick with a percentage of gross by the way Mr. Chairman - if you go to a percentage of net you are kind of freezing compensation levels based on the tax structure as it was with the - when that change was brought in - and you could build an adjustment I suppose - whether that would be at the discretion of the Board or by regulation of government would be part of that consideration. But an example is if someone was working at a job site in Fort. St. John, up in the north east might have people coming in from Alberta from time to time - the - if there's people - two people working on the job - are injured - one is from BC and one is from Alberta - because of the different tax rates the person in Alberta would get more compensation. These are the kinds of problems you get in to when you use a net rate].
  1. We know that average earnings in BC were $30,924 for 1995 (page 18 of briefing paper) so most workers are under compensated by about 5% when the tax system is considered (75% gross compensations 95% of net income for these workers).
  2. Looking at both the Average Wage Distribution table at page 28 of the Briefing paper and Table 5B almost 60% of workers are receiving less money on compensation than when they were working. This figure excludes the bottom 4 levels of income, which may be less than 100% as a result of the recent federal budget.
  3. The data in Table 5B are not based on effective tax rates.
  4. All of the calculations in the above three points DO NOT include the seven items that currently are not included in compensation benefits (discussed above). The cost of these items could be greater or less in every case but we believe it is reasonable to believe that factoring in vacation entitlement, benefits and so on would result in all workers receiving less while on compensation.

PROPOSALS FOR FURTHER UNDER COMPENSATION OF WORKERS: NET VERSUS GROSS EARNINGS.

  1. At least 16.5% of workers with claims with the Board have incomes under $20,000. Changing to a 90% of net system would decrease compensation levels "quite significantly" in the range of 13 - 17.2%. Married workers with non-working spouses or single workers with one child with incomes just under $20,000 would get a slight increase.
  2. About 46% of workers with claims at the Board have income in the range of $20,000 to $36,000. All single workers with no dependents in this group would experience a decrease in compensation, ranging from 6.8% to 13.4%. Married workers with non-working spouses or single workers with one child having incomes at or just above $20,000 would experience increases of 1.6%.
  3. About 34% of workers with claims at the Board have incomes ranging from $36,000 to $54,000. All of these workers would experience a decrease in compensation.
  4. All workers making a claim for compensation with incomes over the statutory maximum (4% of all claims) would suffer decreases in compensation.

AVERAGE EARNINGS CALCULATIONS