2-18-2019; Minimum Wage Law to Change Wage Loss Differential Math for IL Claims; New Indiana WC Single Hearing Member Takes Office + New Drug Formulary in Effect – Are You Ready? by Kevin Boyle, JD

Synopsis: $15/Hour IL Minimum Wage Legislation Goes to Governor Pritzker for Rapid Signature/Enactment. All Pending Wage Loss Diff Claims in IL WC Need To Be Re-Reserved and Settlements Adjusted.

Editor’s comment: Last week, the Illinois House passed SB 1 (Sen. Lightford/Rep. Guzzardi), a bill to increase the state's minimum wage to $15 an hour by 2025 and $13 for those under 18 by 2025. The legislation now goes to Gov. Pritzker where a swift signature is expected. All House Republicans voted against the measure and were joined by Democrats Rep. Monica Bristow (Alton), Rep. Terra Costa Howard (Lombard), Rep. Jerry Costello (Red Bud) and Rep. Mary Edly-Allen (Libertyville). Stephanie Kifowit (D-Aurora) voted "present". The legislation was approved by the IL Senate the prior week on a partisan roll call with 39 Senate Democrats voting "yes" to 18 Senate Republicans voting "no".

Date of Change

Minimum Wage

Teen Wage

Current

$8.25

$7.75

1/1/20

$9.25

$8.00

7/1/20

$10.00

NA

1/1/21

$11.00

$8.50

1/1/22

$12.00

$9.25

1/1/23

$13.00

$10.50

1/1/24

$14.00

$12.00

1/1/25

$15.00

$13.00

 
Teen wage is determined as under the age of 18 and working less than 650 hours per calendar year. 

Unfortunately, the sponsors of SB 1 were unwilling to address the Illinois State Chamber and other business groups' request for a proposed geographical minimum wage that would soften this dramatic change to suburban and downstate communities—we ask our readers to support the State Chamber who remains on point to help Illinois businesses and job growth.

You may note, in one year, the IL minimum wage rate jumps from $8.25 to $10.00, which is a 33% increase! The amended bill passed also includes a complex payroll deduction tax credit for employers of 50 or fewer employees. Please note SB 1 increases penalties and fines for violation of the Minimum Wage Act. An employee may recover TRIPLE damages of any underpayment along with costs, attorney's fees and damages of 5% per month (previously 2%) of the amount of each underpayment following the date of payment such underpayments remain unpaid. In addition, if the employer's conduct is proven by a preponderance of the evidence to be willful, repeated, or with reckless disregard, the employer is liable to the Department of Labor a penalty of $1,500 payable to its Wage Theft Enforcement Fund. One interesting thought—could you make your workers into “owners” by giving them a piece of the business to avoid this gigantic increase? The lawyers will figure that out.

What Does This New Law Mean to Pending IL WC Wage Loss Differential Claims? Take a Fresh Look At Reserves and Pending Settlements.

Well, as you can see from the chart above—the current minimum wage is $8.25 per hour. Illinois WC’s wage loss differential benefits are derived from Section 8(d-1) of the IL WC Act:

 
If, after the accidental injury has been sustained, the employee as a result thereof becomes partially incapacitated from pursuing his usual and customary line of employment, he shall, … receive compensation for the duration of his disability, subject to the limitations as to maximum amounts fixed in paragraph (b) of this Section, equal to 66-2/3% of the difference between the average amount which he would be able to earn in the full performance of his duties in the occupation in which he was engaged at the time of the accident and the average amount which he is earning or is able to earn in some suitable employment or business after the accident.  For accidental injuries that occur on or after September 1, 2011, an award for wage differential under this subsection shall be effective only until the employee reaches the age of 67 or 5 years from the date the award becomes final, whichever is later. (emphasis added).        

Please note the statutory language I highlighted—wage loss differential is based on what the worker will earn or “is able to earn” in a post-injury job that assumes they can’t return to their regular work. So right now as an example, a thirty-year old male worker making $20 per hour who becomes injured and has “permanent restrictions” and can only do sedentary work in a minimum wage job would be making the current minimum wage $8.25 per hour. The wage differential would be $20-$8.25 or $11.75 gross differential times 2/3 or $7.83 net differential. Times 40 hours a week would be $313.33 a week and $16,293.33 a year. They would be entitled to that amount on a tax-free basis until they reach age 67 or for 37 years—that amount is a staggering $602,853.21. Please note that is full, undiscounted value.

When you take into account the new law that will insure if they take any full-time job, they will be making $15 per hour in about five years, the math changes to $20-15 or $5 gross differential times 2/3 or $3.33 net differential. Times 40 hours a week would be $133.33 a week and $6,933.33 a year. They would be entitled to the new wage loss diff on a tax-free basis for the same 37 years, equaling gross benefits of $256,533.21. While that is still a LOT of money, you will note it is dramatically less due to the rise in our minimum wage. If you were to discount it for the time-value of money, it would be even smaller.

I am sure there are still Claimant lawyers and possibly Arbitrators who are still discussing/pre-trying wage loss claims as if the minimum wage will always be $8.25 per hour—to me, it is malpractice not to be aware of the statutory change that will dramatically increase, almost double, the minimum wage. And I am sure many claims adjusters have to take a fresh look at any pending reserves on your current wage loss claims—they are almost certainly too high and should be reduced. The defense team at Keefe, Campbell, Biery & Associates are happy to help with the math on updating your reserves at no charge. Just send a reply.

We appreciate your thoughts and comments. Please post them on our award-winning blog. We are not responsible for implementing these thoughts and legal recommendations unless you implement with in consultation with our firm.

Synopsis: New Indiana WC Single Hearing Member (Judge) Takes Office, and New Drug Formulary now in Effect – Are you ready? Article and analysis by our IN WC Defense Team Leader, Kevin Boyle, J.D.

Editor’s comment: I previously reported changes at the end of 2018 for two new IN judges. The last position has now been filled. This week Sandra O’Brien officially takes over for SHM Gerald Ediger in District 1 which covers the Northwest Region. Ms. O’Brien has practiced  for over 20 years in the Region as a plaintiff’s attorney in civil and IN worker’s compensation cases.

I have prior experience with Ms. O’Brien, and if you have any questions, please contact me. I look forward to working with Ms. O’Brien in the near future. If you look at the map to the left, Ms. O’Brien will handle the counties marked in bright green.

Synopsis: IWCB Drug Formulary Training Seminars Available for the new Indiana drug prescription rules and processes. Article and analysis by our IN WC Defense Team Leader, Kevin Boyle, J.D.

Editor’s comment: I previously reported that the new Indiana Formulary rules went into effect on January 1, 2019.  The IWCB is still providing training seminars to help you understand the complicated process. To recap, I.C. 22-3-3-4.7 and I.C. 22-3-7-17.6 were added to help standardize the approval of “non-preferred” or “N” drugs for employees who filed a notice of injury. After January 1, 2019, if a doctor prescribes an “N” drug, there are now detailed steps to take to approve that “N” drug or try to UR it for a denial. URs are always a tricky step for Indiana worker’s compensation cases. So far, it’s unclear yet how this new statutory change will be followed by our judges, but the steps need to be taken for now, especially if you are denying prescriptions. Call or email me if any questions.

As always, if you have questions, concerns or just want to reasonably and rapidly close your IN WC claims, no one is faster and better than Kevin Boyle. He can be reached 24/7 at kboyle@keefe-law.com

Thanks.

Kevin Boyle, Esq., Keefe, Campbell, Biery & Assocs., LLC, 118 N. Clinton St., Suite 300, Chicago, IL 60661, 312.756.1800

and

885 South College Mall Rd. #222, Bloomington, IN 47401, Direct: 312.662.9899, Alternate: 812.369.7182

Email:  kboyle@keefe-law.com,  Attorney - Bio

Synopsis: Join KCB&A with the IL State Chamber for the IL WC Workshop on April 2, 2019 in Naperville. The link to register is: http://events.constantcontact.com/register/event?llr=omjkt4dab&oeidk=a07eg2i2618bf7c6629

Synopsis: Illinois WC Rates Jump Again—even with 313 residents leaving the state on average PER DAY, there was a jump in the Statewide AWW and Your existing PPD Reserves May Need To Be UPDATED RETROACTIVELY(!).

To any of our readers and/or fans, Send a Reply to Get a Free Copy of Shawn R. Biery’s Updated IL WC Rate-Sheet!

Editor’s comment: There continues to be an upward spiral of IL WC rates. Please don’t shoot the messenger for telling you how to get them right.

As mentioned before, twice every year, starting in the 1980’s, the IL WC Act provides a formula which effectively insures no matter how poor the IL economy is doing, your IL WC rates keep climbing.

We caution our readers to pay attention to the fact the IL WC statutory maximum PPD rate is now $826.79 (up from $790.64—a $36 increase when the last increase was only $15!!!).

When it was published, this PPD Max rate changed retroactively from July 1, 2018 to present. If you reserved a claim based on the prior rate for the period from July 1 to right now, your reserves are wrong.

If you have a claim with a date of loss after July 2017 and a max PPD rate, you need to take a look and see if the new maximum PPD rate applies.

The current TTD weekly maximum has risen to $1,506.81.

An IL worker has to make over $2,260.22 per week or $117,531.18 per year to hit the new IL WC maximum TTD rate.

The new IL WC minimum death or T&P rate also went up.

The IL WC minimum death benefit is 25 years of compensation or $565.06 per week x 52 weeks in a year x 25 years equaling a staggering $734,578.00! Yes, if Claimant makes $100 a week in a part-time job and dies in a work-related accident, the benefit is over $734K.

The new maximum IL WC death benefit is $1,506.81 times 52 weeks times 25 years or a lofty $1,958,853.00 plus burial benefits of $8K.

On top of this massive benefit, Illinois employers/governments have to contribute to a fund to pay COLA increases under the Rate Adjustment Fund that may double that already-high benefit, depending on the CPI.

The best way to make sense of all of this is to get Shawn Biery’s colorful, updated and easy-to-understand IL WC Rate Sheet.

If you want it, simply email Marissa at mpatel@keefe-law.com and include your mailing address if you would like to be mailed a laminated copy & you can also copy Shawn at sbiery@keefe-law.com with any questions, and his great team will get a copy routed to you before rates rise again.

Shawn remains your go-to defense source on any issue relating to IL WC rates!