South Carolina Bill Would Make Workers’ Comp Coverage Optional for Most Employers

A bill introduced in the South Carolina Senate on April 16th (2015 Bill Text SC S.B. 674) would make workers’ compensation coverage optional for the vast majority of the state’s employers—not just those who choose to set up written alternative injury benefit plans like those allowed pursuant to Oklahoma’s new “opt out” arrangement or the somewhat similar opt out arrangement contained in a bill currently before the Tennessee legislature. Such a law would essentially parrot the workers’ compensation scenario in Texas, which is currently the only state that does not require employers to provide comp coverage of some type for employees.

New Title 64

The South Carolina bill would repeal the existing Title 42 of the 1976 Code—the state’s existing comp act—and add a new Title 64 in its place. Under new Chapter 11 of Title 64 (still called “The South Carolina Workers’ Compensation Act”, “an employer may elect to obtain workers’ compensation insurance coverage” [proposed S.C. Code Code § 64–11–105(A), emphasis added] and “an employer who elects to obtain coverage is subject to this title” [proposed S.C. Code Code § 64–11–105(B), emphasis added], leaving the negative pregnant: South Carolina employers may choose not to obtain coverage for employees (provided the employer posts and delivers certain required notices to affected employees).

Under Bill, Legislators Would Continue to Take Care of Their Own

Passage of the bill in its present form would allow South Carolina legislators to abandon residents (and others) who work for private employers. Apparently the bill sponsor  chose not to inflict the “benefit” of the proposed law on those who work for government; SB 674 would require workers’ compensation coverage for public employers and private employers that perform government construction projects.

Additional Thoughts

To coin the phrase used by legislators, “I reserve the right to revise and extend my remarks.” After all, I’m still sifting through the 280-page bill. I’d like, however, to offer two initial notes of irony.

Florida’s Padgett Case Controversy

The first relates to the ongoing “Padgett” litigation in Florida [see generally my commentary posted late last year]. As you’ll recall, in Padgett, two claimant-oriented organizations successfully argued—allbeit before a circuit court judge and not a higher appellate court—that the exclusive remedy provisions of the Florida comp act were unconstitutional because of an erosion over time in the character and amount of workers’ compensation benefits afforded Florida employees. The organizations contend that the delicate balance contained within the original “grand bargain” of workers’ compensation has been inappropriately disrupted. “Give the employee what he or she had at common law,” said the organizations. And in August 2014, Judge Cueto (11th Judicial Circuit, Miami-Dade County) agreed.

The SC irony? Senate Bill 674 would essentially give the claimants’ groups what they say they want. Lost in the shuffle, of course, is the plight of an employee who suffers a work-related injury through his or her own negligence or who has to wait for (and pay for) medical care for what would otherwise have been a clearly compensable accident but for the fact that his or her employer has not elected to be a part of the workers’ compensation system.

Oklahoma’s ERISA Plan Controversy

The second bit of irony relates to the furor in some ranks about the cottage industry—what do you call it if it’s much larger than a “cottage”?— in drafting and administering ERISA plans for opt out employers that has been set up in Oklahoma and that eagerly awaits the passage of the Tennessee bill.

“Small employers can’t afford to set up these complicated ERISA plans,” say some who oppose opt outs altogether and others who favor them, but who lament that the plans are beyond the reach of some small firms.

The SC irony? Under my reading of SB 674, the typical Palmetto State employer, large or small, need not provide workers’ compensation coverage for its employees at all. It need not, therefore, craft an ERISA plan to get out from under the coverage “burden.”

SB 674 Immediately Moved to Committee—Won’t Be Voted on This Session

On the day it was introduced (April 16, 2015), the bill was moved to the Senate Committee on Judiciary, where it is expected to remain for the rest of the current legislative session. Scuttlebutt has it that similar bills may be introduced in Georgia and North Carolina before the end of each state’s legislative session.

Trim your sails; between now and next year there will be some necessary maneuvering.

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