On September 6, 2023, Governor Hochul signed new legislation (S1161-A/A2034-A) implementing a near doubling (initial 83.33% increase) of the state’s workers’ compensation minimum weekly benefits - marking a substantial change for worker rights and protections. Below is a brief summary of the changes, and the implications for both employers and employees as well as for the landscape of Workers’ Compensation in New York.
Minimum Benefits Evolution:
Under the provisions of this new law, the minimum benefits for permanent or temporary partial disability will see a phased increase. The minimum benefit will rise from the current $150 rate to $275 for accidents or disablement from occupational disease claims occurring on or after January 1, 2024, followed by an uptick to $325 in 2025. Starting in 2026, it will culminate at one-fifth of the state’s average weekly wage.
While maximum weekly benefits for workers’ compensation historically have been subject to annual adjustments, the minimum benefit has experienced a more gradual progression. Presently set at $150, it was last raised over a decade ago from $100 to $150 on May 1, 2013. Commencing January 1, 2024, the minimum benefit will surge by $125 up to $275, significantly impacting the worker’s compensation system, predominantly funded by employers.
This substantial increase in minimum weekly indemnity rates, all of which are tax-free, will bear heavily on employers, particularly those who employ a large contingent of low-wage, part-time, or seasonal workers. According to Governor Hochul, the rate increase “will help to ensure that all New Yorkers receive the benefits and protections that allow them to work with dignity.” It is important to acknowledge, however, that such a hike in benefits may inadvertently dissuade certain employees from promptly returning to work when may they not be paid truly in accordance with their disability rating.
Workers earning wages up to $275 will be provided their full and tax-free salary, due to their injuries and lost time. This raises a critical question: will the weekly benefit disincentivize the injured worker to heal and reintegrate into the workforce? The implications of this legislation on practical aspects of recovery deserve close consideration. The higher rates will also likely lead to more employers/carriers considering raising labor market attachment on lower-wage workers with partial disability.
Permanent Injuries and Practical Examples:
Employers/carriers can expect the baseline for permanency awards to nearly double. When a claimant sustains a permanent injury to a non-schedulable site (e.g., neck, back, head, or psychological injuries), the benefits are determined based on the percentage level of the claimant’s Loss of Wage-Earning Capacity (LWEC). This classification percentage takes into account the severity of the permanent injuries as ranked by doctors using the Impairment Guidelines and balancing them against the claimant’s vocational background, establishing a framework for compensation.
To provide a tangible understanding of the impact, consider the following scenario: A 15% or less LWEC (but above 0%) entitles the claimant to 225 weeks of further benefits if the claimant is not working due to a work-related injury once the injury is deemed permanent. In the case of a lower average weekly wage worker, the statutory minimum rate often applies for this benefit when a lower LWEC (such as 15%) is set. Increased from the previous $150 per week, claimants can now anticipate $275 per week in 2024 and $325 per week in 2025. This translates to a shift in the financial support offered, with the minimum LWEC increasing from $33,750.00 ($150 X 225 weeks) to $61,875.00 ($275 X 225 weeks).
The recent legislative overhaul in Workers’ Compensation benefits ushers in a new era of support for New York’s workforce, which may be overdue since the maximum rate has increased annually since 2008 while the minimum $150 per week rate has remained the same. While the increased benefits bring what could be considered an overdue benefit to injured workers, they also present significant changes for employers/carriers by drastically increasing the rate from $150 to $275 rather than providing for a more gradual increase – one that could better avoid many of the concerns raised above.