This report provides an update focusing on three important topics: independent contractors/gig economy, single-payer health insurance, and the legalization of marijuana. NCCI highlighted these topics previously in its
Legislative Trends—Questions to Consider in 2022.
Focus on Three now captures the latest developments as of
June 1, 2022, and explains how these subjects could potentially impact the workers compensation system.
Independent Contractors/Gig Economy
Legislative proposals that provide criteria for determining whether a worker is classified as an
employee of a company or as an
independent contractor continue to be considered. For example, California enacted legislation to establish a three-part test for determining worker status, known as the ABC test. Under this test, a worker is considered an employee and not an independent contractor unless the hiring entity demonstrates that the worker is:
- Free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- Performs work that is outside the usual course of the hiring entity’s business; and
- Is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.
Since the California legislation was enacted, other states have considered legislation to adopt similar tests.
Rhode Island introduced legislation (S 2861) in 2022, which is pending in committee, that would create a three-part test similar to California’s ABC test.
Vermont also introduced legislation (S 203) in 2022 that would create a multi-prong test for determining whether a worker is an employee or an independent contractor, but the bill did not advance this session.
Gig workers, including transportation network company drivers who work for Uber and Lyft, as well as other marketplace contractors, were the focus of legislation in several states during the 2022 legislative session:
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Alabama enacted SB 150, which excludes certain marketplace contractors (i.e., gig workers) who work for marketplace platforms (e.g., Uber, Grubhub, Shipt, and others) from the definition of employment and considers them independent contractors.
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South Dakota enacted HB 1118, which clarifies when a delivery facilitation contractor is an independent contractor of a delivery facilitation platform.
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Washington enacted HB 2076, which relates to workers compensation coverage for transportation network company drivers under certain conditions.
In addition, the Supreme Judicial Court of
Massachusetts recently heard oral arguments in a case involving a proposed state ballot measure which provides that drivers for gig companies are not employees of the company. A decision is expected over the summer.
The question of whether a gig worker—or any worker—is an employee or an independent contractor is an important one. For example, proposals that would make it more likely for a worker to be considered an employee generally benefit an injured worker who the workers compensation system would protect in the event of a workplace accident. Under the workers compensation system, return-to-work programs may be available to assist the employee return to work sooner and safely. The employee would also receive workers compensation indemnity benefits for any lost time from work and payment for medical treatment for injuries. Furthermore, state regulators have oversight and may be able to better protect workers who are part of the workers compensation system. Workers who are independent contractors generally do not have this safety net.
On the other hand, proposals that would make it more likely for a worker to be considered an independent contractor may reduce costs for employers. Employers would not have to pay for certain employment-related taxes and other benefits, such as workers compensation premiums, for independent contractors as they would for employees. However, employers may, in turn, forgo workers compensation exclusivity protection from the financial uncertainty of litigation that could result from workplace accidents and injuries. These types of issues tend to raise long-standing questions related to worker misclassification and fraud.
Single-Payer Health Insurance Proposals
The idea of a single-payer health insurance system has been discussed at both federal and state levels for years. To date, no state has fully adopted such an approach; however, several jurisdictions are studying the issue. Of particular interest are bills that include a reference to workers compensation. In most states that reference workers compensation, the legislation generally contains similar language that directs the board of new state single-payer healthcare programs to develop a proposal for coverage of healthcare items and services covered under the workers compensation system, including whether and how to:
- Continue funding for the healthcare services under the workers compensation system
- Incorporate an element of experience rating
In 2022, four states considered or are considering single-payer health insurance proposals with a workers compensation component:
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Kansas introduced HB 2459, which would have created a universal single-payer healthcare program. The bill required the new program’s board to develop proposals addressing workers compensation and experience rating by July 1, 2024. The bill did not advance this session.
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Rhode Island introduced H 8119 and S 2769, which would create a universal single-payer healthcare program. The bills require the new program’s director to develop procedures for accommodating coverage of healthcare services covered under the workers compensation system.
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California AB 1400 would have created a universal single-payer healthcare program and required the new board to develop proposals addressing workers compensation and experience rating. But the bill was not called for a vote on the Assembly floor and is considered failed for this legislative session.
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New York A 6058, introduced in 2021, would establish a single-payer healthcare program in the state. The bill was recently voted out of the Assembly Committee on Codes and is now in the Assembly Ways and Means Committee. It requires the board of the new healthcare program to develop a proposal for healthcare services covered under the workers compensation law. This includes whether and how to continue funding those services under that law and incorporate an element of experience rating. (The Senate companion bill, S 5474, is currently in the Senate Health Committee.)
In addition,
Oregon enacted legislation in 2021 that extended a previously created state Task Force on Universal Healthcare until 2023 and extended the deadline for the task force to submit recommendations to the legislature until September 30, 2022. The recommendations may address whether the single-payer healthcare program should replace the medical portion of workers compensation.
Washington enacted legislation in 2021 that established a new commission on universal healthcare. The commission must submit a report with recommendations to the state legislature and the governor by November 1, 2022. However, the legislation did not include a workers compensation component.
Single-payer health insurance is an important topic and all proposals, whether federal or state, raise numerous questions for workers compensation stakeholders, including:
- What happens to the state workers compensation system if a state enacts single-payer health insurance legislation and the state decides to incorporate the medical portion of workers compensation into the new single-payer program?
- Would the private workers compensation market continue to write workers compensation policies to cover the indemnity portion of workers compensation?
- If so, how would the split in public/private coverage impact the delivery system for injured workers, including benefits, quality of care, etc.?
- How would workers compensation regulators fit into the new system? Would they continue to have any oversight?
- For employees, their primary concerns are how will this affect benefit delivery and overall medical care for a workplace injury or illness. Would it streamline it or slow it down?
- Would an employee have to pay into the new system to receive medical care for a workplace injury, unlike workers compensation where the employee does not have to pay for medical care?
Legalization of Marijuana
While marijuana is still illegal at the federal level, states continue to legalize it through legislation and ballot measures. In 2022,
Rhode Island enacted legislation (H 7593/S 2430) legalizing the recreational use of marijuana. And
Maryland passed legislation (HB 1) to amend the state constitution to legalize recreational marijuana, allowing Maryland voters to decide the issue during the next election.
Delaware,
Missouri, and
New Hampshire also introduced proposals this year to legalize recreational marijuana.
States continue to legalize medical marijuana as well. In February 2022,
Mississippi enacted a bill to legalize the medical use of marijuana. Legislation is pending in
North Carolina.
Kansas,
Kentucky, and
Nebraska introduced legislation to legalize medical marijuana this year, but the bills did not advance.
States continue to grapple with the issue of medical marijuana reimbursement in workers compensation, and are divided as to whether to allow, require, or prohibit reimbursement.
In 2022:
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Mississippi,
Rhode Island, and
South Dakota enacted legislation, and other states including
Kentucky,
Maine, and
Nebraska introduced legislation, providing that workers compensation insurers
are not required to reimburse for medical marijuana.
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New Jersey and
New York are considering legislation that requires workers compensation coverage for medical marijuana under certain circumstances.
- State courts continue to rule on this issue as well. Most recently, state supreme courts in
New Hampshire and
New Jersey ruled that reimbursement is allowed, while the states’ highest courts in
Massachusetts and
Minnesota ruled that reimbursement is
not required.
- There is a case pending before the
US Supreme Court (Bierbach v. Digger’s Polaris and State Auto/United Fire & Casualty Group; Musta v. Mendota Heights Dental Center and Hartford Insurance Group) to address reimbursement for medical marijuana in workers compensation. The case is on appeal from two Minnesota Supreme Court decisions which held that reimbursement is not required. The court is expected to decide soon whether to grant review in the case.
The question of whether workers compensation insurers are required to reimburse, allowed to reimburse, or are prohibited from reimbursing an employee for medical marijuana use to treat a work-related injury or illness directly impacts workers compensation stakeholders and the workers compensation system. For example, state policymakers make initial decisions about reimbursement for medical marijuana in workers compensation and may need to consider adopting a fee schedule (similar to New Mexico) or another mechanism to address reimbursement.
Proposals to legalize the medical use of marijuana in a state also impact workers compensation and reimbursement. For example, if a state legalizes medical marijuana, then there will likely be more “qualified patients” using marijuana for medical purposes, and it may be more likely to be prescribed for a workplace injury. This could put pressure on state policymakers and the workers compensation system to allow or require reimbursement for medical marijuana in workers compensation.
State proposals to legalize recreational marijuana are also of interest to workers compensation stakeholders. If recreational marijuana becomes legal in a state, there may be more workers using marijuana, and not just for medical purposes. This raises concerns about workplace safety, drug-free workplace issues, and drug testing issues, and may also challenge employers and insurers to provide reimbursement.
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Employers want to know: if they can maintain drug-free workplaces and continue to drug test for marijuana
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Employees want to know: if they can use marijuana and still keep their job; and whether they will get workers compensation benefits if they get injured and marijuana is found in their system
Federal marijuana legalization may help resolve many of the issues facing the states today. But it would still be up to the individual states to determine how to address the workplace safety, reimbursement, and other concerns noted above.
However, federal legalization would mean that insurers may no longer need to worry about conflicts between state and federal law on issues such as reimbursement and how to pay claims. Claims could be reported, and appropriate data could be collected, which would assist in understanding the impact of the use of marijuana in treating workers compensation claims.
This article is provided solely as a reference tool to be used for informational purposes only. The information in this article shall not be construed or interpreted as providing legal or any other advice. Use of this article for any purpose other than as set forth herein is strictly prohibited.
