Oregon Small Business Coalition Issues




OSBC Position:

Support legislation that prohibits insurance companies from increasing an employer's premium retroactively based on duty observations after the fact.

Background: In 1987, legislation was passed which disallowed insurance companies that sold workers' compensation to reclassify employees during an audit after the years end. In 1992, the states largest insurer passed language that repealed the law.

For example: An insurer agrees to insure a cashier at a lumber yard and classifies them as a clerk. During an audit after the years end the clerk is reclassified by the insurer into a higher premium class because he/she helped load a customer's vehicle every once in a while.

In this case, the insurance company can reclassify this employee into a higher class saying that he/she loads vehicles all the time. This reclassification creates a burden to the small business owner because he/she is forced to pay the difference between the two rates retroactively. The payment is then usually due in a lump sum. There does not have to be a claim for this to happen.

Some insurers will oppose this because they do not want the burden to identify work duties prior to providing the insurance. Under current law the burden of proof and the expense is upon the employer. If the insurer makes a mistake in classifying an employee they can make the insured pay for the mistake.

The retroactive reclassification bill was approved with attention to two areas:

  1. Burden of proof is on the insurance carrier.
  2. Intentional fraud should be punished.




OSBC Position:

Reduce the Workers' Compensation Board from five members to three.

Background: The existing workers compensation law provides for a 5 member board to be appointed by the Governor. Two members are to represent employees, two members represent employers and one member shall not represent the interests of either employees or employers.

The board used to be three members, but the back log of cases at the time of the 1990 reforms led the legislature to increase the number to five so they could work in panels. There are now FEWER cases requiring board review than there were when the board had three members.

It is time to return the board to three members.

Eliminating representation on the board is overdue. The board meets in a quasi-judicial manner and members sometimes don t know if they should vote the employer line or vote for what they think is fair, just, and provided for under the law.

As a simple policy matter, ALL board members should represent the public.