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Ohio House Passes Business-Backed Workers’ Compensation Subrogated Claims Bill

Several business groups reiterated support Tuesday for legislation they say could prevent small businesses from experiencing an unfair jump in workers’ compensation premiums.

The legislation (HB 207) requires workers' compensation claims to be charged to the Surplus Fund Account instead of a state fund employer's experience in certain circumstances when a claim is due to a motor vehicle accident involving a third party.

According to Charles Smith, special counsel for the Ohio chapter of the National Federation of Independent Businesses, the legislation would prevent small businesses from losing eligibility for discount programs through no fault of their own.

“This solution is long overdue and will help level the playing field for small employers while still preserving the rights of the injured worker to receive adequate treatment and compensation,” he said, before later adding, “Unfortunately, some of the more catastrophic claims can cause small business owners to go out of business because of the increased workers’ compensation costs and protracted subrogation process.”

Dan Boyd, director of labor and legal affairs at the Ohio Chamber of Commerce, called the bill “a sound approach to protect the interests of businesses throughout the state of Ohio from financial hardship due to motor vehicle accidents that were not their fault and which they could not have prevented.”

“This bill provides an equitable balance between maintaining the integrity of the state-fund and protecting employers from being unreasonably penalized while also ensuring that injured workers received treatment and compensation,” he told the committee.

Jim Klingensmith, testifying on behalf of the Ohio Insurance Agents Association, told the committee that the problem is not wide scale, but creates difficulties for businesses nonetheless.

“If you’re the impacted employer, it matters. In other words, this is not necessarily a problem of frequency, but rather severity,” he said.

The Construction Employers Association, the Associated General Contractors of Ohio, the Ohio Contractors Association, the National Electrical Contractors Association and the Mechanical Contractors Association of Ohio provided joint written testimony on the measure“Our job sites are fluid. Workers have to drive to and from sites to perform their daily jobs…sometimes multiple times a day,” they wrote. “Thus, if HB 207 is passed, an employee through no fault of their own that is injured by a third party driver would have the claim paid out of surplus funds maintained by BWC. This will make sure the employee is covered, but also preserves the employer’s group rate when the accident is no fault of their own.”

Written testimony in support of the legislation was also provided by representatives of the Greater Cleveland Partnership’s Council of Smaller Enterprises and the Ohio Automobile Dealers Association.

“In our industry, for example, service technicians road test vehicles after servicing them to ensure proper operation,” Joe Cannon, vice president of government relations at OADA, wrote. “Unfortunately, these employees are sometimes injured by third party drivers who were at fault. Under the current system, a claim by the employee is applied to the dealer’s experience, regardless of whether or not the claim is likely to be subrogated. The result is increased costs to our members, including potentially impacting their ability to qualify for group rating.”

The measure was approved by the House in a unanimous vote.

Dem Lawmakers Seek to Increase State's Minimum Wage to $10.10/hr.

State Reps. Kent Smith (D-Euclid) and Hearcel Craig (D-Columbus) recently introduced HB486, legislation to increase the state's minimum wage "in order to give hardworking Ohioans the ability to make ends meet and support their families," they explained in a release.

They went on to note, "According to the Corporation for Enterprise Development, Ohio ranks 34 out of 50 states for the highest number of low-wage occupations, with over 28 percent of all jobs in the Ohio being classified as low-wage. Ohio has had a higher percentage of low-wage jobs than the nation since 2009."

"Raising Ohio's minimum wage would provide a much needed assist to working Ohioans who are struggling to make ends meet. Roughly 23 percent of Ohio children would see one of their parents get a raise if Ohio's minimum wage is increased to $10.10 an hour," said Smith. "Increasing the minimum wage would boost earnings of working families, spur Ohio's economy and create new jobs. By modernizing wages, we let one million working people in our state earn the resources necessary to simply get by - for many this means putting food on their families' table and paying for medicine, child care and school supplies."

Under HB486, the minimum wage would increase from $8.10 per hour to $10.10 per hour, while tipped employees will be paid no less than half the new minimum wage.

"Every Ohioan deserves to earn honest wages for an honest day's work," said Craig. "Too many families are struggling to find the good-paying jobs they lost during the Great Recession, but the Legislature has focused on giving out tax breaks that disproportionately benefit the wealthiest Ohioans at the expense of the middle class. Modernizing wages in Ohio will help working families get back up on their feet."

HB486 is a part of a broader economic agenda recently proposed by Democratic lawmakers. In January, Democratic leaders of the House and Senate announced their "Focus on The Future" agenda, an eight-bill package Democrats say will ensure economic stability for the next generation of working people in Ohio.

Are You Prepared for Next Steps in New Billing Process?

Upcoming dates to remember

May 2016

  • May 1 – Policy year 2016 notice of estimated annual premium mailed
  • May 31 – Destination: Excellence enrollment deadline for July 1, 2016, program year

June 2016

  • June 1 – Policy year 2016 premium invoice mailed

July 2016

  • July 1 – Policy year 2016 first installment due
  • July 1 – Policy year 2015 payroll true-up notice sent

August 2016

  • Aug. 15 – Policy year 2015 payroll true-up report due

November 2016

  • Nov. 21 – Policy year 2017 group-enrollment deadline

True-up coming in July

Ohio private employers have adjusted well to the new way BWC charges for workers’ compensation coverage. Last year’s change to prospective billing brought a much-needed move to the standard insurance industry practice of charging premiums in advance of extending coverage.

Employers are now enjoying a number of benefits of the new billing system, including more flexible payment options, better customer service and a $1 billion premium credit provided by BWC to avoid double-billing employers during the switch.

However, the transition process is not fully complete. The payroll true-up (true-up) is coming in July.

True-up is a new process that requires employers to report their actual payroll for the previous policy year and reconcile any differences in premium paid. This is an important step that is necessary for BWC to accurately calculate your premium. It’s also critically important to maintaining your policy and your participation in your current rating plan or discount programs.* You must complete the true-up report even if your payroll for the year matches the estimate you receive from BWC.

Your policy year 2015 payroll true-up notice will be sent July 1 and your report will be due by August 15. Reports must be submitted online at bwc.ohio.gov or by phone at 1-800-644-6292.

Please keep in mind our call center may be experiencing heavy call volumes during the final weeks before the August 15 due date, attributing to longer wait times. We encourage you to create an e-account that allows you to manage your policy, pay bills and complete the payroll true-up. Learn how to create an e-account here, and visit bwc.ohio.gov to get started.

Please contact our call center if you already have an e-account but don’t remember your password or are otherwise unable to access your account.

A number of videos, webinars and other resources about prospective billing are available at bwc.ohio.gov.

*BWC will remove employers from their current rating plan or discount program if it does not receive a payroll true-up by the due date. Any outstanding payroll true-ups will render the employer ineligible for participation in future rating plans or discount programs until the all outstanding payroll true-ups are complete.

30 W. Spring St. Columbus, Ohio 43215-2256 | 1-800-644-6292 | www.bwc.ohio.gov |

HB 394 Delayed While a Group of Legislators Explore Path Forward

House Bill 394, legislation introduced to fix Ohio’s broke and broken unemployment compensation (UC) system, has been delayed in the House Insurance Committee. HB 394 is strongly supported by the Ohio Chamber. However, labor and anti-poverty groups have expressed opposition to the bill. Some members of the Senate have also expressed concern over some of the bill’s provisions, including decreasing the number of weeks of benefits available, creating Social Security offsets, and disqualifying individuals who are terminated for violating a provision of an employee handbook.

A group of House and Senate members began meeting informally to iron out differences between the chambers on how this massive problem should be tackled. At present, HB 394 includes structural changes to what is paid in to the system by employers and what is paid out in benefits in order to create a sustainable solution to Ohio’s UC system. These changes are intended to prevent the massive borrowing that occurred during the last recession, which has led to a 400 percent increase so far in federal UC taxes on employers. This informal working group is a step in the right direction to address any concerns early on so that this critical legislation can move forward.

In an additional development on the UC front, HB 467 was introduced last week which would provide a loan from Ohio’s “rainy day fund” to pay off the outstanding federal UC debt. Without any legislative action, the debt is projected to be paid off in mid-2017. Currently, the increased federal UC taxes being paid by employers are what is being used to pay off the remaining loan balance.

HB 467 has a number of unknowns, such as when the debt would actually be paid off. The debt would need to be paid off by early November 2016 in order to provide employers with relief for 2017. Further, the bill does not specify the terms of repayment. It leaves the terms of the loan, and any repayment required of employers, up to the director of Budget and Management and the director of Job and Family Services. While it is probable these terms would be more favorable than the current penalties from the federal government, this should be spelled out in legislation and not left to the discretion of state officials. Already, the governor’s office has expressed significant opposition to using rainy day funds to pay down the federal UC debt.

Even if the federal debt is paid off, and the increased federal taxes are removed, HB 394 is still needed to prevent history from repeating itself. Paying off the debt without the structural changes just kicks the can down the road. The next economic downturn will again put Ohio’s trust fund in the same position we were in before—having to borrow from the federal government, potentially leading to higher federal taxes on Ohio employers. Thus, we continue to urge the legislature to work towards passing balanced legislation, like HB 394, to finally fix Ohio’s broke and broken unemployment system. 

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