Temporary Worker vs. Direct Hire Workers’ Comp Filings in Illinois: The Art of the Raw Deal

By Karen C. Yotis, Feature Resident Columnist, LexisNexis Workers’ Compensation eNewsletter

While stopping just shy of concluding that temporary worker status—by itself—results in lower workers’ comp claim awards, a new study concludes that the temp worker’s status is highly correlated with many of the factors that do determine the amount of those payouts, such as a significantly lower weekly wage and less time taken away from work after an injury or during an illness. Indeed, the information coming out of current research into the various aspects of temporary employment—including a higher association with adverse worker health and safety risk factors along with differences between temps and direct hire employees in terms of percentage of disability—points to more than 2.7 million Americans who are slipping through the widening cracks of a crumbling Grand Bargain.

GEPPETTO’S NEW PREFERENCE FOR PUPPETS OVER REAL LIVE BOYS

As a freelance author who lost a full-time position with benefits and a pension during the height of the Great Recession, I can’t say I was surprised by any of the information shared by researchers from the University of Illinois at Chicago’s School of Public Health in their article titled Workers’ Compensation Filings of Temporary Workers Compared to Direct Hire Workers in Illinois, 2007-2012, Am. J. Ind. Med. 60:11-19, 2017. Although safely couched among study-speak terms like data source, outcome variables, and statistical analysis, the notion that Corporate America (and the middle-class business world) are creating a lesser class of workers who are repeatedly (and yes, perhaps intentionally) positioned outside the protections of workers’ compensation laws is explosive stuff.

The authors begin by highlighting the significant shift in the nation’s labor market toward an exponentially growing demand for contingent laborers that is generating employment data which shows a “rapid growth” across industries in use of workers from temporary staffing agencies. The demographic information from this study tells us that workers hired through temp agencies are noticeably more likely to be male, younger, single, have more dependents, and earn on average $400 less per week than direct hire staff. 

Among the findings of related studies is research indicating an association between temporary employment status and troublesome risk factors and outcomes such as “paced work, repetitive work, awkward postures of the wrist and intensive use of vibrating tools/machinery, lack of autonomy and skill discretion at work, lower self-rated health, musculoskeletal symptoms in the upper extremities such as pain, numbness, discomfort and tenderness and depression.” Temp workers are less likely to return to work following an injury and are almost three times as likely to suffer non-fatal occupational injuries than their direct hire counterparts. The authors readily admit the major gaps in the way we understand the long-term health outcomes, financial impacts of occupational illness and injury, and other effects on this growing segment of U.S. workers.

The study accordingly aims to examine filings made between 2007-2012 before the Illinois Workers’ Compensation Commission (IWCC), and uses this period of Midwest employment patterns as a template for the entire U.S. labor market in terms of growth in the temporary employment market to:

> Decide the number of temp workers filing contested claims in Illinois compared to national estimates of recorded cases;

> Describe the demographics of temp workers filing contested claims; and

> Evaluate outcomes relating to days away from work, PPD, TTD, and total WC settlement costs to better describe injuries and compensation for temp worker injuries compared to claims from direct hires.

Using statistical analysis on the frequency of temp worker filings and claim rates in addition to regression analysis of medial values using temporary worker status as the “variable of interest” for each of the claim outcomes, the study focuses on the three key outcome variables of: (i) total monetary compensation, (ii) percentage of Permanent Partial Disability, and (iii) temporary total disability awarded to Illinois temp workers for the relevant period in settled and decided comp cases. What the authors reveal is a system of hard realities impacting a network of temps who get hurt more, recover fewer claim dollars, and appear destined to remain sub-rank to their direct-hire colleagues.  

HIPS DON’T LIE, AND NEITHER DO THE NUMBERS

The most significant outcome of this study is by far is the result from unadjusted models which “showed temporary worker status to be a significant predictor of total workers’ compensation and percent PPD.” The award differentials between the two groups reveal some disturbing numbers. Most shocking is that temporary workers were awarded approximately 50 percent less than the amount awarded to direct hires. Temp workers were 10 percent less likely to receive TTD. And although PPD awards were within similar ranges, when both TTD and PPD were awarded, temp workers got lower time off and a lower percent of PPD. These differences do not extend to the body part affected (the study shows a similar a distribution of injuries and illnesses using this variable), accident descriptions (poor documentation is noted for both groups) or work related deaths (both groups die at the same rate). But without doubt, temp workers that suffer the same injuries and are governed by the same state laws as their direct hire associates continually end up holding the short end of the stick when it comes to the amount of dollars awarded in workers’ comp claims.

Temp workers also appear to be suffering from a general lack of national attention. Using the code for temporary workers from the Bureau of Labor Statistics Annual Survey of Occupational Illnesses and Injuries, it appears that the NAICS severely under-estimated the number of injuries for the study’s delineated period by a whopping 58.6 percent. The study attributes the disparity between IWCC and BLS figures to poor reporting of injuries in general to the BLS, but also suggests that the difference may arise from poor understanding of employer reporting requirements for workers who are not on the official payroll.

The authors note contrary demographics showing that temp workers tend to be concentrated in both younger and older age groups and suggest that the discrepancy of data coming from filed contested claims may arise because older workers tend to be placed in less hazardous jobs and that younger workers may have less job experience and safety training.

It shouldn’t be a surprise that temporary worker status became insignificant in predicting total workers’ comp and TTD when the researchers used median regression analysis, since the total amount of monetary compensation in an award is generally based on predetermined factors. What’s interesting about this factoid is that it provides more evidence of how temp workers are treated as second class plebs when it comes to money—both in terms of paid wages and workers’ compensation awards. In situations where temps are brought into the workforce to keep business costs down, these mathematical formulas may not adequately compensate temps for their work-related illnesses and injuries because the payouts from these formulas are strongly driven by average weekly wage, which is significantly lower for temps.

Finally, the study showed that temp workers were more likely to retain legal representation than the direct employees who filed Illinois workers’ comp claims from 2007-2012. While there are numerous reasons why a comp claimant lawyers up, the study authors point to a potential urgency on the part of temp workers to settle claims, based on data showing they had over three months less time between accident and filing, and between accident and decision than direct hires.

A TEMP WORKER BY ANY OTHER NAME IS STILL UP THE CREEK WITHOUT A PADDLE

Important shortcomings limit the authors’ analysis, not the least of which is the on-going problem of accurately identifying all the individuals who are appropriately included within the temp worker category. The wide variety of definitions used to capture this group of vulnerable workers are: temporary, contingent, precarious, non-standard and sub-contractor. Similar variability in the nomenclature exists with the complimentary group’s employment status; these terms include permanent, full-time and direct-hire. This is all further complicated when the employer-employee relationship is altered by contingent-worker status, limitations on the ability to capture cases for research because the temp staffing agency is most often not the physical site of employment, and known injury reporting problems to the BLS. In addition, many temp workers in the labor market are not employed by temporary staffing agencies. The authors accordingly admit up front that their research may have excluded valid claims, no matter the process they used to identify temporary workers.

Other key limitations of this workers’ comp dataset are that it captures only contested cases and excluded cases that were settled out of court. The IWCC’s court data also fails to capture any medical costs that may have accrued both before and during the filing process and only includes disputed costs. All these limitations can potentially underestimate the cost of injury to a group of workers that already sees its recovery amount reduced by half simply because of its lesser-value employment status. 

The final specified limitation on the authors’ analysis is lawyers’ involvement in the examined claims. Because much of the information the study captured was provided by attorneys litigating cases, the cause of accident and nature of injury on each file was poorly detailed.

THE NOT-SO-HIDDEN COSTS OF ECONOMIC RECOVERY

This study’s recognition of the emerging phenomenon of temporary workers and the data-driven evidence of the injustice, inequality and lack of basic fairness that they endure is noteworthy. The authors’ recommendations for additional research to explore different ways of determining compensation to insure adequate injury payouts to temp workers for similar injuries to their direct-hire fellow employees and to consider using different exposure criteria to set workers’ comp premiums (think hours worked instead of wages earned) are also baby steps in the correct direction. But let’s face it—the rapid growth of the temp labor market is driven by a business model that makes careful use of employment resources, expects everyone in the employment chain to do more with less, and keeps a keen focus on things like wages, premiums and claims dollars that can dangerously impact the bottom line. Here’s hoping that this potentially valid path towards recovery generates more change in the market that can eventually benefit not just temp workers, but the entire labor force. 

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