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Duff: How Low Can You Go?

By Michael C. Duff

Thursday, August 15, 2019 | 534 | 0 | min read

My work on a Wyoming workers’ compensation treatise (submitted to the publisher two weeks ago) has emphasized a fairly stark reality: While 90% of Wyoming workers are covered by workers’ compensation only 68% of them work for employers required to provide it.

Michael C. Duff

Michael C. Duff

From the official Wyoming report tracking these numbers:

Ninety percent (90%), or 235,278, are covered by workers’ compensation. 175,455 employees are working in required coverage or extrahazardous occupations, with 59,823 employees working in optional coverage positions.”


Currently, there are 22,629 employers in Wyoming ... 16,322, or approximately 72%, of those employers are registered with Workers’ Compensation (WC) as policyholders. Of the 16,322 employers who are registered, 11,027, or 68%, have required coverage, and 5,295 or 32% have optional coverage.

So 68% of 90% yields a figure of 61% of employees working for employers that are required to carry workers’ compensation (monopolistic) coverage.

Like the situation in Texas, employers not covered by workers’ compensation are usually liable in tort. Also like in Texas, there are significant groupings of employees employed by companies utilizing alternative benefit plans (Walmart is the major example).

Those plans are covered by the federal Employee Retirement Income Security Act of 1974 and thus generally cannot be sued by employees who have elected to participate in them (and many employees will choose participation once they realize their employer is not covered by the state workers’ compensation system).

Employees working for an employer that is not covered by workers’ compensation, and has not established an alternative benefit plan, find themselves in “Texas-land.” (Texas has operated an elective, opt-in system since the inception of workers’ compensation).

The difficulty of pursuing tort claims is, of course, why we have workers’ compensation in the first place and, to add insult to injury, employees routinely find themselves required to arbitrate workplace injury tort disputes, even assuming they can find a theory to evade ERISA pre-emption.

Much of the coverage outcome in the state has been driven by the narrowed statutory jurisdiction of Wyoming law, which applies, uniquely, only to “extrahazardous” employment (though Illinois also still technically possesses such a statute). Explicitly included extrahazardous “employments” are rather non-transparently defined with reference to the North American Industry Classification System.

It takes a good deal of digging to come to the 61% coverage figure. But, as I have said in my treatise, any workers’ compensation system — however unusual — has little to recommend it if it excludes the largest employer in the state (Walmart). As the Larson’s treatise discusses in the context of analyzing the Wyoming Supreme Court’s opinion in Araguz v. State:

Walmart had been assigned [NAICS] code 452910, indicating “Warehouse Clubs and Supercenters.” Because such classification was not defined by Wyoming statute as “extrahazardous,” Walmart [is] not required to participate in the state fund. Walmart maintain[s] its own privately funded workers’ compensation fund, the Walmart Plan, for the benefit of its employees who are injured on the job. The employees contend that the state’s failure to provide benefits was unconstitutional and improper as a matter of law. The court indicated that it would not address the appellants’ constitutional argument, as the appeal was not an appropriate avenue for resolution of such an issue.

The entire structure is evocative of the path-breaking 2012 article by Profs. Spieler and Burton, “The lack of correspondence between work-related disability and receipt of workers' compensation benefits.” 

In Part II of the article, Spieler and Burton observed:

[W]hile exclusions mean that the common law tort system is not supplanted by workers' compensation, exclusion also means that these workers can obtain benefits only through tort litigation (in which there must be proof of actual negligence), from private sources such as employment-based health and disability plans, or from public programs, including SSDI, SSI, Medicaid and Medicare. Some injured workers experience “dual denial” — they are eligible neither for damages from civil litigation nor benefits from alternative programs.

An elective workers’ compensation system like Wyoming’s may not expressly exclude (non-extrahazardous) employment from coverage, but Wyoming’s current economic downturn may ultimately render the distinction academic for a worker employed by an employer deciding to rescind its election to be covered by workers’ compensation.

When profit margins become razor thin, an operator (now short-term because of the onrush of events) may be willing to take a chance on a tort suit, especially if it figures out the arbitration gambit and the Supreme Court continues its Federal Arbitration Act jurisprudence of arbitration uber alles.

Michael C. Duff is associate dean for student programs and external relations, and is professor of law, at the University of Wyoming College of Law. This entry is republished from the Workers' Compensation Law Professors blog, with permission.


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