Study: Workers’ Compensation System Failing Lower Wage Workers

September 3, 2009

Only eight percent of lower wage workers injured on the job receive workers’ compensation benefits, according to a new report.

Also, lower wage workers — those earning just over $8 per hour on average — are often not paid at least the minimum wage or are denied overtime pay. They are also more likely to face employer retaliation following labor law violations.

These findings are according to a study — titled Broken Laws, Unprotected Workers — of the low-wage workforce in the nation’s three largest cities — Los Angeles, Chicago and New York City — which based its findings on interviews with 4,387 workers.

The report suggests that violations are penetrating industries that employ millions of workers in the United States and occupations expected to see the most growth in the coming decade.

The study found that two-thirds of the workers surveyed experienced pay violations in a given week. The average worker with violations lost $51 a week, out of average weekly earnings of $339. Assuming a full-time, full-year work schedule, the report estimates that these workers lost an average of $2,634 annually due to workplace violations, out of total earnings of $17,616. That translates into wage loss of 15 percent of earnings.

“Systematic business strategies are in play when you see violations on this magnitude, which involve explicit decisions made by employers. Not all employers violate the law – we found a range of workplaces where abuses were relatively rare, where workers were also offered health insurance, paid vacation and sick days, and regular raises. But given that 8 of the 10 occupations projected to grow the most in the next decade are low-wage jobs — and that the recession is only compounding these trends — there is an urgent need to address these issues,” said co-author Ruth Milkman, a professor of Sociology at UCLA.

The study’s authors say the findings challenge the claim that only immigrants encounter these problems. While foreign-born Latino workers had the highest minimum wage violation rates of any racial or ethnic group, all workers showed degrees of vulnerability: for example, women were significantly more likely than men to experience minimum wage violations, and among U.S.-born workers, African-American workers had three times the violation rates of their white counterparts.

Workers’ Comp Violations
According to the study, low wage injured workers seldom use workers’ compensation benefits when seriously injured.

Twelve percent of the respondents experienced a serious on-the-job injury during the last three years of work. For these workers, the survey’s authors gathered information about the most recent work-related injury and about the employer’s response to that injury. They found that only 8 percent of the workers who experienced a serious injury during the previous three years had filed a workers’ compensation claim for their most recent injury.

“This finding clearly indicates that the workers’ compensation system is not functioning as intended for front-line workers in the low-wage labor market,” the authors say.

The study suggests that the low rate of injured workers who filed for workers’ compensation benefits is at least in part due to the ways in which employers respond to cases of on-the-job injury. The study found that 43 percent of seriously injured respondents reported that they were required to work despite their injury; an additional 30 percent said their employer refused to help them with the injury; 13 percent were fired shortly after the injury; 10 percent said their employer made them come into work and sit around all day; 4 percent were threatened with deportation or notification of immigration authorities; and 3 percent were told by their employers not to file a workers’ compensation claim. Only 8 percent of employers instructed injured workers to file a workers’ compensation claim.

The study’s authors note that not all of these responses are considered illegal employer responses to on-the-job injuries. Illegal employer actions would include firing or threatening to fire an injured worker, calling immigration authorities in response to an on-the-job injury of an unauthorized worker; or instructing an injured worker not to file for workers’ compensation insurance.

But across the three cities, fully 50 percent of those respondents who suffered an injury in the past three years experienced a violation of workers’ compensation law for their most recent injury, the study found.

The study also examined who paid for injured workers’ medical expenses. Fifty-five percent of respondents who experienced a serious injury at work sought medical attention for that injury, but within this group, only 40 percent indicated that their employers paid for all or part of their medical bills.

About half of the workers who sought medical attention after an on-the-job injury had to pay their bills out-of-pocket (33 percent) or used their health insurance to cover the expenses (22 percent), according to the study.

Overall, workers’ compensation insurance paid medical expenses for only 6 percent of the workers in the study’s sample for those low-wage workers who visited a doctor for an on-the-job injury or illness.

Industry Violations and Retaliation
Apparel and textile manufacturing, personal and repair services, and private households yielded the highest minimum wage violations — all exceeding 40 percent. Child care workers experienced the highest violations of any job, with 66 percent reporting not being paid minimum wage in a given week and 90 percent facing overtime violations.

The study also revealed that workers were reluctant to contest violations for fear of losing work or pay. Nearly half of those who did complain faced illegal retaliation from their employer, the study said.

Key Findings

The study noted several employment and labor law violations in the low-wage workforce, including:

  • Minimum wage: 1 in 4 workers (26 percent) was paid below the minimum wage in a given work week;
  • Overtime pay: 76 percent of those who worked overtime were not paid the required time and a half;
  • Meal breaks: More than two-thirds (69 percent) did not get meal breaks they were entitled to;
  • Off-the-clock work: 70 percent did not get any pay at all for work performed outside their regular shift;
  • Tipped pay: Nearly one-third (30 percent) of tipped workers were not paid the tipped worker minimum wage;
  • Pay documentation: 57 percent of workers did not receive mandatory pay stubs;
  • Employer retaliation: 43 percent experienced illegal retaliation following complaints;
  • Workers’ compensation: Only 8 percent of injured workers received coverage for medical expenses;
  • Exempt workers: 89 percent of “in-home” child care workers earned less than the minimum wage.

About the Study
The three city surveys were conducted by researchers at the National Employment Law Project, the University of California-Los Angeles, the University of Illinois-Chicago, Cornell University and Rutgers University.

Broken Laws, Unprotected Workers was funded by the Ford Foundation, the John Randolph Haynes and Dora Haynes Foundation, the Joyce Foundation, the Russell Sage Foundation.

The full report is available at

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