Insurance Loophole Makes it Easy for Employers to Exploit Illegal Workers

Paul Rolly
Salt Lake Tribune
Article Last Updated:8/8/2008 11:05:58 AM MDT
 
You might recall the recent stories about the couple who had what seemed to be a good health insurance plan until the wife was severely injured in a bicycle accident and the company looked for a loophole to cancel the policy retroactively, which it found. Thanks to the Republican, employer-friendly and developer-heavy Utah Legislature, the Workers Compensation Fund and other insurance companies have new ammunition to do the same thing to laborers who get injured on the job.

The Utah Labor Commission held an emergency meeting recently for labor attorneys, without giving advance public notice, to implement new policies to comply with a law passed this year by the Legislature and sponsored by Rep. Mike Morley, R-Spanish Fork, a construction company owner. The law basically allows Workers Comp, or any other insurer that covers injured-worker benefits, to cancel disability payments to someone hurt on the job if it is shown that person has committed a crime, including being in the country illegally. But, get this, there is no provision in the law to sanction the employer for hiring someone who is in the country illegally, and the injured worker denied the disability benefits cannot pay an attorney to represent him or her against the insurance company's actions, according to Labor Commission rules.

Call it the employer have-your-cake-and-eat-it-too bill. Under the new law, and its interpretation by the Labor Commission, a construction company, say, can hire laborers to perform dangerous manual jobs and if a laborer gets hurt the company can escape liability by having the insurance company throw out the benefits if the employee cannot prove he or she is in the country legally. And, the employer isn't sanctioned for having certified the employee was legally eligible for work when he or she was hired in the first place. Opponents of the law say it encourages employers to hire illegal immigrants because it guarantees not having its insurance company be liable, affecting its premiums, in case the worker is injured on the job. In fact, the South Carolina Supreme Court said just that in a recent ruling against a similar law passed in that state.

The history of the new law and the Labor Commission's compliance is a bit rocky. Two years ago, Workers Comp officials were pushing a bill to accomplish what Morley's bill this year does, but then-President and CEO Lane Summerhays backtracked, saying he learned of "unintended consequences" with the bill and it was not worth the headaches it would cause to pursue. But then, Pam Perlich, a University of Utah economist and a leading expert on the changing demographics of the state, was the guest speaker at the Workers Compensation Fund's annual meeting in late 2007.

She stunned her audience by pointing out that the Latino population in Utah increased by 92,000 between 2000 and 2005, accounting for 24 percent of the state's population growth during that time. Most of the new Latinos were between 20 and 35 - the prime working age - and the majority were males, she said. She also pointed out that the Spanish-speaking newcomers most frequently take jobs in the construction, manufacturing, agriculture and service industries. It just so happens that those industries are the ones where injuries on the job are most likely. Shortly after Perlich's presentation, in which she also pointed out the Latino population growth would continue to soar in Utah, Morley came up with his bill to provide employers, like himself, an added protection against injuries on their job sites without any added burdens or consequences to the employers. 

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