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Conventional wisdom about labor shortages works to reduce workers’ compensation payouts

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Elected official and business leaders argue that Nebraska has a labor shortage due in part to a skills gap between the skills employers want and the skills job-seeking employees have. This conventional wisdom has been challenged, but assuming the skills gap and labor shortage argument as either true or persuasive how will that assumption effect workers in Nebraska who suffered serious injuries on the job?

Injured workers in Nebraska who can’t return to their old job because of an injury can make claims for permanent disability and vocational rehabilitation benefits. Permanent disability benefits pay for the loss of ability to work and vocational rehabilitation benefits are used to help injured workers’ return to employment that is close as possible to their former wage.

My view is that as a practical matter, the perception of a labor shortage in Nebraska helps to reduce pay out of permanent disability benefits in workers’ compensation. But I believe that plaintiffs can argue that any supposed labor shortage should be of limited relevance in determining disability in workers’ compensation.

Nebraska’s “labor shortage” and permanent disability

In Nebraska, many types of injuries, including back and neck injuries are paid permanent disability based on a loss of earning power basis. In other words, permanent disability is paid out on how the injury effects the injured workers  ability to work. Loss of earning power, another term for disability, is an economic rather than a medical question.

In July I wrote about the question of which labor market should be used to determine loss of earning power. But assuming you are using the right labor market to determine disability, what other questions should attorneys be asking about an injured workers’ ability to find work?

At least when it comes to proving permanent and total disability under the so-called “odd-lot theory” a court needs to consider the ability of a worker to sell their services in a competitive labor market unaffected by factors like sympathetic employers or “business booms.”

With near record low unemployment in Nebraska in 2019, the question becomes does historically low unemployment constitute a “business boom”? A related question is whether a job market with alleged labor shortages is a competitive labor market for employees?

I believe these questions arise with seriously injured workers who through a combination of lack of skills and serious injury have job prospects limited to relatively low paid and lighter duty jobs. Some vocational counselors will testify that jobs like retail clerk are available and that employers are willing to accommodate restrictions because of the job market.

But in a recession when unemployment is high, are those employers going to be willing to be so accommodating? Probably not. Studies show that employers tend to raise the qualifications for jobs during times of higher unemployment.

I think there could be some arguments to be made against factoring out abnormally low unemployment in loss of earning power analysis. The first argument is that it would only apply in cases where an employee is an odd-lot or permanently and totally disabled, not permanently partially disabled. In other words, the employee who has a 20 percent disability in a really good job market, can’t argue they would have a 40 percent disability if the job market wasn’t as good.

Another argument against not taking an unusually good job market into consideration in determining disability is that it comes off as speculative. Additionally, ability to earn wages can be taken in consideration of determining loss of earning power. An injured worker who has found employment is going to face a hurdle in arguing they are totally disabled or even substantially disabled in some circumstances.

These arguments can be addressed. In Nebraska, the law is supposed to be interpreted liberally in favor of the employee. I believe liberal construction would mean that abnormally low unemployment could be considered even if the injured worker was not an odd-lot employee.

Concerns about speculative loss of earning power opinions based on questions about what the job market could be in the future, can be addressed because expert witnesses can answer hypothetical questions. Also since permanent disability is meant to compensate workers for their permanent loss of earning power, it arguably isn’t fair to base their loss of earning power based on a snap shot of the labor market at one point in time when economic conditions are relatively good.

The hardest hurdle to overcome is the presumption that in a good job market, an employee should be able to find work. Ultimately those questions get down to questions of credibility of the claimant and need to be decided on a case by case basis.

Questioning the assumption of a skills gap and labor shortage in Nebraska

Though you will rarely hear about it from elected officials or media outlets in Nebraska, many economists and writers question the assumption of a skills gap and labor shortage. The question I have is the best way to present those arguments credibly in the Nebraska Workers’ Compensation Court.

But even if you accept the skills gap/labor shortage argument, that should mean that employers should be clamoring for the award of vocational rehabilitation benefits for injured workers. But according to the latest report of the Nebraska Workers’ Compensation Court only 85 vocational rehabilitation plans were opened in fiscal year 2018. I think there are several reasons why so few plans get implemented, that I will discuss at a later time.

The offices of Rehm, Bennett, Moore & Rehm, which also sponsors the Trucker Lawyers website, are located in Lincoln and Omaha, Nebraska. Five attorneys represent plaintiffs in workers’ compensation, personal injury, employment and Social Security disability claims. The firm’s lawyers have combined experience of more than 95 years of practice representing injured workers and truck drivers in Nebraska, Iowa and other states with Nebraska and Iowa jurisdiction. The lawyers regularly represent hurt truck drivers and often sue Crete Carrier Corporation, K&B Trucking, Werner Enterprises, UPS, and FedEx. Lawyers in the firm hold licenses in Nebraska and Iowa and are active in groups such as the College of Workers’ Compensation Lawyers, Workers' Injury Law & Advocacy Group (WILG), American Association for Justice (AAJ), the Nebraska Association of Trial Attorneys (NATA), and the American Board of Trial Advocates (ABOTA). We have the knowledge, experience and toughness to win rightful compensation for people who have been injured or mistreated.

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