The Obama administration, generally a friend of organized labor, also has made some moves that are not to the liking of federal employees. The biggest item is the two-year pay freeze that began in January.
Now the administration wants to cut workers’ compensation for federal staffers, saying the compensation discourages injured employees from returning to work. The program provides income to employees and families for disability or death related to employment. About 2.7 million federal workers, including postal, are covered.
The Federal Employees’ Compensation Act (FECA) “creates direct disincentives to return-to-work in two significant ways,” Gary Steinberg, acting director of the Labor Department’s Office of Workers’ Compensation Programs, said in congressional testimony Thursday.
The “most far-reaching” disincentive, he said, is workers’ comp payments equaling 75 percent of employees’ pay if they have at least one dependent. “Computed at 75 percent tax free, FECA benefits often exceed the employee’s pre-injury take home pay,” he said.
Setting the compensation rate at 70 percent for everyone “would remove disincentive to return to work,” Steinberg added in a statement to the House subcommittee on workforce protections.
This is just one in a series of administration recommendations, which also include increased payments for funerals and facial disfigurements.
Another issue Steinberg cited is workers’ comp payments for some older employees that can be more than their retirement benefits. Steinberg said “the considerable difference” between workers’ comp payments and retirement benefits “results in certain FECA claimants receiving far more compensation in their post retirement years than if they had completed their Federal careers and received normal retirement benefits like their colleagues. This disparity also suggests that a statutory remedy is needed.”
The administration, however, did not offer any legislation for the proposals Steinberg said would save $400 million over 10 years. That’s less than pocket change to Uncle Sam, but it would have a significant impact on individual employees.
Another proposal would cut the compensation retiree-age employees could get to 50 percent of what their gross salary was at the time of their injury. Currently the compensation is 66.7 percent, or 75 percent for those with dependents.
The 50 percent level “more closely parallels a regular retirement benefit,” Steinberg said, “so that FECA recipients are not overly advantaged in their retirement years compared to their non-injured counterparts.”
But don’t get the idea that folks are looking to get disability payments so they can stay home watching the soaps all day. Almost all on workers’ comp, 85 percent, go back to work within a year, and 89 percent are back within two years, he told the panel. The average number of days off work because of serious injury dropped to 156 last year, from 195 in 1996.
For all of the points Steinberg made at the hearing, Susan M. Carney, director of the American Postal Workers Union human relations department, had a counterpunch.
“As we begin, it is important to point out that postal and federal workers are injured on the job because of the circumstances they encounter in performing a public service,” she said in a statement to the panel.
“These employees are victims of traumatic injuries such as slips and falls, muscle tears and herniated disc injuries. They are victims of poor ergonomic working conditions, like those that cause repetitive stress disease, making it difficult to perform simple tasks that involve grasping, holding and reaching. They suffer motor vehicle accidents, sustain injuries caused by faulty equipment and are innocent victims of unforeseeable, heinous crimes. Workplace injuries and diseases change lives; in many cases forever. No one ever goes to work wanting it to be the day they are injured or the day they will not return home to their family,” she added.
They “do not reap greater benefits, nor do they lack motivation to return to work,” she said before listing the ways injured workers lose money: They don’t earn annual or sick leave. They don’t get matching retirement payments. They don’t get pay raises because their pay rate is frozen at the date of their disability.
Retirement proposal contested
In a related matter, the 22-member Federal-Postal Coalition, a group of federal employee organizations, sent a letter to the Senate Budget Committee urging it to reject certain proposals in the House Budget Resolution and by the National Commission on Fiscal Responsibility and Reform.
The House plan to have employees pay more of their salaries to their retirement program “will ultimately result in a significant pay cut,” the coalition said. The commission’s proposal to base retirement income on the five highest years of an employee’s federal pay, instead of the highest three as it is now, would cut annuities by thousands of dollars, the coalition said.
“Federal and postal employees understand the need for a realistic federal budget,” but the commission and House plans “go too far,” the letter said.
“Even in these tough economic times,” the coalition concluded, “America cannot afford a second-best civil service.”