The National Council on Compensation Insurance (NCCI) has released its 2024 Regulatory and Legislative Trends report, outlining significant actions reshaping workers’ compensation. Key focus areas include workplace-related mental health claims, marijuana reimbursement, independent contractor classifications, the gig economy and potential single-payer health insurance reforms.

This article summarizes the report’s insights and provides actionable strategies to help your business address these challenges, manage risks and reduce claims.

Current Trends in Workers’ Compensation

Mental Health & Workplace Injuries

Many laws now focus on improving workplace mental health, reflecting society’s heightened awareness of its role in employee wellbeing. Historically, protections were centered on high-stress occupations (e.g., first responders), but many states now extend these benefits to a broader range of jobs and mental health conditions. For example, Connecticut recently expanded workers’ compensation to cover PTSD for all employees, while Idaho, Nevada, Tennessee, Virginia and Washington have streamlined access to PTSD treatment for first responders. These changes underscore a trend to make mental health a standard component of workers’ comp coverage.

These legislative expansions create a range of risks for employers, including:

• Employers may face increased claims and higher premiums as more employees become eligible for workers’ compensation benefits related to mental health conditions.
• Mental health claims often involve extended recovery periods and higher expenses. These claims require extensive employer support, raising administrative responsibilities and overall costs.
• Staying informed with changing legislation across states may require additional resources or expert legal support to avoid non-compliance risks.

Marijuana Legalization & Reimbursement

The legalization of marijuana for recreational and medicinal use is transforming the workers' compensation landscape nationwide. With nearly half of the states allowing recreational usage and more permitting medicinal applications, employers are faced with new challenges, including:

• Some states, including Connecticut and New York, allow workers' compensation to reimburse medical marijuana for conditions like chronic pain. Others, such as Maine and Florida, restrict it, citing federal guidelines that require FDA-approved treatments.
• Employers face complex challenges balancing federal laws that classify marijuana as illegal with state laws that may mandate or allow coverage.
• Employees may claim discrimination or wrongful termination if they are disciplined for marijuana use, especially if they have a prescription.
• Some carriers might consider including medical marijuana in workers' compensation as a riskier approach, which could lead to higher premiums or restricted coverage.
• Marijuana use can affect employee performance and safety.

Concerned about the impact of marijuana legislation changes on your business? Explore our article, Marijuana Legalization — Employer Risks & How to Mitigate Them, for insights on additional risks and strategies to ensure compliance while fostering a safe, productive workplace.. 

Gig Workers & Independent Contractors

The rise of independent contractors and gig workers is reshaping workers’ compensation insurance. In 2024, the U.S. Department of Labor (DOL) issued a final rule that redefines worker classifications, moving away from the former three-part ABC test. It now employs a multifactor economic reality test to determine whether a worker should be classified as an employee or independent contractor. This change could result in more workers qualifying as employees under the law, potentially increasing their eligibility for workers' comp benefits.

Unique risks that employers should consider:

• Misclassification of workers could lead to costly penalties, fines and potential legal action, increasing liability exposure for businesses.
• To support classification decisions, businesses may need to enhance documentation practices, including contracts, role descriptions and payroll records, which can increase administrative efforts.

Discover more about the new classification rules that could impact your business. Our article, Employer Risks from the Revised Independent Contractor Rule, offers insights to help navigate these changes effectively.

Single-payer Health Insurance

The discussion surrounding single-payer health insurance remains active as states evaluate its impact on workers’ compensation. Although no states have adopted a single-payer model, recent legislative proposals include provisions specific to workers' comp, such as funding mechanisms and experience rating integration. For employers, monitoring legislative updates in health insurance can provide foresight into possible shifts in medical cost management and workers’ compensation administration.

However, employers face potential challenges, such as higher workers’ compensation costs due to modifications in funding structures and complications in premium calculations that may not reflect employers’ safety records. To manage their risk exposure, employers should actively monitor legislative developments and engage with industry associations.

Here’s how a shift to single-payer health insurance could impact workers' compensation:

• A single-payer system could alter medical cost responsibilities for work-related injuries, potentially impacting workers’ compensation premiums and overall employer claims costs.
• New funding structures could require employers to contribute differently, potentially increasing financial burdens based on industry and workforce size.
• Employers may face changes to their experience modification ratings and premium calculations, which may not fully reflect their safety records or risk mitigation efforts.

• Single-payer health models could modify timelines and protocols for medical care, which may influence the efficiency of return-to-work programs.

Smart Strategies for Employers Navigating Workers’ Compensation Trends

• Prioritize mental health initiatives. Develop thorough mental health programs that equip managers with the skills to identify signs of distress, provide access to counseling services and foster a culture of transparency around mental health.
• Stay informed of legal developments. Regularly review and update your awareness of state and federal workers’ compensation regulations. Consider membership in industry organizations that provide ongoing training and resources on legislative updates that impact your business.
• Review substance use policies. As marijuana legalization continues to evolve, review your workplace policies. Ensure they comply with state laws and provide training for supervisors on managing issues related to medical marijuana.
• Embrace the gig economy. Establish clear contracts that outline their rights and responsibilities. Educate these workers about available benefits and ensure compliance with state laws regarding their classification as employees or independent contractors.
• Participate in safety training. Invest in ongoing safety training programs for employees, especially in high-risk industries, to reduce workplace injuries and claims filed.
• Utilize technology for claims management. Leverage technology to streamline your claims management process. Consider adopting software that provides real-time updates on workplace injuries, which helps identify trends and areas for improvement.
• Monitor health care costs. Stay ahead of potential shifts to single-payer health insurance by actively managing your health care costs and seeking innovative insurance solutions. Regularly evaluate your workers’ compensation costs and look for opportunities to negotiate better terms.
• Engage with your broker. Maintain open lines of communication with your insurance advisor. Work together on risk management strategies and utilize any resources they offer to reduce workplace injuries and related claims.

We’re Here to Help Keep You Informed of Workers’ Compensation Trends

Today’s workers’ compensation landscape is dynamic, reflecting broader changes in societal attitudes toward mental health, the legalization of marijuana, the structure of the labor force and health care reform. As these trends continue to evolve, staying informed will be crucial to effectively navigate the future of workers’ comp. Connect with a member of our team to discuss your business’ unique workers’ compensation needs.