The Workers? Compensation Situation in this Country is Nuts, Arnold in CA Takes Action

The Workers' Compensation situation in this country is unbelievable. Why, well because of lawsuits and attorneys mostly. The costs of workmen's compensation on the business community is part of the reason for the slow return of high paying blue collar jobs in this country and the demise of the manufacturing sector. The system covers some 122 million workers nationally, but it is regulated state by state, not nationally and there is nothing close to being a Federal Oversight on this, not that I or anyone else cares to add another layer of bureaucracy to an already broken system.

You can imagine the burden of the franchising community to provide jobs and the incredible problems faced by franchisees. The average cost on a national level has risen 50% in the last 3 years. This means that the poor employer is stuck, do they hire fewer people and assign more work, go out of business or cheat. Actually none of these options seem to be worthy of assisting in attaining the elusive ROI or profit that all business owners and franchisees seek. The prices in California have risen so fast that the costs of workmen's compensation have doubled in the past three years. That is 200%. We recently talked to one company which builds Car Washes and Quick Service Restaurants Franchise Tennant Improvements and C-Stores, who indicated to us his workmen's compensation costs in Los Angeles were running 110% of payroll? WOW. This is serious, it is due to run away lawsuits, we need tort reform.

This is one reason that Maurice "Hank"Greenberg of AIG Insurance Groups said that Lawyers are Terrorists, this is why Elliot Spitzer targeted him personally. Well, I could not agree more personally and have never heard not one debatable comment from any one in the legal profession, which sues employers. California is working on their problems and is making some progress as you might have seen on TV or in the newspaper: It's About time reform for workers compensation:

We understand the issues with labor in many industries and why we need safety and assistance for those hurt on the job:

But I must tell you that it is a real hardship on businesses to deal with this. Good to see Arnold is working on it. Glad to see we are working to fix the problem. But essentially this is merely a start of the fixing of the over all problem in America. The premiums started a huge upward hike and accelerated the already fast pace in increased costs after 9-11 when the Insurance Industry took unexpected hits of 40 Billion dollars. The other factor increasing costs is the medical industry getting hammered by lawsuits for mal practice. The improvements in safety and added restrictions have decreased work related injuries. A reduction in worker eligibility for benefits has led to a decrease of 36% in compensation claims in the last 10 years. Unfortunately the costs per claim have doubled to an average of $15,000 in the nation and in California $35K. In the 1900s when the compensation ideas were started they were to reduce litigation and disputes. Of course once you make one law, you have just given yourself job security. Due to the fraud of lawyers, chiropractors, criminals and doctors working together billions in fraud has been stolen from businesses over the years.

Joe, goes to a lawyer who has a friend who is a Chiropractor. Joe says he hurt his arm to the lawyer and Chiropractor or doctor expert confirms this, they file suit and document the extent of injury and how many days Joe should be out of work and charge their hefty fees to the deal. All this is fraudulent, as Joe was seen skiing in Aspen, Water Skiing in Lake Mead, Sky Diving in Phoenix, Sport fishing in Baja, Para sailing in Key West, mountain climbing near Jasper, Canada and riding his dirt bike in TX. And you think you have a chance owning a Burger Franchise in CA with 41 employees? NOT. We are glad to see things are changing, but it cannot possibly happen fast enough. Want some books on this subject?

Maybe CA is getting their act together, maybe a franchise in CA might be feasible with out getting your pants sued off. We are happy to see that Arnold the 'Governator' is terminating bad laws and policy in CA, the question is; is anyone else listening and are they going to do anything about it?

"Lance Winslow" - If you have innovative thoughts and unique perspectives, come think with Lance;

In The News:

How to Help Small Businesses Survive COVID's Next Phase  Harvard Business School Working Knowledge
A Way Forward for Small Businesses  Harvard Business Review

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