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House of Representatives
Session of 2019 - 2020 Regular Session


Posted: December 7, 2018 02:16 PM
From: Representative Rob W. Kauffman
To: All House members
Subject: UEGF Proof of Wages Legislation
I am preparing to introduce legislation that would amend the Workers’ Compensation Act to require that a claimant receiving benefits from the Uninsured Employers’ Guaranty Fund (UEGF) demonstrate proof of wages in order to receive a wage loss benefit.

UEGF provides workers’ compensation benefits to injured workers whose employer violated the law and did not provide workers’ compensation coverage. Benefits for these workers are funded through an assessment on insurers and self-insured employers – in other words, the people playing by the rules. Act 132 of 2018 was enacted late in the prior session to provide for UEGF’s solvency by increasing the assessment and implementing other reforms.

Unfortunately, while Act 132 implemented several good reforms to UEGF, there is still a major issue yet to be addressed. UEGF has become the default insurer for workers injured while working in the underground economy. When an employee of an insured employer is entitled to wage loss benefits, the employer can document the amount of the employee’s wages. If an employee is injured while working under the table, the uninsured employer often cannot be found. In many of these claims, employees have scant documentation of wages – or none at all – and they are allowed to document their wages by virtue of their own testimony.

Over the years, there have been a few “snapshots” of the extend of this problem. At different times, between 31-53% of claimants receiving a UEGF wage loss benefit had only their own testimony used to calculate the amount of their benefits. Quite simply, my legislation would end this slippery practice. My bill will require another form of evidence (check stubs/payroll records, tax returns, bank records, unemployment wage records, contemporaneous written documentation, or employer testimony) to substantiate the claimant’s testimony. If the amount of wages cannot be substantiated, the claimant will not receive a wage loss benefit. To be clear, my legislation will not prevent these claimants from receiving medical expenses for their injury.

UEGF was intended to be there for employees who, in good faith, went to work for an employer who violated the law. It was not intended to bail out those working in the underground economy - who are likely complicit in the unscrupulous employer’s violations of the law.

I hope that you will join me by cosponsoring this legislation.

Introduced as HB83