Alabama's Workers' Compensation Laws Declared Wholly Unconstitutional

A judge recently declared two key provisions of Alabama's workers' compensation laws unconstitutional -- which means that the entire legislative act is now void. This has both far-reaching short-term and long-term implications it is important to understand if you are an injured worker in that state.

The provision regarding income was found to be irrational and out-of-date.

The move is hailed as a victory by advocates for the injured because the two provisions that were declared unconstitutional and out-of-date are probably the most important ones in the act. The first limited injured workers to a cap of $220 per week in compensation. Peculiarly, the way the legislation is written, it divided low-income workers and high-income workers into two categories -- but paid both the same rate.

At the time the cap was made, which was back in 1987, $220 was deemed to be adequate -- and it was for workers at the lower end of the income scale. It was more than someone would earn at minimum wage and above the state's poverty level. However, it was never adequate when it came to covering high-income workers. An employee who made a six-figure salary couldn't hope to maintain any semblance of his or her former lifestyle if he or she became disabled due to an on-the-job incident.

Even worse, the legislation contained no provision to increase the amount over time with inflation. Now, that $220 a week would put a family of four that relied on the income from the disabled wage-earner would be well below poverty level. 

By comparison, other states, like Tennessee, used 2/3 of the worker's weekly salary as a basis for their cap, which means that the cap keeps changing with time and is self-designed to reflect differences in income levels.

The cap on attorney fees was found to be injurious to the disabled.

The second provision the judge declared unconstitutional was regarding the 15% cap on attorney fees. The net effect of the cap, advocates argued, was to deprive the injured of being able to find adequate representation if they needed it. Attorneys simply couldn't afford to take the cases and stay in business for long.

In other states, like Tennessee, attorneys are able to collect at least 20% of whatever the worker recovered plus reimbursement of costs. While it may not sound like much of a difference, it creates a narrow profit margin that allows attorneys to take on cases and remain solvent themselves.

It was estimated that up to 20,000 injured workers in Alabama year went without necessary representation every year.

The short-term effect is dismaying while the long-term effect is positive.

The judge stayed the ruling for 120 days in order to give the state's legislature time to make changes to the system that would make it valid under the constitution. Otherwise, all workers' comp service and payments would grind to halt -- which would further devastate the disabled. 

The judge acknowledged that changes to the laws would have far-reaching effects on medical providers who derive their income from the care given to the disabled workers to the insurance companies who provide coverage. Absent new legislation, workers will have to turn to other sources of financial aid and medical assistance.

If you are an injured or disabled worker in Alabama, or you incurred an on-the-job injury in Alabama while on a detail from your employer from another state, contact an attorney like Rizzi Law Group to see what this could mean for your case.