Alabama’s Workers Compensation Act Ruled Unconstitutional

Alabama Small Business

The Workers’ Compensation Act in Alabama was recently ruled unconstitutional by one of the State’s circuit judges, Pat Ballard from the Jefferson County. According to Judge Ballard, a weekly compensation cap of $220 and the 15% cap on fees for legal services are unlawful.

Two faulty provisions led to the entire bill being declared illegitimate, and you may think it has been dumped into the trash can. Well, not that fast. The Act has been offered 120 days; enough time for the Alabama Legislature to rectify the flaws.

So what can be the outcome of the revised bill? What could small businesses expect after the 120 days deadline? It turns out, there could be quite a lot to hope for.

The law goes back 30 years dating to 1987 and does not take into account the current economic climate, inflation, economic crises or the increase in wages and standard of living America has seen in the last 3 decades. In addition, at the time the law was enacted $220 per week was above minimum wage level and the poverty threshold. Today things are a lot different. Attorneys argue a similar cap would total just under $500.

Judge Ballard, in his ruling, also showed how the current law somewhat discriminates by grouping injured workers into two classes which basically receive the same benefit. “There is little credibility in telling two injured workers, both of whom are 99 percent disabled due to work injuries, that they both get $220 per week… when one earns $8.50 per hour for a 40-hour work week, and the other earns an annual salary of $125,000,” he notes.

Another problem is a provision of the law that placed a 15% cap on attorney fees. Just like the first provision, Judge Ballard simply called it unconstitutional and said it fails to afford due process of the law. Attorneys have had nothing but praise for this move. Speaking for the plaintiffs, Attorney Lawrence King said the judge had “turned the lights onto a horrible inequity that has penalized and injured members of Alabama’s labor force for decades.”

He indicated that the existing system was “set up to keep injured workers from getting easy access to legal help.” The salary cap made workers’ compensation cases very unattractive for lawyers who did not find it lucrative enough. This meant that up to 20,000 individuals each year suffered workplace injuries and were only dependent on the insurance industry for assistance.

Judge Ballard acknowledged that a change in the Workers’ Compensation Act will inevitably “mean that Alabama’s taxpayers will shoulder a large measure of the burden”, and medical providers will given their income from services billed to workers’ compensation insurers, employers, and self-insurance funds.

But he justified the more or less unprecedented move by saying that crises such as this are the direct result of a problem created and allowed to persist by the Legislature.

Judge Ballard says he understands the far-reaching implications of his ruling. He has therefore issued a 120 day stay so the Alabama Legislature can correct the Act. While it may simply correct issues in existing regulation, it may also include changes to requirements as seen in other states.