Generous Benefits for Feds Injured on the Job Could Be on the Chopping Block

Lawmakers and representatives from the Obama administration advocated on Wednesday reforming the workers’ compensation package awarded to federal employees injured on the job, arguing changes could save more than $300 million over 10 years.

A Labor Department official told the House Education and the Workforce Subcommittee on Workforce Protections the current system provides benefits more generous than the compensation employees would receive had they never gotten hurt. Democrats on the panel disagreed with that assumption, though lawmakers in both parties agreed workers’ compensation should provide no more or less money than employees’ uninjured counterparts earn.

Leonard Howie, director of the Labor Department’s Office of Workers’ Compensation Programs, laid out a proposal to bring equity to workers’ comp for federal employees, whether or not they have dependents. Currently, feds deemed fully disabled earn 75 percent of their pre-injury salary if they have dependents, while those without dependents receive 66 2/3 percent. Labor proposed giving all fully disabled employees 70 percent of their previous salaries.

Howie, explaining a plan included in President Obama’s fiscal 2016 budget and previous Obama budgets, also advocated lowering the benefit for injured feds once they reach retirement age. Under the Labor proposal, the Federal Employees Compensation Act benefit would be reduced to 50 percent of pre-injury salary once the employee reached Social Security retirement age. Excessive benefits, Howie argued, remove incentives for employees to return to work, as their tax-free workers’ comp is often more generous than a taxed pension under the Federal Employees Retirement System.

Rep. Mark Pocan, D-Wis., and other Democrats on the committee, took issue with those arguments, noting 98 percent of FECA recipients are back on the job within two years. If the current structure were truly motivating employees not to work, they said, that figure would be far lower. They also said FECA-collecting feds are missing out on overtime, promotions and other ways they could have boosted their incomes if they were able to work.

Rep. Tim Walberg, R-Mich., chairman of the subcommittee, joined his Republican colleagues in supporting the Obama administration’s proposal, saying after 40 years of stagnancy it was time for an update to the program.

“As with any reform process, updating the FECA program will require some tough choices,” Walberg said. “But I think we can all agree something has to be done.”

Walberg said lawmakers must balance the need to provide fair and adequate compensation to federal workers with the numbers that make it sustainable and an obligation to taxpayers to be stewards of government spending. Howie emphasized Labor did not prioritize savings in making the reform proposals -- instead focusing on the best ways to improve the program -- but conservatively estimated the changes would save $360 million over 10 years.

Congress has for years sought FECA reform; Walberg in 2011 co-sponsored legislation focused more on streamlining the processing of claims and protecting against fraud, which passed the House but fizzled in the Senate. Lawmakers in each of the last two Congresses attached FECA provisions similar to those pitched by Labor to U.S. Postal Service reform legislation, but they were never passed into law.

In a 2012 report updated and re-issued Wednesday, the Government Accountability Office found the proposed changes would bring the median FECA benefits “on par with or below the median retirement incomes individuals would have received absent their injuries.” When GAO looked at the average retirement compensation for employees who worked 30-year careers, however, the auditors found the proposed FECA benefit package would be 22 percent to 35 percent less than the median FERS retirement package.

National Active and Retired Federal Employees Association President Richard Thissen said the proposal was not based on sound public policy and would serve only to “punish the very people struggling to recover after a debilitating injury in service to their country.”

“Members of Congress should pay close attention to the GAO findings before acting rashly to make severe cuts to the basic income protection afforded to federal employees injured while serving their country, as the DOL proposal aims to do,” Thissen said.