Counting to three in workers’ comp

The workers’ compensation coverage requirement in New Mexico has always been a mess. Finally somebody is paying attention to it.

A state Court of Appeals decision last year yanked away the exemption that protected farmers and ranchers for decades from concerning themselves with this convoluted language. After the decision, the Workers’ Compensation Administration told them they would have to start buying workers’ comp insurance. The requirement has been stayed temporarily by the state Supreme Court, pending its review of the case. But now – in case the Supreme Court doesn’t bail them out — they are grappling with it (paragraphs 52-1-6 and 52-1-7 of the statutes).

Most businesses with three or more employees are required to buy coverage, and that ends the discussion for them (construction is the exception, requiring all employers to have coverage, regardless of the number of employees).

But for very small businesses, the question of what constitutes “three” is a serious matter. (My slogan: there are many ways to count to three.) So is the question of what constitutes an employee. These issues are not simple.

The farmers and ranchers are looking to change these paragraphs. If you operate a very small business, or are employed by one, any changes will affect you.

Two failed bills, SB 244 and HM 108, were merely statements of the complaint of farmers and ranchers in an attempt to justify the old exemption.

The interesting bill – which also went nowhere – was SB 283, sponsored by Sen. Ted Barela (R., Estancia). It was a first attempt – clumsy, in my opinion – to amend the definitions that affect very small businesses.

Here are a few of the issues.

One concern is family members. Should a business owner be required to count his spouse, kids, parents or other close family members as employees, if they work in the business? Maybe, maybe not. In most family businesses, we’d assume an injured family member will be taken care of by other means. But not always.

Should the exemption extend to cousins? The bigger the circle of exemption, the more it’s open to legal challenge if there’s an argument about who’s related to whom. Cousins can get divorced, for example – causing a legal dispute over whether a particular person is still related.

Workers’ compensation is not isolated in dealing with family exemptions (though the workers’ compensation community tends to forget this). Another area of law — unemployment insurance — has its own set of rules. Using unemployment law as a model may or may not be the best choice, but it surely would reduce confusion for some small family businesses if the two sets of rules were similar. It’s worth looking at.

“Executive employees” are another issue. The workers’ comp law says executive employees (corporate officers, partners and the like) may exempt themselves from coverage (saving premium dollars) but they must be counted to determine whether the company has three or more employees.

Some very small companies have three or more executive employees and nobody else.   The executives can exempt themselves. That business is required to purchase a so-called null policy – which costs real money but does not protect anybody. Is that absurd? Maybe.

And a particularly crazy definition: the workers’ comp law defines a “sole proprietor” differently from the way that term is commonly understood. Normal usage says sole proprietorship is a business owned by a single person with no corporations or partnerships. Our workers’ compensation law says a sole proprietor owns all the assets of a business and employs no one but himself. Some legal nitpickers have said that means the sole proprietor employs himself and is therefore required to count himself as an employee. Can we fix this, please?

I told you: in workers’ compensation there are many ways to count to three.

Triple Spaced Again, © New Mexico News Services 2016