Published 19 August 2021
MISSA jumpstarts preparation for the implementation of Workmen’s Compensation Law
In preparation for the implementation of RMI’s Workers’ Compensation Law (WCL), MISSA has started a series of consultation meetings via Zoom with Mr. Frank Cabrera, Director of CNMI’s Workers’ Compensation Commission. The Administration has tapped Mr. Cabrera’s assistance since the country’s WCL was patterned from the CNMI’s current workers’ compensation program.
The country’s Workers’ Compensation Bill was introduced in 2016 by then Minister John Silk under Bill No. 49. However, it was only passed by the Nitijela in September 2019 which then became P.L. 2019-107. The purpose of the law is to provide for the compensation and rehabilitation of workers in respect to work-related injuries resulting in disability or death.
- MISSA was appointed as the administrator of the program.
- Under the law, every employer shall be liable for and shall secure payment of such compensation.
- Compensation shall be payable irrespective of fault as to the injury.
- In case of permanent or temporary disability, the disability benefits shall be sixty-six and two-thirds (66-2/3) percent of the average weekly wages, but shall not exceed $140 per week.
- In case of death, reasonable funeral expenses not exceeding $1,200 shall be paid.
- The total disability benefits for either injury or death payable to one employee for one occurrence of injury shall in no event exceed the sum of Forty Thousand Dollars ($40,000).
- Implementation was deferred by the Cabinet until September 2021 to give employers, workers, insurance companies and other stakeholders ample time to understand the program and allow MISSA to design its structure and establish its systems and procedures.
Considering the scope of MISSA’s responsibility as its administrator and the current COVID-19 situation worldwide, MISSA would need at least one year to come up with a compensation program that would address the following areas of concern that until now remain unclear:
- Funding, both for the public and private sectors.
- The need to have an actuary conduct a feasibility and actuarial study.
- Administrative costs during the preparation and implementation period.
- Systems and procedures.
- Employers’ and workers’ rights and responsibilities.
- Compensation and benefits during disability or death.
- Monitoring of compliance.
- Financial constraints that may cause certain sectors to not afford to pay the required amounts.
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In a meeting with Attorney General Richard Hickson and Chief Secretary Kino Kabua, MISSA has raised the same areas of concern that were mentioned above and requested that the implementation of the program be deferred again for at least another 12 months, preferably until September 2022.
MISSA management also had a dialogue with the two local insurance agencies namely Moylan’s Insurance Agency which was represented by Sen. Stephen Philip and Grace Abong, and Marshalls Insurance Agency, represented by Cora Lagunay. Sen. Philip and Mrs. Lagunay are both members of the Task Force on Workers’ Compensation that was established by the Cabinet in 2016.
It was shared to MISSA that during the Task Force’s dialogue with different stakeholders a few years ago, there were resistance encountered due to financial reasons. The Government has put more focus on Government workers and seafarers while the private sector was in limbo and without any assurance of funding. Likewise, Kwajalein issues were also raised, more particularly the protection of local workers employed in Kwajalein. As there are Marshallese workers being employed abroad, benefits for accidents outside the country were also considered, to include hospitalization and repatriation.
Initially, the Task Force has considered the Labor Office to be the Administrator of the Workers’ Compensation Program but subsequently opted to recommend MISSA to administer the program as the Administration has already established a more reliable organizational structure and systems and procedures.
Currently, Moylan’s and Marshalls Insurance have dozens of local clients who have their own workers’ compensation plans. Their premium rates are customized individually and based on occupational hazard, the number and gross wages of employees. For example, sea-based workers are at higher risk and pay more premium than those individuals working in the office doing administrative functions.
MISSA agreed to provide the two local insurance agencies with a list of employers estimated at around 700, to be grouped by industry. Other information to be included in the list are the number of workers and annual gross wages in each company. The Administration also sought the assistance of Sen. Philip to request for an initial funding of at least $100,000 to jumpstart the preparation process.
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To hear the side of the private sector, MISSA invited Mr. Mark Stege, President of Majuro Chamber of Commerce (MCC) to a meeting. Mr. Stege shared the invitation to its 80 plus members and about 20 of them joined the meeting virtually by Zoom.
MISSA informed the members of MCC that the disability and death benefits capped at $40,000 were based on CNMI’s minimum wage of $7.50 per hour that was enforced a few years ago, and not on the current $3.00 per hour minimum wage in the RMI. Considering this big difference, the Administration is contemplating to propose an amendment to the WCL to lower the cap and consequently reduce the premium. Another amendment to the law that the MISSA Administrator considers is to propose that mom & pop stores be exempted due to financial reasons. Likewise, the provision on medical cost and hospitalization in the WCL may also be amended as the cost of medicine and hospitalization in the country are free of charge. If amended, it will consequently reduce the premium.
In response to the proposal to exempt mom & pop stores from the law, one member said that big employers will absorb the cost and they will have a bigger share in the total cost of the program.
In the case of companies who have existing regional compensation coverage like Deloitte & Touche, the MISSA Administrator said that as long as the terms and conditions of the insurance coverage are consistent with the country’s WCL, the company can retain their existing insurance plan. This rule also applies to other local companies who have their own workers’ compensation coverage.
It was agreed that MISSA and MCC will continue their discussion until all issues are addressed. The MCC conducts a monthly meeting every last Wednesday of the month. This will be a good venue for future dialogues with the Administration.
To formalize MISSA’s stand, the Administration shall submit a position paper to the Cabinet to include the following requests and points of consideration:
- Postponement of the implementation of the workmen’s compensation program until September 2022.
- An initial appropriation of $100,000, to cover actuarial and consultant fees, travel expenses if deemed necessary to have a face to face consultation with the CNMI Worker’s Commission (when travel restrictions are lifted), legal & medical fees, and administrative expenses;
- Creation of a Workmen’s Compensation Task Force comprised of representatives from MISSA, the Government, Nitijela, private employers, local insurance agencies, Labor office, NGO’s and Ebeye.
- Amendment to the following provisions:
- Consideration may be given to certain group in the private sector (e.g. mom and pop stores) to exempt them from the program due to financial reasons; and
- Section 8: Medical Services and supplies – Under this section, the employer is responsible for the cost of medical services and supplies that are needed by the injured worker. Since hospitalization and medical supplies are free in the Marshall Islands, this provision may be removed or rephrased.
The Administration fully supports the government’s vision to financially protect the well-being of our workers and their families in times of serious injuries and fatal accidents. MISSA will always be ready for additional responsibilities that may be given. But efficiency and better public service can only be attained through preparation and well-defined systems, policies and procedures.
MISSA is now drafting the structure of the program that will include the following provisions:
- Administration and management of the program
- Funding
- Employer and insurance carriers’ liability and responsibilities
- Employees’ benefits and responsibilities
- Claims and payments
- Adjudication of disputes
- Forms to be used
- Monitoring and penalties for non-compliance