"An amendment to the state's workers" compensation statute that quietly went into effect earlier this month for the first time gives employees, business competitors and others the power to sue a Massachusetts employer for failing to pay its workers' compensation insurance premiums......." Click here for full article
Clearly, the intent of this legislation is to curb fraudulent employer activity designed to evade paying proper WC premium. As cited in this article, the most use of this statute is expected to be in the building trades, where some employers gain competitive bidding advantages from such premium avoidance practices.
The passage of this legislation is not an indictment of the Commonwealth's regulatory machinery's inability to effectively police this activity. Rather, it is a recognition that such activity is wide-spread and the volume is such that no state agency is capable of keeping up with it, particularly in tough economic times.
Does this legislation set up a vigilante type of Wild West justice system? Perhaps, but the building trades have long pushed for such legislation in hopes of leveling the playing field for honest employers to compete for work and jobs. It also ensures honest employers will not over pay their fair share to make up for those who willfully skirt the law.
Two aspects of this will be interesting to watch as the implementation of this law unfolds. How will plaintiffs factually substantiate their allegations? Will the courts require some objective standards for allowing suits for other than whimsical speculation that an employer is not meeting his WC obligations? Could employers file frivolous suits alleging wrongdoing just to harass their competitors?
Will this legislation create a new cottage industry of "bounty hunters" seeking to profit from uncovering fraudulent activity? Will this activity lead to more regulatory oversight to prevent abuses or will competing employers be allowed to "shoot it out" on the streets?
Massachusetts has long been associated with regulatory "firsts", but this one could send us into a whole new stratosphere. This could be interesting.....
