photo by Flickr user chedder
Professional athletes often receive special treatment in recognition of their outstanding skill. But does that mean they should receive special treatment from state legislators too?
The question is complicated. For a prime example, consider the recent dispute over proposed legislation that would affect the workers’ compensation benefits of professional athletes in Illinois.
The proposal is part of a budget compromise package, designed to deal with Illinois’ larger fiscal problems. But Senate Bill 12 specifically targets professional athletes by modifying workers’ compensation rules where they are concerned, under the logic that the careers of pro athletes are much shorter than other professions.
First, it is worth discussing workers’ comp in general. Part of the confusion that can sometimes arise in discussing such benefits springs from the fact that workers’ comp insurance typically provides two different types of benefit to workers injured on the job: wage replacement and medical benefits. The latter is self-explanatory. The former is designed to replace lost income resulting from the injury. In some states, including Illinois, even if the injury does not leave the individual totally incapable of work, workers’ compensation benefits may pay out some amount representing a “wage differential:” that is, the difference between what injured individuals are capable of earning and what they could have earned had they not sustained the injury.
Illinois currently offers some of the most generous wage differential laws in the country. For Illinois workers, currently including professional athletes, the law allows wage differential payments until age 67. The amount is roughly two-thirds the difference in wages, capped at $1,075 per week or $55,900 per year. For instance, a skilled worker such as a carpenter who loses the use of her hand may be able to do some sort of work for decades to come, but would have expected a larger income had she continued to make use of her specialized skills. The Illinois law is designed to allow her to offset at least part of that gap, even if she is not eligible for total disability.
As advocates of the proposed legislation point out, however, no professional athlete plays until age 67 – with the possible exception of golfers on the PGA Tour Champions (formerly known as the Senior PGA Championship). If passed, SB 12 would limit wage differential payments for professional athletes to age 35 or five years after the date of the injury, whichever is later. Supporters argue that this cap, while still generous, realistically reflects the length of sports careers and puts a reasonable limit on the number of years teams will have to pay deductibles for players who make claims – often around $1 million per player per year, according to ESPN.
In most states, including Illinois, employers either pay premiums for a workers’ compensation insurance policy on behalf of their workers or prove to the state that they can self-insure. So the owners of Illinois’ professional teams have a financial incentive to support SB 12. In a letter to Illinois Senate leadership, the owners of Illinois’ five major professional sports teams argue that the change is simply correcting an oversight in the original law. “Wage differential benefits are not a lifetime benefit, but rather are intended to compensate an athlete for the difference between what he or she could have earned during his or her career as a professional athlete and the amount he or she actually earns as a result of the injury,” they wrote.
Proponents of the bill may be failing to take into account that, for pro athletes who achieve even moderate success, each year of lost income from a sports contract has much greater proportionate effect on their lifetime earnings than does a year of earnings for people in other professions. This is especially true for an NFL player, since his entire contract salary amount is not guaranteed. A running back who can’t earn for one year may lose as significant a proportion of his lifetime income as an accountant might lose from being unable to work for a decade. If the running back is forced to work as an accountant during the intervening year, he would still lose perhaps 90 percent of that year’s income without any future opportunity to make up the difference.
The cap on the wage differential’s annual payments prevents the system from compensating for the lost income upfront (because no one wants a state-run system designed to make huge payments to millionaire athletes), but it fails to account for the fact that, spread over the course of a lifetime, the athlete’s earnings may be no greater than the accountant’s. By reducing the age limit by as much as 32 years, SB 12 would increase the likelihood that many pro athletes will earn only a fraction of what they would have earned in other, more typical professions through age 67.
It is unsurprising that organizations representing the interest of players are protesting a change that singles out their members for exemption from Illinois’ generous workers’ comp laws. The NFL Players Association reacted forcefully to the letter from Illinois team owners supporting the new legislation. The Association argued teams should negotiate using collective bargaining if they wish to adjust compensation, rather than lobbying state legislators. NFL Players Association head DeMaurice Smith has said he will encourage players in free agency to stay away from the Chicago Bears if the legislation passes.
The NFL is not the only league where players have expressed concerns about the newly proposed cap. The Major League Soccer Players Union, whose members draw much smaller salaries on average, has said it will join the NFL Players Association in opposing the legislation. Richard Gordon, a personal injury lawyer and lobbyist representing the NFL Players Association, observed that the bill will not hurt stars as badly as it would athletes like professional soccer players and minor-league baseball players, many of whom make less than $100,000 annually.
One major point of contention is whether SB 12, if passed, would affect disability compensation and medical benefits. Team owners have vehemently denied this is the case, while the NFL Players Association has countered that workers’ compensation is designed both to replace lost wages and to subsidize medical care. “Taking away either of those benefits is essentially changing the entire right, which is harmful to all workers everywhere and can lead to a change in the rights of employees in other professions,” the Association argued.
In counterpoint, the Chicago Bears’ general counsel, Cliff Stein, has stressed that the team would never deprive players and former players of medical benefits. When Smith claimed that SB 12 would do just that in a radio interview, Stein reacted by calling his statement “false and misleading.” However, if injured players’ medical benefits will truly be unaffected by the new law, the owners seem to be oddly and deeply invested in what would otherwise be a fairly minor change dealing only with lost income.
While it is understandable that players’ unions want to secure the best possible deals for their members, the NFL Players Association’s argument is at least partly undercut by the fact that Illinois’ existing rules are so unusual. “Since 2005, no other teams in any other state have paid more money in workers’ compensation claims, settlements and awards than the teams in the state of Illinois,” according to Stein. Only 13 states include some form of wage differential in their workers’ compensation laws at all. Of those states, three (Ohio, New York and Nebraska) limit the number of weeks an employee can collect wage differential benefits, and Arizona caps the rate of wage differential benefits across the board. Nor is singling out professional athletes unheard of in workers’ compensation laws. Michigan does not offer wage differential payments to professional athletes, and laws in states including Florida, Texas and Missouri already treat workers’ compensation differently for professional athletes.
The letter from team owners in Illinois points out that no other state allows players to file wage differential claims for benefits up to age 67. And they also argue that, by preserving medical and total disability coverage, the amendment to the law would effectively differentiate between an injury that ends a professional sports career and one that prevents the player from pursuing any gainful employment at all.
One final wrinkle is “forum shopping:” the practice of filing for workers’ compensation benefits in another state (usually one with more generous laws) if the athlete once played there. It is, in some ways, the mirror image of the so-called “jock tax.” Both cases represent an attempt to treat a state visitor like a state resident. If the athlete is injured in Illinois, state law currently allows for forum shopping, leaving even non-Illinois teams potentially on the hook for decades longer than their home state law dictates.
It is worth noting that a well-run workers’ comp system would be entirely self-financed through the premiums paid by employers. A state’s general fund should neither profit from benefit reductions nor be directly hurt by more generous systems, although of course bigger benefits mean higher premiums, which can affect a state’s business climate. If Illinois’ benefits are too generous for the state’s businesses to afford, why take action only on behalf of sports teams? It certainly gives credence to the NFL Players Association’s claim that the proposed bill does not reflect a state budget issue, but rather serves as a way for team owners in Illinois to circumvent the collective bargaining agreement and use the legislative system to cut their costs.
Ultimately, because workers’ compensation rules are up to the states, professional sports teams have much less flexibility than their players in this area. It is only right that both unions and team owners attempt to do their best for those to whom they answer; ultimately, it will be up to Illinois lawmakers to play referee.