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Oklahoma Workers’ Comp Opt-Out Act Ruled Unconstitutional

Sept. 21, 2016

The Oklahoma State Supreme Court ruled on September 13, 2016, in Vasquez v. Dillard’s that the Opt-Out Act created impermissible unequal, disparate treatment of a select group of injured workers and is an unconstitutional special law under the Oklahoma Constitution.

The Employee Injury Benefit Act (Opt-Out Act) allowed qualified employers to avoid participating in the Oklahoma workers’ compensation system and instead establish an employee benefit plan as provided by the federal Employee Retirement Income Security Act.

Since the enactment of the Opt-Out Act in 2013, the law has been under constant challenge by injured workers, insurance companies, and their attorneys. Opponents object to the Act on the grounds that its potential to contravene the provisions and protections of the Administrative Workers’ Compensation Act (AWCA) would unconstitutionally create separate and unequally treated classes of injured employees.

The Case

In the case of Vasquez v. Dillard’s, an employee with Dillard’s filed a claim for benefits under the employer’s Opt-Out plan after injuring her neck and shoulders while lifting shoe boxes. The employee’s claim was denied. The plaintiff pursued her case, and it worked its way through state and federal courts, reaching the Oklahoma Worker’s Compensation Commission on remand from the United States District Court for the Western District. The Commission found that the Opt-Out Act was an unconstitutional special law; it denied equal protection to Oklahoma’s injured workers; and it denied injured workers the constitutionally protected right of access to courts. Dillard’s appealed the ruling.

In reaching its decision the Oklahoma Supreme Court affirmed the Commission’s ruling and found that in comparison with the AWCA, the Opt-Out Act:

· Did not provide injured employees same protection in coverage, process, or procedure;
· Specifically allowed employers who created their own plans to make it more difficult for the injured employee to recover from a work-related injury.

With the law being struck down as unconstitutional, Oklahoma employers again face the prospect of being required to enroll in the state-regulated workers’ compensation system, a system they consider to be too expensive and draconian in its rules and regulations. However, only Texas has an opt-out solution and every other state’s workers’ compensation system is essentially the same as the system in Oklahoma. Texas has a different constitutional makeup, and its opt-out statute is substantially different from the one recently tested here in Oklahoma. It is conceivable that, even if we adopted the same law as Texas has in place, it would not pass constitutional muster here in Oklahoma.

As the Oklahoma Supreme Court stated in Vasquez, “This Court has previously made it clear we will not accept the invitation of employers to find a discriminatory state statute constitutional by relying on the interests of employers in reducing compensation costs.”

Get Legal Help

As an employer, you may have questions about the decision in Vasquez v. Dillard’s and how it may affect your business. Boston Avenue Law, in beautiful downtown Tulsa, keeps up with the latest legal developments in workers’ compensation and employment law, and our attorneys are experienced and prepared to advise you and answer your questions. Call today for a consultation.