The American Staffing Association is desperate to change this, and held a conference call on June 28 for its members.
It was a call to join forces, and an opportunity to hear what the ASA's political consultant is doing in an effort to appeal the Legislature’s standing on rates for staffing firms.
There are 48 states that allow staffing firms to use individual codes to classify a risk or workplace exposure, and loss costs, that the state classification system provides. Pennsylvania and Delaware are the only two that don't.
In Pennsylvania, according to the ASA, the firms must pay group rates that far exceed those for individual codes.
The high rates are affecting staffing firms' business and job expansion in the Commonwealth, and have even caused some staffing firms to close, according to the ASA.
This is why they hired David Patti, CEO of the Pennsylvania Business Council, to commandeer an obligatory grassroots effort to change the system.
Ultimately, the ASA wants to adopt a workers’ compensation rating system similar to the other 48 states, so temporary workers can use the same individual class/occupation codes as full-time workers doing the same job.
Kicking off Tuesday's morning call, ASA’s senior vice president of legal and public affairs, Edward Lenz, said, “The industry has made periodic efforts to persuade the [Pennsylvania Compensation Rating Bureau] to use individual passcodes classification codes.”
In what Lenz called a “perverse economic incentive,” the PCRB assumed temporary staffing was “inherently riskier” in workers’ comp and created through-the-roof rates for small individual staffing companies.
ASA’s view is that the state ought to grant them the right to use all individual codes, but Lenz added, “We have thus far been unsuccessful.”
For 18 months, Lenz said, the PCRB has been rejecting requests to change the system, “and in some respects, made the system worse.”
Now, Lenz feels the political climate has changed enough now that they have a fighting chance at changing the system. The governor is encouraging a pro-business climate, but saying the ASA needs to go through the administrative steps for the Legislature administration to take anything into consideration.
They are filing a formal appeal this summer with the PCRB, even though Lenz said he doubts the PCRB will change its stance.
“We have no reason to believe the bureau will accept any of these arguments,” Lenz said. “They have rejected them in the past.”
Patti, whose organization has a similar layout to the ASA with its member firms, said the Pennsylvania Business Council’s mission is to work on a proactive public policy for the state. This will allow them to be more competitive in bringing new business into the Commonwealth, fitting in nicely with economic development plans.
How do staffing firms fit into the course of action?
“Your success directly translates to the success of the companies we represent,” Patti said of PBC.
There are people in the Pennsylvania Legislature who are sympathetic to the staffing firms’ plight.
“We have legislators right now who are interested in … helping your firms prosper,” Patti told the staffing representatives present in Tuesday’s call.
Patti said he plans a “triangulation” approach, putting the pressure on the state’s insurance commissioner and “making enough noise” to be heard by those who can weigh in on the outcome.
What have they done so far?
Patti said they’ve met with Pennsylvania’s labor and industry committees, and the former is interested. However, it is the insurance commissioner, Michael Consedine, who has to be interested in making a change.
Patti said Consedine has recused himself from conversations to the matter thus far, "so he's not being lobbied."
The way to get through to him involves success through failure.
They start by filing an appeal to the PCRB, Patti said, which will likely say no way.
“In fact, we want them to say no,” he added.
His reasoning: If PCRB turns them down, they can then appeal to its board. Hopefully this will fail too, because it brings them to Consedine's department after they have exhausted all legal remedies.
Patti’s hope is that the governor will advise the commissioner to proceed with some sort of change.
Lenz predicts, “This is likely to be a longer-term process that will go over into 2012.”
“It’s not going to be a short process,” Patti told the representatives. “But we can make it as efficient as possible.”
It’s not going to be a cheap process, either. Patti and Lenz are calling for staffing firms to pony up the legal funds, as even grassroots efforts cost you.
Patti said many firms have already donated. The ASA has put forth $10,000 for two years’ worth, and Patti suggested interested parties put in at least $1,000.
That's a lot of money for firms to contribute, given they’re getting knocked down by insurance rates already.
Only time will tell if the efforts will even get through to the Legislature.