The Labor Department Wednesday asked a House panel for help in overhauling the Federal Employees Compensation Act, the 99-year-old law that governs compensation for federal employees injured on the job.

While the department says its plan would save the government more than $360 million over ten years, Director of Office of Workers’ Compensation Programs Leonard Howie told the House Subcommittee on Workforce Protections that saving money was not the top objective. The proposal was “first and foremost” designed to improve the program, he said.

The department’s plan would reduce compensation for disabled workers who reach retirement age, in an effort to encourage them to rely on other savings instead. Nearly all federal employees who are injured on the job return to work, Howie said. But of the 41,000 currently receiving long-term workers’ comp, nearly half —17,000 —are old enough to withdraw from their retirement savings plans. The fact that they’ve chosen to stay on workers’ comp suggests it is too generous, Howie said.

Another provision would cut the additional compensation that workers with dependents now receive, which is up to 75 percent of the wages they earned before being injured. Workers without dependents receive up to two-thirds of their former income. The department wants to set a standard maximum rate of 70 percent for everyone.

“Our law is clear: We are to provide replacement wages,” Howie said. “There is no other program where we pay based on the number of dependents.”

Unions oppose changes to workers’ compensation benefits

Lawmakers of both political parties have supported similar proposals in the past, but they have failed to become law because of opposition by groups representing federal employees.  Disabled postal workers and the widow of one killed on the job accompanied Ron Watson of the National Association of Letter Carriers to the hearing. Watson testified that there was no evidence to show that the current level of compensation for employees with families discourages them from returning to work. Rather, he argued, letter carriers have had difficulties convincing Postal Service management to take them back.

The largest labor unions representing federal employees echoed Watson’s sentiments in statements.

“We have received reports from our members about management resistance or lack of interest in light duty assignments, alternative worksites, disability accommodations and other actions that could allow FECA recipients to return to work. A change in management practices and culture is needed,” wrote Colleen Kelley, president of the National Treasury Employees Union, which represents customs agents, among others. “I don’t expect this is something Congress can fully legislate, but the first step is to end the myth that able-bodied workers are receiving FECA payments and accept the fact that many injured workers would like to return to work and could do so with opened minded and innovative agency practices.”

The proposal impacting injured employees of retirement age was more troubling to her, Kelley said. Employees on workers’ comp have far less money set aside for retirement than those who have worked full careers, she argued in her statement.

Statistics from the Government Accountability Office bear out Kelley’s assertion. GAO expert Andrew Sherrill testified that Federal Employees Retirement System participants who worked 30 years would have 20- to 30-percent more money saved for retirement than if they had been injured and received workers’ comp under the Labor Department’s plan. The exact amount would vary widely, with younger federal employees having the most to lose under the proposal.

The plan would be prospective, however, Howie said. No one now receiving workers’ comp would be affected.

Democrats openly questioned the Labor Department’s plan.

“We can’t make budget cuts on the backs of federal worker who are permanently disabled and unable to build towards a secure retirement,” said the subcommittee’s ranking member, Rep. Frederica Wilson (D-Fla.).

But the Republican leadership gave little indication of how the panel would proceed.

“It’s an issue of people but also of numbers,” said Chairman Tim Walberg (R-Mich.)

Other parts of the department’s plan are less contentious. It would like access to Social Security records and other data to verify when injured employees return to work so that it does not pay compensation beyond that date. The department now needs a claimant’s permission to see their records. Those intending to commit fraud are unlikely to consent, testified Labor Department Inspector General Scott Dahl.

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