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Department of Labor

Recommendations and Actions

DOL01: Enhance Reemployment Programs for Occupationally Disabled Federal Employees

Background

The compensation program for occupationally disabled federal employees began on September 7, 1916. Since then the program has expanded considerably both in coverage and level of benefits. It is now a comprehensive workers' compensation system covering job-related injuries of most civilian federal workers regardless of where they live and work.(1)

Since 1982, the number of federal employees receiving long-term compensation payments for work-related injuries and disabilities has increased by approximately 3 percent a year even though the number of federal employees has remained relatively constant. Annual expenditures under the Federal Employees' Compensation Act (FECA) are approximately $1.7 billion. At the end of fiscal year 1992, more than 53,000 federal employees were receiving tax-free workers' compensation payments.(2)

Many of these occupationally disabled employees are willing and able to regain their job skills or to develop new ones, but they need reemployment assistance. These former employees are a valuable resource who will benefit the government by bringing their expertise back to the workplace and, in the process, reduce federal disability payments and generate taxable income.

Until recently, however, not enough had been done by the Department of Labor (DOL) and other federal agencies to aggressively pursue return-to-work programs. In April 1992, the Office of Workers' Compensation Programs started a Periodic Roll Management Project in four of its 12 FECA field offices. Special teams were formed to review 25,000 cases for continued disability status, reemployment potential, and adjustment of benefits. As of March 1993, more than $156 million in reduced worker compensation payments is projected to result from helping occupationally disabled federal employees return to income-producing jobs.

In a separate but related effort started in fiscal year 1992, the Office of Workers' Compensation Programs implemented a four-year, congressionally authorized demonstration project known as Assisted Reemployment in all of its FECA field offices. This project uses salary-reimbursement incentives to encourage federal and private sector employers to hire injured federal workers. Incentives in the form of FECA subsidies to the employer for offsetting salary costs can be as much as 75 percent of wages in the first year, 50 percent in the second, and 25 percent in the third. At the close of fiscal year 1992, the number of people participating in the demonstration project had reached 153. Of these, 26 had started work with wages subsidized by the program. Each of the reemployed persons had been out of work and receiving disability compensation for at least 18 months; one person had been out of work since 1976. The average period since the original injury was six years.(3)

Despite the successes of these efforts, the federal government has not done enough to help injured workers make the transition from the compensation program to full-time employment. Reemployment efforts are sometimes hampered by the lack of qualified positions for the rehabilitated employees within their employing agencies. In the absence of rehabilitation services or reemployment assistance, potentially productive people may draw disability benefits for the rest of their lives. With some adjustments in program emphasis, employees can be retrained and significant future dollar savings can be realized.

Action

Authorization for the Periodic Roll Management Project should be expanded for all 12 FECA field offices in fiscal year 1994, and the four-year Assisted Reemployment Demonstration Project should be extended.

This congressional action would expand the current program, which has already proven its success, to all FECA offices, and it would extend the use of wage subsidies as an incentive for hiring occupationally disabled federal employees.

Implications

By expanding this project now, instead of waiting until the end of the four-year, four-office demonstration project, thousands of people could return to productive careers. In addition, the federal government will demonstrate a commitment to the general intent of the Americans with Disabilities Act by focusing on the rehabilitation aspects of this program and the accommodations made to better match disabled workers with jobs.

Fiscal Impact

Through reemployment and benefit adjustments for occupationally disabled employees, the federal government can realize a cumulative net savings of approximately $126 million by fiscal year 1999. Combining this with the projected savings from the ongoing four- office demonstration project will bring the total net savings to more than $280 million by fiscal year 1999.

Implementation of the recommendation will require an additional 105 four-year term employees for the Office of Workers' Compensation Programs at a cost of approximately $8 million a year. In addition to the benefit savings already described, costs incurred to expand the program could also be partially offset by an increase in income tax revenue derived from the taxable incomes of workers who are reemployed as a result of the project.

Staffing could be accomplished using term employees who are terminated when case reviews are completed, or after four years. These staff do not become permanent federal employees.

 Budget Authority (BA) and Outlays (Dollars in Millions) 
 *******************************************************
 Fiscal Year
        1994     1995     1996     1997     1998     1999     Total
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 BA     $0.3   -$28.0   -$30.3   -$21.3   -$23.2   -$23.2   -$125.7

Out- lays $0.3 -$28.0 -$30.3 -$21.3 -$23.2 -$23.2 -$125.7

Change in FTEs 105 105 105 105 0 0 0

Endnotes

1. Nordhlund, Willis J., A History of the Federal Employees' Compensation Program (Washington, D.C.: U.S. Department of Labor, Employment Standards Administration, Office of Workers' Compensation Programs, April 1992), p. 14.

2. See U.S. Department of Labor, Office of Workers' Compensation Programs, Rise in the FECA Disability Roll (Washington, D.C., July 1993).

3. Memorandum from Cari M. Dominguez, Assistant Secretary for Employment Standards, to the Secretary of Labor, Washington, D.C., October 6, 1992.

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