Justice Reform: Prevent 2nd Class U.S. Citizens - WORKERS' INDEMNITY AND GUARANTY PLAN

Pass Federal Legislation Authorizing Federal and State Worker’s Indemnity and Guaranty Plans to help eliminate discrimination against workers with criminal records. This discrimination creates permanent class of Second Class U.S. Citizens, leading to continual poverty and high recidivism rates

Prologue: Justice Reform is difficult because it would take years to sort through the millions of cases, laws, decisions; and to investigate who has suffered injustices due to corruption or miscarriages of justice by law enforcement or the criminal court system. In the meanwhile, millions of U.S. citizens continue to suffer as Second Class Citizens, live in poverty, and are denied right to be gainfully employed. This proposal would be the first step towards long-term criminal justice reform.

Objective

To create a Federal program that authorizes and backs up Workers’ Indemnity and Guaranty Plans across all 50 states. These plans would be similar to Workers’ Compensation Plans and would insure employers, workers, and all related Third-Parties against damages and liabilities that might arise associated with hiring workers with previous criminal records, with appropriate time limit restrictions for violent crime and repeat offenders.

Background

The biggest cause of criminal activity and poverty in the United States is that persons with criminal records are by and large unable to be hired due to background checks, and employers who are unwilling to hire workers with any criminal background. On the employer’s side, there is little legal protection due to potential damages that might be caused by hiring workers with prior records. Employers perceive that they would be required to assume unlimited liability for the risk of hiring workers with a prior record. This, in turns, creates a large permanent group of Second Class U.S. Citizens who are regulated to a life of poverty and low-paying jobs. The Federal Department of Justice (DOJ) statistics estimates that over 70 million working age adults have some sort of prior record.

Policy Recommendations

  1. That the United States Federal Government establish Federal/State framework to guarantee employment opportunities for previously convicted workers while limiting employers’ liabilities and providing protection for all Third Parties

  2. Previously convicted workers have no legal rights to employment
    • Employers can legally discrimination against workers with records
    • These workers have no legal rights or protections to gainful employment
    • This condemns many of these working age adults to a lifetime of poverty and encourages them to continue to lead a life of crime as many of them are denied the opportunities for gainful employment.

  3. Create a federal program that helps insures the rights of workers with records (referred to as “Qualifying” Workers) to employment and limits ability of employers to discriminate hiring based on background checks. In exchange, employers would be protected from, and received significant limits on liabilities associated with hiring workers with prior criminal record:

  • Federal government authorizes and supports funding mechanisms to establish insurance program(s) that operates similar to an “Inverse” Workers Compensation program
  • Prohibits employers from denying employment based on criminal record (or limits the number of years since incarnation for violent offenses)
  • Create no-fault liability for employers who hire “Qualifying” workers with prior convictions
  • Plans would provide protection to cover losses or other damages sustain by customers, fellow workers, vendors or other third-parties due to employers hiring Qualifying Workers. Injured parties would be covered for the following:
    a. Medical expenses related to any injury
    b. Reimbursement of direct financial losses caused by or related to Qualifying Worker’s employment activity
    c. Loss of income and awards for damages
    d. Retraining and continuing education

4. Proposed Plan Features

  • States would establish Workers’ Indemnity & Guaranty (WIG) Plans
  • Legislation would authorize and support the creation of State Agencies and Self Insured Plans. States would be allowed the option to authorized Third Party Insurance (TPI), but TPI must operate as a Non-profit Organization (i.e. mutual or similar type organization).
  • Federal and State governing and regulating boards would comprise of individuals from government, business, and qualifying workers covered by a Workers’ Indemnity Plan.
  • Participating Companies’ and Government Agencies’ job applications would “ban the box”.
  • Companies or Government Agencies could be exempt from Workers’ Indemnity Plans by petition or by Federal regulation, but would pay an annual assessment to Workers’ Indemnity plans to underwrite the cost of such exemptions.
  • Companies and Agencies would still do a background check after job offer, but would be prohibited from denying employment for most convictions, or limited the numbers of years since incarceration for violent crimes
  • If a new hire has a positive background check for non-excluded crimes, Qualifying Worker would automatically be enrolled in Workers’ Indemnity Plan
  • Only workers with positive background check would be included in the WIG coverage (i.e. “Qualifying Worker”)

5. Proposed Startup Funding Sources

  • States Agencies would establish initial Reserves through issuing Agency Bonds
  • Self-insured companies or employer groups would contribute capital to establish and fund Captive Insurance entities
  • Non-profits and Mutual would establish Reserves through Contributions
  • Investment income in these plans would build Reserves and pay back Bond Funding principle and interest
  • Qualifying Workers would contribute required payments via direct payroll deduction.

6. Ongoing / Operating WIG Funding Sources

  • Qualifying Workers would have automatic paycheck deductions. Payments/direct payroll deductions that would be in 2 parts:

  • a) Part A: A Premium rate based on the plan’s historical experience, up to 10% of Qualifying Worker’s wages and salary. Premium rates would scale down for each year credited to Qualifying Worker for having a clean record, and based on historical plan experience.

  • b) Part B: Payments would be credited to a separate Safety Reserve to guarantee Qualifying Worker’s continued compliance, starting at 15% of their annual wages and salary. Workers would be penalized by forfeiting a percentage or all of their Safety Reserve if convicted of a repeat offence.

  • Safety Reserve (Part B) would be calculated as follows:

    a. Qualifying Worker’s Part B payments would be credited to individual worker’s separate account

    b. Minimum annual contributions
    First year - 15.0%
    Year 2 - 13.5%
    Year 3 - 12.0%
    Year 4 - 10.5%
    Year 5 - 9.0%
    Years 6 & 7 - 7.5%
    Years 8 to 10 - 6.0%
    Years 11+ - 5.0%
    Annual Percentages could be higher based on actual rating experience.

    c. Maximum contribution would not exceed 250% of current annual salary and wages (Max cap could vary by state). Upon reaching age 62, 65, or 70, Qualifying Workers are eligible to receive monthly retirement payments based on the balance in their separate account.
    d. Interest income would also be credited to Workers’ Separate Safety Reserve.
    e. Qualifying Workers already employed would be grandfathered in and exempt from Workers’ Indemnity Plans as long as they remain at their current job and current company. If existing or new Qualifying Workers changes jobs and/or companies, they would be enrolled in the Workers’ Indemnity plan. However, the plans would credit qualified workers prior years’ clean working experience in determining rates to be applied.
    f. States would have the option for companies to receive credit up to 25% of Worker’s (Part A) premium rate based on above average percentage of Qualifying Workers hired.

For inquiries or questions regarding this advocacy, please reach out to Zachary Smulski, who is serving as the spokesperson for this policy. You can contact him directly on this platform under the username “ZacSmulski” or via email at zacharyjunk21@gmail.com.

Interesting concept, this is a more balanced approach than simple “ban the box” approaches, where the employer is basically forced to hire the person and carries all of the liability if something goes wrong. I worry that having this plan take 50% of an employee’s wages (25% part A, 25% part B) is going to put someone making $15.00/hr in a position where they can’t survive. I don’t see an obvious solution, having the employer pay creates a disincentive to hire these folks and the government is broke so they can’t pay. Needs more thought.

Should certain jobs simply be off limits forever? For instance if someone is convicted for embezzlement should they never work in accounting / book keeping? Same with securities fraud / securities and computer hacking / IT. But once we start fencing off careers vs past crimes it gets real complex.

Steve,

Thanks for the feedback. I believe you misread the percentages. Part A Premium would be up to 10%, and Part B reserve would target 15%. So the all in total deductions in wages, to start, would only be 25%. Then it would drop every year for having a clean work record, so it acts like built-in raises. Also remember that the Part B goes into the worker’s account, so they retain funds like a 401k, but it’s restricted and they can not take it out until retirement. Also keep in mind state law restrict wage garnishment to 25%, so realistically, it can not go any higher than 25%. $15/hr. would get cut $11.75. That’s tough, but better than no job at all, and they get raises every year they stay at it.

Should certain jobs be off limit? It’s one reason why I put in exemptions either by Regulation or by petition. But I have never seen a study that reports that formerly convicted workers have a higher rate of theft or misconduct than employees with no record. I seen one study that show formerly convicted workers have greater loyalty and work harder for employers who hire them. Admittedly, this is a small study and involved only small businesses, primarily because these were the only companies that would hire them. That is why I put in the petition part, because I wanted companies to prove statistically that there is a greater risk in hiring a formerly convicted workers vs. not.

And with these plans, we can finally collect statistics that would show the actual rate of incidents of workers with, and without prior records. Hopefully this clarifies things.