(WA) Firms can no longer take life insurance on workers

[Newsjock]

http://seattlepi.nwsource.com/business/223839_corporateinsurance12.html?dpfrom=thead

By CANDACE HECKMAN
SEATTLE POST-INTELLIGENCER REPORTER

Companies statewide will no longer be allowed to secretly take out corporate life insurance policies on their rank-and-file employees under a law signed this week by Gov. Christine Gregoire.

Through a practice critics call "dead peasant insurance," many companies, particularly large ones, had bought life insurance policies on workers without telling them. The companies then collected the death benefits, often long after the employee had retired or left the company.

In the past, employees' families never knew about or received any of the benefits from corporate-owned policies. Lawmakers began questioning the ethics and legality of such practices after a highly publicized legal battle in Texas over Wal-Mart's corporate-owned policies.

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[Up2Late]

1. Why was this EVER allowed?

:mad: :nuke:

[Erika]

2. Employers could actually profit from the deaths of employees

No kidding.

[TahitiNut]

5. Yep. A weak OSHA can pay off. How about the Iraq mercs?

Sick, huh? That's what having only one objective (profit) does to an organization.

[Daphne08]

3. Dead peasant insurance?

Now, that is sick. :mad:

[expatriot]

4. This has been on "Ring of Fire" a few times...

Not this new WA law but discussion of dead peasant policies.

[Up2Late]

6. And the Best part is, Dead Peasant Insurance is LOTS Cheaper...

...than Health and Dental Insurance, PLUS when they Die from lack of Medical treatment, it pays off hundreds of thousands of Dollars!

So Everyone Wins!
:sarcasm:

[Xithras]

7. Hey, I have life insurance on my employees...it's not that creepy.

FYI, this can be an important tool for small businesses. In my business, where we only have a handful of professional employees and everyone has a long list of job responsibilities, suddenly losing an employee would cost the company a lot of money and put our continued existence in peril. Each of my employees is insured at $75,000 under the assumption that this money will go to recoup lost revenue, pay any performance penalties that the employees loss may cause, and train a new employee to fill the now vacant position.

Of course, all of my employees ARE aware I have this (I also offer them personal life insurance policies for the same amount at no charge to them) and I do get their consent beforehand. Not because I have to, but because to do otherwise would be improper.

Why big corporations would do this, and why they would do it for replaceable factory workers, is beyond me.

[happyslug]

8. Because their can.

The intention of permitting Employers to insure their employees was in cases like your, you are dependent on these employees and if one of them should die you would suffer a financial harm.

The problem was the Courts (and this is court made law NOT Statutory law) never put a restriction on the right to insure an employee DEFERRING TO THE LEGISLATURE. In most states the Legislature had more important things to do (translation, no one was lobbying the Legislators to change the law). As to the Courts, the only restriction the courts impose was did the employer have something to protect? This came out of the cases where someone insured a bum, who their had no connections with, and then killed him for the insurance money. That act was ruled to be illegal, but only after it was done and the insurance company refused to pay off. The Courts then had to make a ruling that you have to have an insurable interest in someone to get insurance on that person, but no other restrictions were introduced.

Now this was NOT a problem, most employers did NOT insure their rank and file employees. Why insure a minimum wage employee? The problem was in the 1970s with modern computers you could track not only existing employees but old employees. Furthermore the Insurance was Cheap for the employer to obtain (The actual insured amount was rarely over $10,000). Historically these were rarely collected on so the rates were cheap. Thus employers like Walmart started to insured their employees and when one of them died (Even years AFTER they were no longer an employee) the employer would find out about the death and collect. If you are large enough this can become a nice source of Income (Walmart is the best known company for this practice, since it is the single largest non-governmental employer in the Nation).

Thus such insurance was permitted for most state's legislatures just do not want to address this issue.

[Up2Late]

14. Wal-mart does this?

Is this one of those forms that, if you don't sign it, they won't hire you?:shrug:

[happyslug]

15. No, they just insure you.

In most states there is no law that state that your employer HAS TO INFORM YOU THAT THEY ARE INSURING YOUR LIFE. I suspect ALL states but I am NOT willing to make such a blanket statement (Some state like California or Washington may have passed a law requiring employees to be informed but I know of no such law).

[w4rma]

12. It is very "creepy" when Walmart does it. Walmart works to lower their

employees life spans by keeping their wages low, forcing them to work an additional job, and making the Walmart health insurance much too high to afford for the vast majority of their own employees.

Walmart workers will, in general, have a much lower lifespan than Americans in general.

[Up2Late]

13. I think this law and disgust is mostly aimed at Major Corporations

I doubt this law has any "loopholes" for small businesses, which is about par for the course (the little guy gets screwed).

[Up2Late]

9. Kick n/t

:kick:

[bushisanidiot]

10. More Repuke Moral Values: Big Business placing bets on employee deaths

it's like going to vegas.. only you KNOW you're gonna win in the end 'cuz everyone dies eventually.

[napi21]

11. Co's I worked for did this for Sr. execs, but it was never secret.

The Co. takes out the Ins., and pays the premium, and is designated the beneficiary. If some were doing this in secret, that's wrong! If they are doing it to help support Co. profits for a period of time when they've lost a critical member of mgmt, I don't see anything wrong with the idea!