CA Governor Brown Backs Overhaul of Workers’ Compensation

Although California business and labor negotiators have drafted a compromise agreement, the plan still faces some tough obstacles in the days ahead as it moves through the Legislature. On Friday, legislative leaders were cautious about endorsing the workers' comp changes and far from enthusiastic about the package's prospects.

"We will certainly consider any proposal that raises benefits for permanently injured workers," said Senate President Pro Tem Darrell Steinberg (D-Sacramento). "Before voting on a comprehensive package in these last two weeks of session, we need to scrutinize any proposal closely and ensure that significant groups of injured workers aren't harmed."

Assembly Speaker John Perez is heartened by the labor-business cooperation, a spokeswoman said, but limited his comments to saying "it's something worth considering."

Passage of a workers' compensation bill would be the first comprehensive revision of the law since 2004, and it aims to provide improved benefits for injured workers without raising premiums and costs paid by hundreds of thousands of small and large businesses, government agencies and other employers throughout the state.

The system covers 14.4 million employees and is supported by insurance premiums and direct payments from 864,000 employers. In 2010, the system provided medical care and compensation to about 530,000 victims of job-related injuries or illnesses.

Also on Friday, an all-day meeting was held at the Sacramento office of the governor's Labor and Workforce Development Agency in which supporters sought to build support for the 280-page proposal and calm concerns that benefit cuts may be part of the package.

Word of the governor's support came late Thursday, when Brown's Department of Industrial Relations, the agency that runs the workers' compensation system, released a statement saying that the administration was backing a proposal negotiated by unions and large employers. The statement was unusual because Democrat Brown and his administration typically don't signal the governor's position on a bill until it's signed or vetoed.

"Representatives of labor and employers have been working vigorously to reform California's workers' compensation system before projected rate increases push California to a crisis situation," agency Director Christine Baker said. "The result of this work is a comprehensive reform proposal that protects workers and employers by improving benefits and ending wasteful litigation."

The overhaul, if it becomes law, would boost benefits to permanently disabled workers by an estimated $750 million that would be financed by $1.3 billion in savings created by changes in the law aimed at making the system more efficient and less litigious, Baker said.

Streamlining the state's cumbersome workers' compensation system, which includes dozens of special courts around the state, could have a major effect on virtually every California worker and boss.

Getting the last-minute proposal through the Democrat-controlled Legislature will be a challenge, lawmakers say. The details of the plan are only now leaking out and subject to change. The Assembly and Senate must act on a bill by Aug. 31 -- two weeks away.

Already, opponents are sniping at the package, led by lawyers who represent injured workers. For the last week, the California Applicants' Attorneys Assn. and a related group, Voters Injured at Work, have been tying up lawmakers' phones with calls denouncing the emerging compromise put together by a handful of large employers, the Brown administration and the California Labor Federation.

Voters Injured at Work President Jesse Ceniceros said his organization fears that the proposal would drastically reduce the healthcare options and legal recourse available to people injured on the job.

The attorneys and Ceniceros argue that the proposed changes in permanent disability benefits would have unintended consequences and would take money out of the pockets of many injured workers. Friday's negotiations are aimed at calming the opponents' fears that benefits might be cut, participants said.

Still, the opponents face formidable foes if California's potent labor and business lobbyists unite behind a package with Brown's support. The workers' compensation deal came out of months of talks between labor and negotiators for Safeway Inc., the Walt Disney Co., UPS, Kern County organic carrot grower Grimmway Farms and some public school districts.

In the last week, the talks expanded to include the California Chamber of Commerce, the California Manufacturers and Technology Assn., insurance companies and trade groups such as the California Retailers Assn. and the California Restaurants Assn.

Insurers, though they haven't formally endorsed the plan, said that, so far, they have found little to object to in the compromise. Manufacturers said they would support any proposal with "proven cost savings" and anticipated taking a formal position on the measure next week, when it's expected to be formally introduced in the Legislature. The chamber also has not taken a formal position on the package either.