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CA State Workers Compensation Fund to Lay Off Up to 1,800 Employees

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Posted on 07 Oct 2011

In an effort to streamline operations and cut expenses, California's largest workers' compensation insurance company plans to lay off almost a fourth of its 6,800 employees.

Tom Rowe, the president and chief executive of the government-controlled State Compensation Insurance Fund, announced Thursday that the company was overstaffed by approximately 30% and plans to let go 1,500 to 1,800 civil service workers by the second quarter of next year.

It's the first layoff at the San Francisco-based firm since the 1930s.

"The positions being eliminated are in areas where business processes have changed significantly enough that work has been substantially reduced," Rowe said in a companywide email. "We spend more operating the company than we do on benefits to injured employees."

The layoffs are expected to save the company about $350 million per year.

The century-old company was created by the California Legislature to act as an insurer of last resort for employers that cannot get legally required workers' compensation coverage from private sector insurance companies. Last year, it collected about $1 billion in premiums from approximately 150,000 employers representing 15% of the California workers' compensation insurance market.

State Fund officially is a state agency, staffed by government workers, but it operates as an independent company and does not rely on any funding appropriated by the Legislature or the governor. State Fund is governed by a board of directors, mainly appointed by the governor.


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