Employers threaten to leave California

[Judi Lynn]

Article Published: Wednesday, August 27, 2003 - 6:56:07 PM PST


Employers threaten to leave California
By Steve Lawrence, Associated Press

Employers warned Wednesday of job losses and companies fleeing the state unless lawmakers find ways to sharply reduce California's skyrocketing workers compensation costs.

"If changes aren't made what we will have to do is move work out of state,' said Howard Chambers, a Boeing Co. vice president who says he faces pressure from the federal government to reduce the cost of planes Boeing makes for the military.

Another large employer, Costco, said it was considering moving some of its support facilities out of state and taking those workers with them because of high workers' comp costs.

"We have more cost for workers' compensation in California than we do in the balance of the 36 states where we do business,' Jim Sinegal, the warehouse store chain's president and chief executive officer, told a special legislative committee working on the workers' comp problem. (snip/...)

http://www.sgvtribune.com/Stories/0,1413,205~24512~1595358,00.html

[Systematic Chaos]

1. Worry not! Ahhhnold is here to save the day!

:puke:

[Democat]

2. We will terminate those workers comp claims

Vote for The Gang Bang Governor, order a beef taco!

[JackSwift]

3. Why can't they just find another

insurer? Comp benefits in California are ridiculously low compared to the cost of living.

[Newsjock]

4. Boeing B.S.

They just pulled exactly the same crapola in Washington state to muscle the Legislature into massive tax breaks:

http://seattletimes.nwsource.com/html/localnews/134918329_taxlocke06m.html

Wednesday, June 11, 2003
Locke to woo Boeing with bold tax cuts

OLYMPIA — Gov. Gary Locke told legislative leaders last night his plan to win Boeing's new factory includes a package of tax cuts so big it will make them gulp.

... Kiga said the study compared the cost of doing business in Washington with other states known to be making pitches for the 7E7 plant. He said Washington is 20 to 25 percent higher than the others. At least seven states are competing for the jetliner work.

... Already, lawmakers have been working to meet Boeing's demand that they rewrite the state's unemployment-insurance system and make changes to the workers' compensation system.

Glad to see another state putting on the kneepads for Boeing.

[dfong63]

5. didn't boeing already screw WA?

... moving a bunch of jobs out of state, despite massive incentives?

big business is so fickle, it hardly seems worth trying to meet their demands. today it's workers comp, tomorrow they'll try to blackmail us again on some other issue, and next week - they'll be running to mexico or taiwan.

[Bruce McAuley]

14. Boeing is evacuating Wash. State as fast as they can.

Even though the legislature got down on kneepads and passed a massive overhaul of unemployment compensation just for Boeing, they continue to lay off people right and left in Washington State. Washington will probably lose the 7E7 competition, AND the 100 aircraft order for the military tankers, so expect the economy of Everett-Seattle to diminish in the near future. Add to that the fact that they can't get cheap aluminum here any more since power rates have gone up, and Kaiser aluminum is shutting its smelters down here in eastern Wash.
Boeing will be assembling aircraft in China within 10 years, my bet.

Bruce

[Heddi]

16. Ex-Boeing Workers

are FLOODING the technical schools in the area---which is good, I guess....AND they're getting 100% of their tuition paid through the state, which is good too, I guess....


Except that people like me, who are also out of work, and who are also attending school to enchance our skills, don't get ANY tuition reimbursement from the state. I get scant financial aid as it is, and seeing that tuition at my school is increasing starting in the fall (September) and federal financial aid is getting cut, I see it as the ultimate screw-over for all people involved.

Well, except for the Ex-boeing workers.

Maybe I'm just a little miffed that I'm unable to get into a nursing program at ANY school in western washington because of the influx of Ex-boeing workers who have flooded the schools in the area and are taking up spaces that people like ME, who have been going to school LONGER THAN THEY"VE BEEN LAID OFF.

They get preference for admission into classes. They get preference for admission into programs---all of which are VERY competitive.

I registered for a highly-sought-after Chemistry Class. I reigstered on the 2nd day of registration and was #14 on the waitlist.

A friend of mine, an Ex-Boeing employee, registered THREE DAYS BEFORE CLASS STARTED and she was PUT INTO THE CLASS---which is BULLSHIT because she should have had to go on the waitlist like everyone else.

I have much sympathy for people who have lost work, and I guess because Washington State (esp. Western Washington) has such a high rate of BOeing Employees, and Ex-Boeing Employees, it's a bit skewed out here than it would be in other places----

I know that boeing has laid of THOUSANDS of workers, and is continuing to lay them off with each passing month---but I don't see why they should get preference over OTHER people who have been laid off, fired, or had their jobs outsourced or just completely done away with.

Make it fair to all, or in the end, it's fair to none.

[Wednesdays]

6. Translation:

"Pass the laws and elect the politicians we tell you to, and no one gets hurt."

[Kbowe]

7. If every corporate CEO would take a 30% pay cut

they would have enough money to fund employees' comp. They will move to other states, keep CEO pay and benefits needlessly high and pay the workers in the new states minimum wages and bare workers' comp! This just shows you how greedy, unpatriotic, and unfair these corporations are. Especially when you consider that the OWNERS are mostly foreigners living abroad.

[bemildred]

8. Get the hell out.

Who needs you and your crappy defense department jobs?
We need employers that give a crap about their community.

[DBoon]

9. I know a comp attorney

A big prob is that the premiums are based on the size of the workforce, and this is based on the honors system. Many employers, (particularly small sweatshops), lie about the number of workers to evade taxes. When their workers file claims, it throws the premium/benefits ration out of whack.

Honest employers (or ones who can't lie about their payroll size) are paying for a lot of dishonest ones.

There are also many small sweatshops that never pay into the comp system at all (illegally I might add). When one of their workers files a claim, they just fold up and vanish.

Yes, com insuranc premiums are way too high. No it isn't the fault of workers trying to get compensation.

This whole problem would vanish if we had a real health universal care system. Workplace and non-worplace health issues would get treated just the same.

[AP]

10. They should move out and be replaced with corporations which

actually pay property and income tax.

[nn2004]

11. Replaced by whom?

If it's more profitable in another state then which do you think they'll choose? Safety nets are not free.

[bemildred]

12. Fine, let them go there.

Good luck to them.
They don't run the state, we do.
If they don't like it they can leave.
It's a free country.
You let these morons bully you and there is no end to it.

Edit: Most of these aerospace and defense corps. left
ten years ago; high-tech more than made up for it. Nobody
will miss these bozos.

[hang a left]

25. fuck em

they are 2 years from going to Bombay anyway!!!!!!!!!!

[Ernesto]

13. For my whole life

I've heard that line o shit.... Remember folks, their just ain't no place like California. Say what you want about our current Repuke inspired problems, we are the envy of the nation...

[Robin Hood]

15. Perhaps, if you assholes provided a safe work environment,

And not worked your people ragged. Your workmans comp insurance would not be so high.

[Xithras]

17. Do you people know ANYTHING about this issue?

Where the heck did this "business=evil" attitude come from?!?! A very good friend of mine owns a small company and up until about a year ago had about 150 employees (he leases hi-lifts and other construction equipment to contractors, and most of his employees either maintain or deliver the equipment to client sites). This guy is a good Democrat, treats his employees fairly, gives them FULL medical and health benifits without copays, and is in every way the kind of employers we WANT in this state. And yet, even though they have only had TWO major claims in 10 years, his workers comp rates have risen from $120,000 a year in 1998 to $750,000 in mid 2002, and he was advised that he'd be over the $1,000,000 mark by mid-2004.

He isn't some fat-cat that can take a pay cut, the profit margins in his business aren't that wide to begin with, and there was no way for him to raise prices without losing all of his business, so what was he supposed to do? What he did was LAY OFF all 40 of his delivery drivers and contract that job to an outside trucking company. Those 40 hard working people were not made unemployed because of Bush, or because of a downturned economy, or because of a tech bubble bursting, or because of corporate greed...they are unemployed because our states Workers Comp system is completely broken. We charge employers the highest rates in the nation, and yet give the workers the smallest payout. We are driving the GOOD employers out with the bad.

Fixing the broken workers comp system is the biggest economic problem in California right now, and the relucance of the Democratic party to seriously address the issue baffles the hell out of me. Every time we lose an employer, our unemployment grows. Every time unemployment grows, less money flows into state government. The less money that flows into government, the more programs that have to be cut. Keeping people EMPLOYED and TAXPAYING has to be the BACKBONE of any socially progressive government. You can't raise taxes on people with no income, you can't increase sales tax if people don't have money to spend, and you can't implement a socially progressive tax system if all of the rich people and corporations leave.

As fixated as we all are on the Davis fiasco right now, I actually consider this a BIGGER issue, and yet nobody in our party wants to talk about it. Why exactly is that?

[Ernesto]

18. YES I DO

I just retired after 35 years in the very hazardous construction industry. I spent 14 years training apprentices. I witnessed the deaths of 2 men. I have a permanent dissablity from an on the job accident in '78. I worked with the tools, managed projects and worked on accident investigations........... The bottom line is: the "sky has been falling" for my whole working life. Yes it is expensive to injure people and it should be. ALL good construction companys and unions have very serious safety programs. The company that cuts corners on safety is doomed to pay higher premiums. TOO BAD. Companys that hurt people do not have a right to be in business PERIOD..... The tragedy of this repuke inspired California fiasco is that our state government is paralized. Workmans comp is typical of any program: it needs adjustment from time to time. Appropiate legislation will have to wait. The f*cking repukes should have thought about the consiquences of their wreckless behavior. (As if they care)

[Xithras]

20. This has NOTHING to do with "good " or "bad" companies

In 10 years, my buddies company has had TWO serious injuries. One was from an employee falling from a lift, and the other was a delivery driver involved in a major wreck. His company takes safety VERY seriously, and an accident rate of 1 every five years in an industry where employees are working with heavy equipment everyday is pretty impressive in my book. So why should HE be doomed to paying higher premiums? Why should his 40 ex-employees, none of whom had ever had an OTJ injury, be fired due to skyrocketing Comp rates?

The system doesn't need tweaking, it needs replacing...and it CAN'T wait. Davis needs to jump on this NOW an outline a plan to rework Workers Comp, keep business here, and therefore help the California economy. Davis WILL be recalled because the majority of Californians see him as an inneffective governor beholden to special interests. If he actually tackled this problem, and in so doing help the job situation, the state economy, and business, it just might improve the average Californian's opinion of him and save his seat. He needs to LEAD. Any politician should know that you don't IGNORE major issues before an election, you EMBRACE them. So far, I haven't seen Davis embrace much of anything.

[Ernesto]

28. For your information

Individual construction trades are rated per their inherent on the job risk. For example an iron erector's job is much more hazardous than a flooring installer's. So the iron erection contractor pays much more money.
It would make sense that your friend's safety record is not very good when compared to other equipment venders. SUCESSFULL (good) companys generally have good safety records when compared to their direct compitition.... BTW: construction workers would laugh @ the suggestion that the rental business is dangerous.

[nn2004]

19. Well said

This workers comp issue is much broader than a simple black and white dem/repub argument. One could run the safest company in CA and still get screwed by these outrageous payments.

[bemildred]

21. YES I DO!

I was born and raised here and I've been hearing this
crap about workers comp all of my life and it has
zipedeedoodah to do with why jobs are here or not, and it
has plenty to do with how injured workers get treated.

The comp system does has its flaws, but if these assholes
want to leave over that, then I say don't let the door hit
your butt on the way out. If they want to stay and work to
make the system fairer and more effective then fine, but they
can kiss my ass with the threats.

[nothingshocksmeanymore]

22. Yes I know about this

There used to be a "minimum rate" that kept comp carriers solvent. The State Fund is the largest comp carrier in the state. The minimum rate law was abolished which created more competition for comp business and competitive bidding but due to poor reserves set aside by amateur adjusters, many comp carriers went belly up.

In the mid 80's major reforms began being forwareded and between 1989 and 1993 MAJOR reforms were passed in the California Labr code. These reforms were passed without increasing temporary or permanent disability benefits to injured workers. The industry had certain groups lobbying such as the California Workers Compensation Institute and the California Manufacturers Assn. They floated statistics claiming that up to 50% of California comp claims were FRAUDULENT.

This led to the Workers Compensation Fraud Reporting act (Insurance code 1877 and forward)which among other things earmarked funds for district attorneys throughout the state to investigate and prosecute fraud. It also mandated that in cases where insurance carriers had evidence of fraud, rather than simply setting it forth as a defense in workers compensation litigation, they were mandated BY LAW to report it to the District attorney in their locale and funds were provided to investigate and prosecute.

The state also mandated that a program for medical treatment be created ..these programs were known as HEALTHCARE ORGANIZATIONS or HCO's. They were tied to health insurance providers (this is a rough outline so if I am not entirely clear...keep in mind the program is quite complex and takes up a whole section of the labor code)

The goal of this program was to give carriers greater control over medical care for greater periods of time..HCO's for the most part give the carrier control for 6 months sometimes more.

The reforms also had a caveat added by insurance carriers that a Workers compensation judge HAD to give the patient's treating physician the greatest weight in evaluating disability unless persuasive evidence existed to rebut the treating doc's opinion.
THIS WAS A SECTION OF THE CODE TH CARRIERS WANTED BELIEVING THEY WOULD HAVE MEDICAL CONTROL AND WOULD BE ABLE TO USE THEIR DOCTORS POSITIONS TO UNDERSTATE INJURIES THEREBY PAYING LESS MEDICAL TREATMENT AND LESS PERMANENT DISABILITY>

This backfired on them and each year they have attempted to get the eriod of medical control lengthened.

The reforms also led to a 500 BILLION dollar windfall profit for carriers, no increase in disability for injured workers and a reduction in the amount of QUALITY physicians willing to practice occupational medicine in the state.

In the mid 1990's a reporter from northern California by the name of Mary Fricker had written several PRO insurance articles about the reforms in her local paper. She began investigating the claims and won awards for her investigative reports.

She found workers often didn't get all their benefits even after their day in court. She further found claims of fraud inflated as the reporting of fraud by carriers as MANDATED BY THE LAWS resulted in less than ONE PERCENT of all cases even being CLAIMED BY CARRIERS TO BE FRAUDULENT and even fewer being proven.

The bottom line is many reforms were passed in favor of the carriers but little was done to limit what they could charge. Several Carriers went broke and their bills an cases had to be paid out by CIGA (California Insurance Guarantee Assn.) This money has NOT been recovered. In the meantime, those FEW carriers left writing in the state have BROAD authority as to how they RATE the risk of a given business and how they CLASSIFY the tasks performed by that business (allowing them to overstate risks)

We are living through the early 90's all over again. I have NO DOUBT employers will want to give injured workers tha shaft when what is necessary AGAIN IS INSURANCE reform..the carriers interests and the EMPLOYERS interests are not one in the same.

Many employers are self-insured but are so POOR at administering their own claims, they hire middle men. Allowing these employers to opt out of coverage by carriers who would actually do a better job has also created part of this crisis.

Hope I wasn't too long winded.

Careful what you ask for ;-)

I might add that as with ALL INSURANCES, the only time rates are reduced meaningfully for consumers (including industry as a consumer) is WHEN INSURANCE REFORM IS PASSED)

[Capn Sunshine]

23. The Problem is the COMPANIES

These monoliths are gouging us, much like the Pharmacos. BECAUSE THEY CAN.

Rather than blame the victim (The "broken" Workmans Comp system), no one is standing up and questioning WHY the premium increases are being used to make up for their massive losses in the Bush market crash of 2001.

This is always the case with Insurance companies, if they don't get the return on capital they want regardless of the environment, they just get it any way.

Always have. Always will.

[nothingshocksmeanymore]

27. It is also much like energy dregulation..stacked in favor of monoliths

The comp deregulation allowed larger employers to opt out of coverage which forces higher premiums on smaller employers in order for carriers to remain solvent. Carriers make money on funds set aside in reserves which is actually an art form( for an adjuster to adequately reserve in the first place)

By allowing larger companies to opt out infavor of self insured, this reduces the sow of funds to the carriers thereby putting the burden on smaller businesses much the same way deregulating electricity was to give industry the power to shop for their power source and stick smaller consumers with the bill (not saying energy does that but that WAS the original goal and it IS what happened in workers comp.

The other factor is that an applicant attorney's fees in comp are tied to the level of permanent disability the injured worker gets whereas carriers are not limited in how they pay their attorneys...and since they can claim their legal fees are "workproduct" one never knows how much they spend litigating each claim.

They often stall where they should settle and are not held accountable.

Small employers too often band with large corporations when their interests are not the same.

Large corps can afford to lobby which often results in savings for them and a burden for the little guy.

i DO have empathy for the smaller employer in this but again would caution that until they get mad at carriers and go after INSURANCE REFORM since they MUST carry work comp insurance..then everytime the economy swings the wrong way they will get gouged and attacks will be made on workers rights.

[Capn Sunshine]

24. Let them go

The FIFTH LARGEST ECONOMY IN THE WORLD will find a way to compensate. Believe me.

The disinformation ou there on this subject is as deep as that on the power companies.

[shirlden]

26. My brother-in-law

owns a couple of transmission repair shops in California. When he told me he had to pay $.36 on the dollar for workers comp, at first I thought he was kidding. He was not. Compare that to my small business here in Ohio, where I pay 2 cents on the dollar. He said he has not turned a profit in two years because of this and is very seriously considering just going out of business.
California does have some serious problems, but I fail to see where a muscle-bound actor could be the one to lead them to sanity.

[Ernesto]

29. What nonsense!

I suppose his competition doesn't have to pay for the same coverage.... Oh wait now I get it! Everybody is driving to Nevada to get their trannys fixed...... Sounds kinda like the chimp: "it's somebody else's fault".

[nothingshocksmeanymore]

30. Ernesto please read my post..I don't know about 36cents on the dollar

but his post is essentially honest. Rates are higher for smaller businesses due to larger employers being self insured. California's law are very pro labor but comparing them to Ohio is rather unfair since ohio's program is GROSSLY tilted in favor of the employer.