ON DECK FOR 2004
OC Legislators Target Workers’ Comp, Other Business-Related Issues
By CHRIS CZIBORR
Topping Gov. Arnold Schwarzenegger’s to-do list in 2004 is improving California’s business climate.
Last year, the democrat-led state assembly fell short in the eyes of businesses on a number of issues: A workers’ comp reform law wasn’t tough enough, companies said; a bid to reform the “unfair business practices” clause under section 17200 of the California Business and Professions Code died (the law has allowed for scores of expensive lawsuits aimed mostly at small-businesses); and a law that requires small companies to cover workers’ healthcare costs raised the ire of businesses.
The Business Journal earlier this month spoke with seven assemblymembers representing Orange County to see what business-related legislation they plan to support or oppose this year. Workers’ comp reform topped the list of nearly every one, including the sole Democrat.
The assemblymembers’ comments follow:
Ken Maddox
(R-Costa Mesa)
Workers’ comp is at a crisis point.
I spent the last three years fighting trial lawyers and trying to make California’s job market competitive with other states. Last year I was selected as the Republican lead on workers’ comp issues,sadly, the bipartisan committee only made baby steps. We tinkered around the edges. The Democrats wouldn’t push anything that wasn’t signed off by the trial lawyers. That’s not a way to craft meaningful reform to the system.
On 17200, Assemblyman Correa started to carry some reform legislation and was beaten about the head and shoulders and whipped into submission by the trial lawyers. I have many small minority-owned businesses in my district that have been hurt by 17200.
This year there may be some 17200 reform legislation, but I don’t expect it to go very far. The legislature is only able to focus on one or maybe two things at a time that are major issues, and this year the major issue is getting us out of the budget deficit.
Lou Correa
(D-Santa Ana)
Primarily I think we will continue to work on workers’ compensation. The measure we passed last year is starting to kick in, but I think there is some additional work we need to do.
I understand there are new carriers that have begun to bid for workers’ comp business here, which tells me that we may have turned a corner. Clearly we need to continue working on weeding out costs.
We will work again on 17200. We’ll go back and we will assess what needs to be done and what is possible at this time, given the political environment.
It looks like there will be ballot initiatives on 17200 reform for the November ballot. We’ll see if that presents us with a different environment.
We’ll look at whether that provided enough of a change in the political landscape. Maybe this will give the opportunity for legislative changes to move ahead. Otherwise we’ll have initiatives on the ballot and the voters will choose.
Tom Harman
(R-Huntington Beach)
Sen. Joe Dunn’s (D-Santa Ana) Senate Bill 796 is a ticking time bomb.
It allows employees, acting as private attorneys general, to sue for violations of the labor code. Employees can sue on behalf of themselves and on behalf of all other workers.
And there is a multiplier effect because the penalty is assessed for every pay period the violation took place multiplied by the total number of employees.
Take an aerospace company with 3,000 employees that failed to post workers’ comp rules in the lunchroom for one year. If a disgruntled employee sues and the company gets slapped with the standard $200 penalty times 26 pay periods times 3,000 employees, then the total fine is $15.6 million.
That bill became law Jan. 1. Already we’ve been having problems with private attorney general issues under 17200. We failed to fix 17200 and what happens? Dunn comes along and creates a private attorney for labor code enforcement. There’s no need for SB 796,the state Labor Board already handles this stuff.
Another key area is labor arbitration.
Former Gov. Gray Davis had vetoed Assembly Bill 1715, but I suspect the Democrats will try to bring it back this year. The bill limits the use of arbitration in employment contracts.
We don’t want to limit arbitration. We want to increase the use of it and make it more inexpensive, speedy and business-friendly.
The trial lawyers don’t like arbitration. They want to go to the courthouse and earn a bunch of legal fees and run up the cost on businesses and blackmail them into a settlement they don’t like.
Mostly it’s an anti-business world up here in Sacramento,it’s very difficult to find a business-friendly bill.
John Campbell
(R-Irvine)
The single biggest issue for business will be workers’ comp reform.
Identical bills have been started in both the senate by Sen. Chuck Poochigian (R-Fresno) and in the assembly by Assemblyman Abel Maldonado (R-Santa Maria), which is a strategy used to put pressure on each house.
The governor is telling the legislature to pass a reform law by March 1 or it goes to a November ballot. Those bills are supposed to deliver $11 billion to $12 billion, cutting premiums 50%.
They are getting signatures to prepare for the November ballot if they don’t get the bill passed in the legislature.
If Democrats hold these things up,if they don’t do real workers’ comp reform,and it winds up on the November ballot, then they will have to explain to voters why they didn’t want reform.
Workers’ comp reform that we had last year cut premiums 5%. Gov. Schwarz-enegger said he’s not interested in that level of reform.
There also will be a lot of activity in the area of tort reform,the governor has great interest in that and has a task force to deal with tort reform.
I think you’ll see some significant tort reform legislation, but I’m not sure which ideas they’re going to pick and run with at this point.
There is an initiative that’s been filed already on 17200 reform, funded by car dealers.
They put a bunch of money into that to qualify it for a ballot. It’s gathering signatures toward a November ballot initiative.
The governor also believes that energy costs in the state are too high and that is part of what is driving out business.
There are disincentives to build energy here.
Some of the energy expansion we can have can be in so-called green power. There will be some proposals and initiatives to help energy costs go down.
Gov. Schwarzenegger has a simple charge. He’s looking for things that will make California a better place to do business and create jobs.
Patricia Bates
(R-Laguna Niguel)
Workers’ compensation is the biggest issue facing the business community in California. The governor has set forth a call to action,I hope it’s heard by the majority party (Democrats) and that we will get action. If there’s no reform by March, then with the governor’s help and his resources it’ll be on the November ballot.
If it ends up on that ballot the issue will get more exposure to the general public, who will then have more of an opportunity to gain an understanding of how it affects their jobs and livelihood and public health.
Current proposals would allow for managed care programs to enter into the management of work or other related injuries that make you unable to work. There would be seamlessness between health insurance and the network of doctors that would provide discounted services for workers’ comp-related injuries. I believe there’s an open mind there now that the governor has spoken so strongly on this issue.
Business and Professions Code 17200 clearly is an area that needs reform. We’ve been unsuccessful in getting reform bills on this through. If we’re not successful then there is a ballot initiative on 17200 reform for November. That will be the right and immediate next step.
Senate Bill 2, which requires smaller business to provide healthcare for all employees, will be challenged as a ballot initiative. The law will hurt the economic engine of California, which is the small business sector.
A number of us are proposing reforms because SB 2 is a hindrance,not a help,to ensuring insurance coverage. It would take a lot of small businesses out of the market.
We want to get people back into the workforce, but if even small businesses are required to provide healthcare to part-time workers, there won’t be any job creation.
Lynn Daucher
(R-Brea)
Workers’ comp is of course at the top of the governor’s list, so it’s probably at the top of every Republican legislator’s list.
I was a joint author last year on Assembly Bill 1483, which would’ve improved physician training, required physicians to treat and evaluate injured workers and demanded that physicians be certified so that there is some continuity and understanding of what was allowable and what wasn’t. That bill did not make it.
My prediction is there will not be meaningful reform by the March 1 deadline the governor has set out,it’s almost a certainty that we’re going to have to go to the ballot.
There’s a ballot initiative on 17200,I’m a sponsor of that. The legislature has demonstrated they’re unwilling to grapple with these issues. The special interest groups have too much clout up here, so I think you’re going to see some things on the November ballot as the only way to make things happen.
To me, Senate Bill 796 is a bill waiting to greatly harm the business community. The labor code violations bill could even rival workers’ comp in terms of the negative impact it’ll have.
Gov. Davis signed that in July. There was a huge discussion on the floor. It took a long time to get the necessary votes to have it barely pass. So-called moderate Democrats were under a lot of pressure, and they caved,a few of them caved at the last minute. The next thing our caucus will be talking to the governor about is SB 796.
The new governor is smart in tackling workers’ comp first,I’m sure he’s aware the 17200 initiative will be voted on.
There’s a new sheriff in town, and I think we are going to see some openness to things. Gov. Schwarzenegger is doing everything in his power to work with the Democratic leadership. That’s a good first step. A lot of this has to do with relationships,he’s going to have a better relationship with those folks than Gov. Davis did.
That doesn’t make people automatically change their mind or their positions, but what it does do is allow them to search for common ground and compromise, and I’m a strong believer that if the desire is there to compromise and build consensus, then people can do that.
Todd Spitzer
(R-Orange)
The workers’ compensation system is driving business out of California. We need to produce substantial reform that will protect employees who are legitimately injured while at the same time preventing the rampant abuse and fraud that is currently present.
We must also look at positive reform to Business and Professions Code 17200. Last year, bills were introduced that did little to reform unfair competition laws,in fact they did just the opposite.
Thankfully these bills were defeated in the legislature. I am committed to working toward positive reform that helps consumers, not trial attorneys.
