Democrats, Republicans Prepare for Referendum on Workers’ Compensation Reform

As Gov. Arnold Schwarzenegger's (R) March 1 deadline for the Legislature to approve legislation to reform the state workers' compensation system nears, "battle lines are being drawn around the increasing likelihood" that reform plans will appear on the November statewide ballot, the Sacramento Bee reports (Chan, Sacramento Bee, 2/1). During his State of the State address last month, Schwarzenegger said he would seek to place a measure on the November statewide ballot if legislators do not pass reform legislation. As part of his "California Recovery Plan," Schwarzenegger in November proposed cutting up to $11.3 billion in funds from the state's $29 billion workers' compensation program, under which employers pay $5.85 per $100 of payroll -- the highest rate in the nation -- for coverage. Schwarzenegger's plan includes measures that would prohibit workers from receiving multiple disability payments for the same injury; require dispute resolution more frequently to reduce litigation costs; limit penalties paid by insurers and employers in medical bill disputes; and establish uniform standards for permanent disability (California Healthline, 1/8). With hearings on Schwarzenegger's proposal not scheduled until mid-February, lawmakers will have only a few weeks to discuss the "voluminous reform package and other major proposals" before March 1, and Democratic leaders "have been openly defiant, ... practically daring the governor to go ahead with a ballot initiative," the Bee reports.

Sponsors of three competing workers' compensation initiatives have agreed to support a measure sponsored by the Small Business Action Committee, which incorporates several of Schwarzenegger's proposed reforms and is expected to garner his endorsement if the Legislature does not meet his deadline. The groups have raised nearly $1.7 million during the past two weeks to fund their effort to place the initiative of the ballot (Sacramento Bee, 2/1). The sponsors -- including the SBAC, the Independent Business Council and Grimmway Farms -- need 598,105 signatures of registered voters to place the initiative on the ballot, and they anticipate they will have to spend at least $20 million to succeed in passing the ballot measure, according to Joel Fox, who heads SBAC. The California Chamber of Commerce and the California Manufacturing and Technology Association also have indicated they might support another initiative mirroring Schwarzenegger's bills. Allan Zaremberg, president of the Chamber of Commerce, said that pushing for workers' compensation reform would make for "an expensive war" during an election year in which it is already working on other initiatives, including one to repeal a law (SB 2) requiring some employers to pay for workers' health insurance. However, Zaremberg said the chamber has "no intention of shying from a fight," the Los Angeles Times reports (Lifsher, Los Angeles Times, 2/2).

The California Labor Federation, which represents farm workers, and the California Applicants' Attorneys Association, whose members are attorneys who represent injured workers, have pledged to work together to fight the governor's proposal and any reform plan that does not call for new regulations to the insurance industry. Last week, they unveiled plans for a "media blitz" to oppose the Small Business Action Committee's initiative, according to the Bee (Sacramento Bee, 2/1). However, some labor leaders confirm that they are holding low-key talks with unnamed companies to reach a compromise that might "head off a costly and risky initiative contest," the Times reports (Los Angeles Times, 2/2).

Additional information on SB 2 is available online.