Statewide Issues

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Statewide Issues

The Peninsula Builders Exchange, through GSBE, the statewide association of builders exchanges, participates in representing our industry in Sacramento.

	Who Employs Temporary Workers?
	Trades Education
	Lien Law Changes
	Worker's Compensation
	2002 Summary

Temporary Worker Status
AB 2816 (Shelley) - For purposes of the workers' compensation law, would provide that a licensed contractor shall be the exclusive employer of an individual and solely required to secure the payment of workers' compensation for that individual's employment if the licensed contractor enters an agreement with a temporary employment agency, employment referral service, labor contractor, or other similar entity for the entity to supply the contractor with an individual to perform acts or contracts under the contractor's license and the contractor is responsible for supervising the individual. Assembly Insurance Committee, 4.24.02. This bill would make temporary workers the responsibility of the contractor using them rather that the temporary agency they actually work for - Expect amendments.

Trades Education
There is a shortage of skilled trades people in California. Without a supply of skilled labor construction will become more difficult and more expensive. The legislature will not do much in a deficit year to increase the number of young people who choose trades as a career. Some of the issues are:

Young people are not considering trades as a career
The number of "shop" classes offered by schools has fallen by about 40% in ten years
The construction industry does little or nothing to publicize career potentials
High school counselors are not aware of trades career paths

Proposed solutions include funding curriculum development, funding high school trades programs and publicizing trades as a career path. We are supporting any legislation which would achieve any of the above goals.

Budget Allocations for Education as of 7/1/01
The Budget contains a mere $26,000,000 identified for trades education (CTE = Career/Technical Education. The allocations are as follows:

$5 mil for Information Technology
$8 mil for CTE
$10 mil for ROC/P equipment
$ 3 mil for ROC/P data collection

Lien Laws
Mike Honda has been spearheading a drive to change California's lien laws so that home owners would have protection against liens from suppliers and sub contractors. This would be a substantial change to the existing law and may take away one of the best collection methods available to contractors. Proposals are currently being considered by committee and there may be alternatives which would offer some compromise. This issue will probably take some time to reach the point where proposed legislation emerges.

The issue is being studied by the California Law Revision Commission. After about a year of study here is their first cut on changes:
A) Only home improvement rules are being changed for contracts less than 100K
B) No lien for amounts paid to prime by homeowner
C) 50% bond on all contracts over 10K
D) Under 10K no liens allowed

The actual proposal is much more detailed and can be read at www.clrc.ca.gov there will be a comment period starting in September and you can address your concerns to:

If you have an opinion contact:

CA Law revision
400 Middlefield Rd. Room D-1
Palo Alto, CA 94303
650-494-1335
commission@clrc.ca.gov

Worker's Comp. Insurance

Davis signs comp bill into law 2/19/02 - Labor pressure and a coming election caused Davis to sign the new comp bill into law (AB 749) The bill will increase benefits by 22.7% in steps through 2006. California has the the 49th lowest compensation benefits but we pay among the highest rates. What's the problem? Its not the rate, its the run away medical costs and a court system which favors the claimant to the extent it is almost impossible to defend a false claim. Everyone wants injured people to be cared for and receive adequate compensation, but no one is willing to take on the doctors and the court system. Read below for background.

Update as of 1/10/02
At the strong urging of organized labor, get ready to see quick action of a workers' compensation benefit increase bill. As you will recall, the Governor has vetoed three previous benefit increase bills sent to him by the legislature. Business has opposed past benefit increase bills because they were too expensive and did not contain sufficient off setting reforms to control costs. The rumor --- and a very good one - is that labor told the Governor: no workers' compensation benefits increase bill, no endorsement. Look to see SB 1156 (Burton) amended next week and the bill getting to the Governor's desk in short order. Developing …

Davis has vetoed SB 71 for the third time. According to our lobbyist, Kevin Pedrotti here is the status as of 12/14/01. Senator John Burton and Labor organizations have made good on their threat to file an initiative to increase workers' compensation benefits after Governor Davis' third veto of a benefit increase bill. The benefit increase would cost about $6 billion annually, almost twice as much as the various estimates for the vetoed legislation.

Technically speaking, two virtually identical initiatives were filed to give the sponsors several strategic choices. While substantively identical, one initiative would amend the state constitution and the other the Labor Code. The initiative amending the state constitution makes it harder to amend in the future, but requires 670,000 signatures to qualify, while the Labor Code initiative requires only 419,000 signatures. If the measures qualify, they will appear on the November 2002 ballot.

The "Fairness for Injured Workers" initiative would increase total temporary disability weekly maximums from $490 to $651, or 100% of the average weekly wage, whichever is greater. The average weekly wage is $792, and the estimate for 2003 is $857. The Workers' Compensation Insurance Rating Bureau estimates the benefit changes will increase benefit costs by almost 40 percent. The initiative also includes a cherished plum for labor: automatic adjustments for labor. This provision essentially allows labor to get annual benefit increases without having to negotiate for reforms in the Legislature.

The $230 maximum weekly permanent disability benefit is increased to two-thirds of the temporary rate. This would more than double the top rate. Maximum death benefits would also increase by 50%. The initiatives contain no reforms whatsoever, as might be expected of a labor sponsored initiative.

The initiatives, if successful, would take effect January 2003 instead of 2004 as provided by SB 71 (Burton), the last vetoed bill. Labor will be sure to tout the fact the benefits provided by the initiative will raise California's rank from almost last to the middle of the other states. However, on a per capita basis, California pays more in claims than all but one state, highlighting the need for system reforms to accompany the equally needed benefit increases.

The initiative is sponsored by the wife of Steve Duncan, who is the lone survivor of the 1999 Tosco refinery fire. The Duncans have been active in lobbying the Legislature to pass a benefit increase, and Steve Duncan has become a symbol for California's inadequate benefits for seriously injured workers. Contract workers who were killed in the accident reportedly received $21 million settlements. Mr. Duncan, who suffered permanent and critical injuries, attempted to sidestep the "exclusive remedy" doctrine for workers' compensation in court. He was limited to workers' compensation benefits that provided only a fraction of his $50,000 wages. Tosco recently settled the litigation for an undisclosed amount.

The initiative does not forestall a legislative compromise on a benefit increase/reform bill. Labor will most likely withdraw the initiatives if a compromise bill is enacted early in the 2002 legislative session. However, nobody has made the first move towards a compromise. Governor Davis recently released his view of what compromise language would look like, saying he hoped to enact it quickly. The language was merely recycled from the Governor's proposal submitted during the final days of the 2001 legislative session and roundly rejected by labor and Democratic legislators. Senator Burton and labor will most likely take the position they will not negotiate against themselves, hoping the Governor will feel pressure to move towards their position.

The success of an initiative is not a foregone conclusion despite the heartbreaking situations of the seriously injured workers who will be involved in the public campaign. The California Chamber of Commerce and other employer groups, who are expected to dig deep into their pockets, will label the initiative a "job-killer." They will be able to make much of the fact the initiative increases benefits significantly for workers' with temporary minor injuries without reducing litigation and all the hangers-on that feed off the system. The increasing troubles in the workers' compensation insurance market and the fragile economy may bring out a conservative bent in voters. Democratic legislators will also try to push the Governor and labor closer together for a legislative solution, preferring labor's campaign funds go into their coffers instead of an expensive initiative.

Summary of 2002 Outlook as of 1/10/02
The second year of the 2001-2 session began this week in what likely will a very difficult year. A number of major items face policy makers, including a $12 billion (yes, billion) budget deficit to be dealt with. Couple this with an election year for all statewide office holders and 100 of the 120 legislators either termed out, running for a new office or running in newly drawn district, one might wonder just how much will get done this year. After two-year bills are dealt with in January, the pace will slow until after the March primary. The new bill introduction deadline is February 22 and unless a bill contains an urgency clause, it must be in print for 30 days before being eligible for consideration.

On Thursday, the Assembly unanimously elected Assemblyman Heb Wesson (D- Los Angeles) the new Assembly Speaker. Wesson will actually take the reins of the job in early February. The 50 year old Wesson worked as a staff member to several powerful L.A. based politicians prior to being elected to the Assembly. Wesson is extremely well liked by his colleagues and members of the third-house that has been helpful in his abilities to raise large sums of campaign contributions. In addition to politics, Wesson is passionate about golf. With a change of Speaker will come a wholesale change in committee chairs and members of leadership. All of this a part of a term-limited legislature. These changes will be reported when made official.