Calif. Employers Could Face Higher Workers' Comp Costs

A study by the Workers' Compensation Insurance Rating Bureau concludes that public and private employers in California\r\ncould face an additional $4.69 billion in workers' compensation costs.

A study concludes that public and private employers in California will face an additional $4.69 billion in workers'' compensation costs if Gov. Gray Davis signs two measures sent to him in the closing days of the legislative year.

The California legislature passed Assembly Bill (A.B.)1176 Sept. 14, in an attempt to offset some of the costs of S.B. 71, which was sent to the Governor earlier. One provision of S.B. 71 -- retroactive annual cost of living adjustments to weekly life pension and permanent total benefits -- represented an additional cost of $3.2 billion, but provisions in A.B. 1176 pared this back to $1.3 billion. Other provisions of A.B. 1176 may cut up to $400 million in costs, but those savings are speculative.

The Workers'' Compensation Insurance Rating Bureau released its evaluation of both S.B. 71 and A.B. 1176. The WCIRB now estimates the cost of the two bills at $3.39 billion by the time they are fully implemented in 2006.

The additional retroactive benefit adjustments, which take effect immediately, will cost employers $1.3 billion.

"Small businesses and those whose jobs depend on them are most at risk from this legislation," said Allan Zaremberg, president of the California Chamber of Commerce. "The legislature''s attempts to fix the problems in the workers'' comp system fall far short of what is needed to achieve any meaningful savings that would mitigate the economic damage this legislation would cause. Gov. Davis should continue to support efforts to balance the cost of benefit increases with measures that improve the system for both employers and workers. He should veto S.B. 71 and facilitate a process that will achieve these goals."

by Virginia Foran

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