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The Division of Workers’ Compensation (DWC) is pleased to announce a Carve-out Agreement between seven Southern California United Food and Commercial Workers (UFCW) local unions, Vons and Super A Foods. The agreement covers an estimated 20,000 workers in the region. These workers increase the total California workforce covered by such programs over 55 percent. There are a total of 32 active Labor-Management Carve-out agreements in California, eleven of them active Labor Code 3201.7 Non-Construction Carve-out programs.

Carve-out programs allow employers and unionized workforces to create their own alternatives for workers’ compensation benefit delivery and dispute resolution under a collective bargaining agreement. Since 2004 carve-out programs in California have handled over 25,000 injured workers’ claims . Eligibility of parties to participate in a program must be approved by the administrative director of the Division of Workers’ Compensation.

With Senate Bill (SB) 983 (Chapter 117, Statutes of 1993), the California Legislature established the “Construction Carve-Out Program” under Labor Code section 3201.5. In doing so, it permitted employers, groups of employers, and employee organizations involved in the construction industry to use collective bargaining as a way to create alternatives to the traditional workers’ compensation dispute resolution process. The passage of SB 228 (Chapter 639, Statutes of 2003) amended Labor Code section 3201.7 to allow non-construction employers, groups of employers, and employee organizations to participate in carve-out programs. In 2013 SB 863 added “The State of California” to industries that can establish carve-outs.

Disputes between employers and injured workers over benefits under the carve-out program are generally heard in arbitration and/or mediation. In 2011, carve-out programs reported resolving 19 claims using litigation. Fourteen claims were resolved at mediation, one at arbitration, four at the WCAB, and none at the Court of Appeals. Of the litigated claims, non-construction programs litigated only four claims at mediation; the rest were litigated by construction carve-outs

The requirements to participate and the elements required to be in carve-out programs are contained in Labor Code section 3201.5 for the construction industry and Labor Code section 3201.7 for all other industries, as well as California Code of Regulations, title 8, sections 10200 – 10204 . Reports covering prior years o f the program, which has been in force for construction trades since 1993 and for non – construction workforces since 2004 are available on DWC’s informational page.