Tag: 2023 News

Founded in 1903, the Teamsters Union represents 1.2 million workers in the U.S., Canada, and Puerto Rico. Following a legislative session where he vetoed a multitude of bills that would have improved worker’s rights, occupational safety, and financial security for the middle class, the Teamsters are condemning California Gov. Gavin Newsom saying he is making life harder for working families in the nation’s most populous state.

“The way Gavin Newsom reacted to a vast majority of the pro-labor bills that came before him this year is something that we would expect to see from a governor who got elected with support from the Koch brothers – not someone who received support from organized labor,” said Jason Rabinowitz, President of Teamsters Joint Council 7. “Being a pro-union governor doesn’t mean you stand with us when it’s convenient. It means you stand with organized labor when it counts, which is when it’s time to sign pro-union legislation.”

The worst veto for good-paying careers in transportation was AB 316 – legislation that would have required a human operator in any vehicle over 10,000 pounds. In addition to being a priority for the Teamsters, the bill was incredibly popular. Over 90 percent of the state legislature voted in favor of it, and public polling shows that nearly three-fourths of Californians across party lines, gender, geography, and all other demographics support AB 316 – unsurprising data given that collisions and accidents with self-driving vehicles continue to occur.

In addition to AB 316, other pro-worker legislation that Newsom vetoed includes:

– – AB 504 – would have banned employers from disciplining or taking any other adverse action against public employees for honoring picket lines or other strike activities;
– – SB 686 – would have required that all household domestic service employers comply with and adhere to all applicable occupational safety and health regulations by January 1, 2025, and remove the exemption of domestic workers from safety and health laws;
– – SB 799 – would have enabled union members who were either on strike or locked out by their employer to collect unemployment insurance benefits (New York and New Jersey both allow this);
– – SB 725 – would have required a successor grocery employer to provide an eligible grocery worker a dislocated allowance equal to one week of pay for each year of employment;
– – SB 627 – would have required an employer, following the shutdown of a chain or franchise location, to provide laid off workers the opportunity to transfer to another site within 25 miles of the closed business;
– – AB 575 – would have expanded eligibility for Paid Family Leave (PFL) benefits to include workers who take time off from work to bond with a child that they are acting as the legally-recognized primary caregiver for. AB 575 would have also removed a restriction that allowed only one family member at a time to access PFL, as well as a provision that allowed employers to make workers use up to two weeks of vacation time prior to accessing PFL;
– – AB 1123 – would have required the California State University (CSU) system to grant workers a leave of absence with pay for one semester of an academic year, or an equivalent duration in a one-year period, following the birth of a child or in connection with the adoption or foster care placement of a child by the CSU worker;
– – SB 751 – would have prohibited franchise agreements for solid waste services from containing provisions that excused a service provider from complying with the agreement in the event of a work stoppage associated with a labor dispute;
– – AB 699 – would have expanded occupational safety protections to lifeguards employed on a full-time basis in the Boating Safety Unit by the City of San Diego Fire–Rescue Department;
– – AB 1145 – would have expanded worker’s compensation benefits for certain nurses, psychiatric technicians, and various medical and social services specialists employed by the Department of Corrections and Rehabilitation, the State Department of Developmental Services, and the State Department of State Hospitals.
– – SB 640 – would have required any food service contract or hotel development project undertaken by the CSU Board of Trustees to be with employers signatory to labor peace agreements; and
– – SB 90 – would have prohibited health plans from imposing a copayment of more than $35 for a 30-day supply of an insulin prescription drug.

“Gavin Newsom wants to act like he’s both an ally of labor and an ally of Big Business,” said Chris Griswold, Teamsters International Vice President At-Large and President of Teamsters Joint Council 42. “The last thing America needs right now is more politicians who are friendly with Big Business. What we need is something that’s in short supply: elected officials who are going to stand up for workers.”

The Insurance Commissioner issued a May 24, 2023 Decision on the Workers’ Compensation Insurance Rating Bureau of California (WCIRB) September 1, 2023 Regulatory Filing. Since then, the WCIRB has issued over 90 percent of the January 1, 2024 experience modifications (X-Mods) that insurers, agents/brokers and policyholders rely on for January policy renewals.

The following are several tools to access published X-Mods and check the status of a pending X-Mod. The WCIRB provides these tools for member insurers and their authorized third-party administrators (TPAs) and managing general agents (MGAs) as well as licensed agencies and brokerages. See the How to Access X-Mods: A Comparison of WCIRB Products chart for various ways to access X-Mods.

WCIRB Connect®  – Insurer and agent/broker users of WCIRB Connect can view the X-Mod for any policyholder. Authorized users may view and download a PDF of published experience rating worksheets (ratesheets). Insurers are also able to search their own policies for X-Mods that are pending due to missing data.

X-Mod Direct®  – X-Mod Direct allows Connect users to request an email when a new or revised X-Mod is issued for a policyholder. To set an alert, click the “Subscribe to X-Mod Direct” button in the ribbon at the top of the Policyholder Details screen.

Comprehensive Risk Summary (CRS)® Report  – Authorized users can quickly obtain detailed policyholder information in Connect with the CRS Report. The automated process will request authorization directly from the policyholder. The report includes the following information:

– – Up to 10 years of historical data
– – Primary policyholder name, address and Bureau Number
– – All classifications reported on policies that incepted within the last five years
– – WCIRB assigned classifications
– – All policyholder names and FEINs reported on policies that incepted within the last five years
– – All addresses and locations reported on all current policies
– – All exposure and loss details on policies that incepted within the last eight years

Visit the CRS Report page for more information.

X-Mods and More® – This API web service is for member insurers and their authorized TPAs and MGAs as well as licensed agencies and brokerages. It provides real-time, automated retrieval of the following information to assist in underwriting workers’ compensation policies in California:

– – X-Mods
– – Assigned classification codes
– – Previously reported policyholder names and addresses, FEINs and other information

See the X-Mods and More® Web Service User Guide. Additional Resource – September 1, 2023 Regulatory Filing Documents

Given the exceedingly narrow scope of judicial review of arbitration awards, assuring both the actual and apparent impartiality of a neutral arbitrator is crucial to the legitimacy of arbitration as a dispute resolution mechanism. This month, a Court of Appeal published opinion illustrated on of the rare instances where an arbitration award was vacated for the impression of possible bias.

In January 2019, plaintiff FCM Investments, LLC (FCM) signed a Purchase Agreement to buy real property in Riverside, California from defendant Grove Pham, LLC (Grove), a company owned by Phuong Pham. Grove operated a nursing home on that property with resident patients. FCM agreed to pay Grove $7.45 million to buy the property, with an upfront deposit of $500,000. Escrow was to close in 30 days.

Disputes arose during the due diligence process, with the parties extending the escrow closing date several times. By April 2019, FCM filed a complaint in Riverside Superior Court against the sellers alleging that their dilatory tactics were preventing completion of the sale. The parties were required to mediate “any dispute or claim” and arbitrate disputes not resolved by arbitration.

Ultimately the parties stipulated to arbitrate their disputes before Honorable Judith C. Chirlin (Ret.) of Judicate West. Arbitration proceeded over two days in June 2021. The arbitrator concluded that the Phams breached the Joint Addendum by failing to provide proof of 66 live-in patients or a notarized agreement regarding the use of Longha’s license. FCM was accordingly justified in terminating escrow. FCM was awarded a return of its deposit with interest, loss-of-bargain damages of $9.1 million plus interest, $127,040 in attorney’s fees, and $20,048 in costs.

FCM filed a petition to confirm the arbitration award, while the Phams moved to vacate it pursuant to the California Arbitration Act (Code of Civ. Proc., § 1280 et seq.). Emphasizing the narrow scope of judicial review, FCM opposed the petition to vacate. Following hearings in December 2021 and January 2022, the court denied the Phams’s motion to vacate and entered judgment for FCM confirming the arbitration award.

The Court of Appeal vacated the arbitration award in the published case of FCM Investments v. Grove Pham, LLC – D080801 (October 2023).

Although the Phams asked to vacate the arbitration award on multiple grounds, the Court of Appeal largely focused on one. In making an adverse credibility finding against Phuong based on her use of an interpreter, the arbitrator’s decision creates a reasonable impression of possible bias requiring that the arbitration.

The arbitrator found the seller in breach based largely on an assessment of witness credibility. She felt the case was unique “both in 12 years of doing arbitration and 24½ years on the Los Angeles County Superior Court, in that the lack of credibility issues are so rampant and obvious.”

In the arbitrator’s view, defendant Phuong Pham lacked credibility because she used an interpreter during the arbitration proceedings. Reasoning that she had been in the country for decades, engaged in sophisticated business transactions, and previously functioned in some undisclosed capacity as an interpreter, the arbitrator felt that her use of an interpreter at the arbitration was a tactical ploy to seem less sophisticated.

While arbitration awards are “nearly immune” from attack, “one of the limited grounds for challenge is bias on the part of the arbitrator.” Courts are empowered to act where that impartiality can reasonably be questioned. “[A]ny tribunal permitted by law to try cases and controversies not only must be unbiased but also must avoid even the appearance of bias.” (Commonwealth Coatings Corp. v. Continental Casualty Co. (1968) 393 U.S. 145, 150.)

“Sensitivity toward language difficulties is the hallmark of our multi-lingual state.” (People v. Aguilar (1984) 35 Cal.3d 785, 794; see Gov. Code, § 68560, subd. (e).) Across California, “approximately 40 percent of us speak a non-English language at home; there are more than 200 languages and dialects spoken; roughly 20 percent of us (nearly 7 million) have English language limitations.”

“Arbitration proceedings were unreported, leaving us to guess what evidence, if any, was presented as to Phuong’s English proficiency during arbitration.”

“As a factual matter, FCM’s own pleadings undercut the notion that Phuong’s use of an interpreter was a ploy. In its original complaint, filed long before the relationship between the parties completely unraveled, FCM acknowledged that Phuong used her daughter as a translator during a conference call based on her daughter’s ‘proficiency in English.’ If Phuong relied on her daughter to translate a conference call before the deal unraveled, it seems unsurprising that she would use an interpreter to testify in commercial arbitration proceedings.”

Here, the arbitrator’s credibility finding “rested on unacceptable misconceptions about English proficiency and language acquisition. These misconceptions, in turn, give rise to a reasonable impression of possible bias on the part of the arbitrator requiring reversal of the judgment and vacating the arbitration award.”

Self-insured groups (SIG) are created by business owners pooling their resources to achieve greater control, improved claims outcomes and lower overall costs. Members share in any surpluses or shortfalls of funding needed to cover claims and operating costs of the group.California has adopted and supports the self-insurance option despite pressure from parts of the legal and financial community that oppose it.

The California Restaurant Mutual Benefit Group (CRMBC) is a California Self-Insured Group formed by restaurant owners choosing to opt out of commercial insurance. CRMBC is the only Workers’ Comp Self-Insured Group for California Restaurants. In an often-problematic industry, it has also become California’s largest self-insured group with more than 3,000 members and annual payroll greater than $1 billion. Statistics presented at its annual meetings reflect improvement across the board since the plan was founded in 2005.

Members share in any surpluses or shortfalls of funding needed to cover claims and operating costs of the group. In the early years of CRMBC, mismanagement by third-party service providers resulted in the group undercharging itself and incurring an $80 million deficit.

The deficit was discovered during a regulatory audit by the State of California Office of Self-Insurance Plans (OSIP). The group’s board of trustees immediately undertook a remediation plan to correct the deficit and to instill strong operational and financial controls going forward. CRMBC appointed a new administrator, implemented cost-cutting measures, and completely overhauled their claims management and loss control providers and procedures.

This month CRMBC announced that it has successfully raised $100 million in capital over the past decade from its members and through diligent fiscal controls. These actions combined with member assessments resulted in a remarkable turnaround resulting in a fiscally strong and sound group today. Interestingly, CRMBS said “even with the additional assessment, many members still paid less overall than they would have paid to a traditional carrier.”

“Our team did a full analysis of what we paid in premiums including our assessment compared to what we would have paid in the commercial market, and we still paid less by staying in CRMBC,” reported Bryce Myers, Owner of 21 Sizzler Franchise locations and a Richie’s Real American Diner.

To further limit past exposure and turn the page on the early days of the Group, CRMBC completed two loss portfolio transfers (LPTs) approved by OSIP where Safety National Insurance assumed all responsibility for past legacy program claims from 2004 through 2015. This freed the members from liability exposure of the past and assisted them to begin focusing on the present and future health of the group.

In 2023, accompanying the recently announced new leadership of CRMBC, The PATH Alliance was appointed as the group’s new Administrator beginning in May. PATH brings extensive expertise in financial management, regulatory compliance, claims oversight, safety and loss prevention, and member service to the group. LWP Claims Administration is the third-party administrator handling all claims for the group, while ALC Consulting is an outside claims consultant providing independent claims oversight.

California’s current minimum wage is $15.50 per hour. Some cities in California have established minimum wages that are higher than the current statewide minimum wage. Since the start of 2022, spearheaded by SEIU-United Health Workers, several California cities have passed or introduced ordinances for a $25 per hour minimum wage for healthcare workers. Some of these ordinances have been challenged and put on hold after petitions for referendum were submitted to put the matter before city voters.

This is now all about to change after Governor Newsom signed Senate Bill 525 into law late Friday. This bill incorporates a limited moratorium on such future initiatives, but preserves the recent health care worker $25 minimum wage initiative passed by voters in Inglewood.

Amendments to the new law on September 11 struck the flat minimum wage increase provisions initially proposed when the bill was introduced, and instead implemented a tiered schedule of increases for differing employers based on specified factors. Generally speaking the new law provides:

– – Dialysis clinics and large health systems with more than 10,000 workers would pay a minimum wage of $23 an hour in 2024, $24 in 2025, and $25 in 2026.
– – Community clinics would start the pay increase at $21 per hour in 2024, rising to $22 in 2026 and $25 in 2027.
– – Other health care employers would increase their minimum wage to $21 per hour in 2024, $23 in 2026 and $25 by 2028.
– – Hospitals with a high mix of Medi-Cal and Medicare patients, as well as rural independent hospitals would have to pay workers $18 an hour in 2024. That rate would increase 3.5% annually until it reaches $25 in 2033.

This new law was highly controversial, and there is a long list of organizations who were in favor, or who opposed the law. SEIU California was the sponsor of this law arguing, among other things that “Care work has historically been undervalued by society. A recent report on the California nursing home workforce characteristics found that 1 out of every 2 Skilled Nursing Facility workers earns less than $20 per hour.”

Opponents argued that, “In the aftermath of the COVID-19 pandemic, health care providers in California are in dire financial straits. One major hospital has already closed, others are on the brink, and more than half are losing money every day to care for patients.” They also argue that, “SB 525’s added costs will force health providers to cut hours, positions and services. With fewer positions and potentially fewer providers, health care professionals will have fewer opportunities, be at heightened risk of job loss, and have less flexibility in the positions that are available.”

The California Nurses Association/National Nurses United is opposed unless amended to exempt RNs from the scope of the bill. They argue that, “the inclusion of RNs in this bill will ultimately lower the wage floor for RNs, encouraging employers to propose takeaways on wages during bargaining. California RNs are currently among the highest paid in the nation well above the proposed $25 minimum hourly wage for health care workers in SB 525. According to the U.S. Bureau of Labor Statistics, the median hourly wage for California RNs is $60.26, while RNs in the lower 10th percentile make $37.53. In other words, one would be extremely hard pressed to identify anyone working as an RN in California who makes below $25/hour.”