Commission on Health and Safety and Workers' Compensation
Information Bulletin

November 2, 1999 Christine Baker
(415) 703-4220

Commission Issues Report on

"Carve-Outs": Alternative Workers' Compensation Programs

SAN FRANCISCO -- The California Commission on Health and Safety and Workers' Compensation has approved the findings of a report on collectively bargained workers' compensation programs in the California construction industry, also known as "carve-outs".

The Commission's project focused on the carve-out provisions of the 1993 workers' compensation reform legislation – so called because certain employees and employers may be carved out from the traditional workers' compensation system. Unions and employers engaged in construction and closely related industries many create their own workers' compensation system. Although a number of minimum standards remain in place, the parties have considerable latitude on how they set up the program.

Since carve-out programs have operated only since the mid-1990s, data from the alternative workers' compensation programs is very preliminary and not statistically conclusive. The study team found indications that neither the most optimistic predictions about carve-outs' effects on increased safety, lower dispute rates, far lower dispute costs, and significantly more rapid return to work, nor the most pessimistic predictions about carve-outs' effect on reduced benefits and access to representation, have occurred.

Carve-outs are new and continually evolving and the structure of the carve-out programs vary widely. Each new large project builds upon past structures and the experience of the participants. Agreements that involve periodic renegotiations evolve internally as parties improve their understanding of the arrangements. As carve-outs have become better understood and more common, new participants have become involved with new ideas. The diversity among carve-out structures enables the evaluation of different innovations, which may be useful to the statutory workers' compensation system as well.

The Commission contracted for this collaborative project with the DATA/Survey Research Center and the Haas School of Business at the University of California at Berkeley and the Stanford Center on Conflict and Negotiation at Stanford University.

A copy of the report is available at no charge by writing to Christine Baker, Executive Officer, Commission on Health and Safety and Workers' Compensation, 455 Golden Gate Avenue, 10th Floor, San Francisco, California 94102, by calling (415) 703-4220, or by faxing a request to (415) 703-4234.

Commission publications are also available through the Internet at the California Department of Industrial Relations' home page at Information about the Commission may be accessed by choosing either 'Occupational Safety & Health' or 'Workers' Compensation'.

The Commission is charged with overseeing the health and safety and workers' compensation systems in California and recommending administrative or legislative modifications to improve their operation. The Commission was established to conduct a continuing examination of the workers' compensation system and of the state's activities to prevent industrial injuries and occupational diseases and to examine those programs in other states.