Public Meeting



September 4, 2002



State Capitol, Senate Room 112

Sacramento, California



Industrial Welfare Commission







BRIDGET BANE, Executive Officer

DOUG McCONKIE, Staff Services Manager

DAVID ZAHEDI, Office Technician





Proceedings 4

Consideration of Petition to Amend Wage Order 16 4

ROBERT FRIED, Atkinson, Andelson, Loya, Ruud & 4


FRANK STEPHENS, Western Electrical Contractors 19


TOM RANKIN, California Labor Federation, AFL-CIO 20

Consideration of Petition to Amend Wage Order 5 22

SISTER MARYGRACE, East Bay Services to the 23

Developmentally Disabled

LONNIE NOLTA, Residential Care Society 24

WARDELL JACKSON, Association of California Care 26


TONY MARTINHO, Association of California Care 28


TOM RANKIN, California Labor Federation, AFL-CIO 42

Executive Session - Pending Litigation 45

New Business 47

Adjournment 47

Certificate of Reporter/Transcriber 48







(Time noted: 10:02 a.m.)

COMMISSIONER DOMBROWSKI: I'll call the meeting to order.

We have Item Number 1, consideration of a petition requesting the Commission amend its regulation found at Title 8, Chapter 5, Group 2, Section 11160, "Wages, Hours, and Working Conditions," for certain on-site occupations in the construction, drilling, logging, and mining industries.

I would ask Mr. Robert Fried and Mr. Frank Stephens to come up.

Mr. Rankin wants to testify on this.

Is there anybody else who's going to want to testify on this?

(No response)


MR. FRIED: Welcome and good morning. And I thank the members of the Commission for allowing us to make this oral presentation to you and for the time I'm sure you've spent --

COMMISSIONER DOMBROWSKI: For the transcript, could you identify yourself?

MR. FRIED: I will -- for considering the issues that are presented here.

Let me identify myself. My name is Robert Fried. I'm a partner with Atkinson, Andelson, Loya, Ruud and Romo, and I'm here representing the petitioner, which is the ABC Golden Gate Training Trust.

Now, let me place an important caveat to that, because although it's quite true that the Training Trust asked me to present this petition, in the course of much of what I do as a -- I was going to call myself an attorney, and I am, but I want to perhaps use a better phrase -- technician, in terms of much of what I do, I work very closely with the construction labor unions in California and unionized contractors. I work very closely with industry sectors, such as the refinery industry in California. And one of the things that's become apparent to me and was one of the engines fueling this petition is that in the rush of energy that was associated with the legislative session that gave birth to Labor Code 208, not all the complexities that the industry needs to consider were fully evaluated.

More fundamentally, I want to talk a little bit about those complexities, and then I want to also identify for you a situation which is really a tough one for this Commission. I want to frame it up-front as very tough. The reason why I frame it as very tough is because, on the one hand, Labor Code 208 appears to have vested the California Apprenticeship Council with some authority to set some kind of wages for apprentices, and extending that ostensibly to their employment in private construction as well as public works. On the other hand, this Commission was also vested by the legislature some time before that with the authority to set wages for the construction industry. It did so in Wage Order 16. In doing so in Wage Order 16, the Commission did not, as it has in other wage orders, exclude apprentices or apprenticeship from the scope of that wage order.

If I took myself and whatever I do for a living and putting myself in the position of a layperson, it's a little like driving up here on Interstate 80, and there would be one speed limit on one side of the highway that says "x" miles an hour, and another one on the other side of the freeway with a different speed limit that says "y" miles an hour. And it's kind of an open question exactly which flashing lights do you obey.

There is clearly this kind of essential conflict between the two position that the legislature appears to have taken. And so, starting from that technical standpoint, to me there is no question that the Commission must act.

Now, I'm not going to presuppose -- obviously, I have a point of view -- but I'm not going to presuppose which direction the Commission would go. Certainly the Commission would be within its authority to reopen Wage Order 16 for considering the issue of including the exemption for apprentices within the scope of the wage order. On the other hand, the Commission may wish -- and certainly this is my position -- the Commission may wish to reopen Wage Order 16 for the purposes of examining precisely what minimum wage they deem appropriate for the purposes of apprentices in California.

Lest there be no question as to the intent of the CAC in doing what it did, allow me just to read into the record for a moment the final Statement of Reasons -- from the final Statement of Reasons issued with respect to the regulations that have been implemented with respect to Labor Code 208 on the part of the California Apprenticeship Council. And it reads -- I quote: "The Council considered alternative approaches to the setting of a minimum wage for apprentices." And then it goes on to explain what they chose and why they chose it. Later on, in the same Statement of Reasons, they say, "For apprentices employed in building and construction and employed on private works, the minimum wage was changed." And then they go on to explain what, in fact, they did.

So there's no question on the record that the California Apprenticeship Council believes that it was setting a minimum wage for apprentices in California. At that point, I'm not going to take up much more of your time on that, because, from a technical standpoint, the case is closed. There's a clear and ineluctable decision that needs to be made on that issue.

Whose authority governs? Clearly, at this point, because Wage Order 16 is -- arises out of the authority of the Industrial Welfare Commission, it precedes whatever may have occurred with respect to the CAC. It is my position, and frankly, if I were your attorney, my advice, that the Commission takes such steps as are appropriate to protect its authority.

Having closed that -- and, of course, I can answer any and all questions you may wish to have on it -- let me talk a little about the merits, and when I'm talking now, about the merits of the next stage. So let's assume that you do take the step that seems to me inevitable, of reopening Wage Order 16. If you do so and --

COMMISSIONER DOMBROWSKI: Let me interrupt you for a second there --


COMMISSIONER DOMBROWSKI: -- because I'd like Bridget Bane to advise the other commissioners about the legal point and the advice we've gotten from the Attorney General's Office.

MS. BANE: I would be glad to give you that information. Marguerite Stricklin is the attorney assigned to the Commission from the Attorney General's Office. She was unable to come today, but we have had numerous discussions regarding this.

There is no authority that Marguerite Stricklin could find, or other attorneys that we consulted, giving the IWC the authority to override the California Apprenticeship Council's regulations.

It may be that the interpretation of "minimum wage" here, or the reference to "minimum wage" in the California Apprenticeship Council reasons for setting their apprenticeship wages is a bit confusing. And the IWC certainly has the authority to investigate and set the minimum. If you want to call that the minimum minimum, you can call that the minimum minimum. But it does not seem to indicate that the California Apprenticeship Council, which has been given the authority to set wages, could not set a higher wage. Perhaps they're referencing it as a "minimum wage" could create some confusion. But it is a floor. It is a set wage; it is not a minimum wage in the same sense that the IWC has set.

So it is the opinion that there is no authority given to the IWC that would override the California Apprenticeship Council's authority.

MR. FRIED: I do have a few comments on that, and then I'd like to get into the fundamental merits question.

I think what Marguerite has identified is accurate. I think there is no specific authority for either the Industrial Welfare Commission or the CAC to override one another's authority. I think it's rarely contemplated that a legislature invest different entities of the same state government with apparently equal authority to legislate or to implement regulations.

Now, unfortunately, we can't send it to an arbitrator, as between the IWC and the CAC. But the ineluctable fact that I present to you that forces the decision is that Wage Order 16 does not include the exclusion for apprenticeship. And because it does not, there is, in my view -- and I notice that the Attorney General has not addressed this point -- there is no opportunity, legally, technically, or any other way, to avoid the issue.

Now, let me focus a little more closely on the merits, because I think one of the fundamental duties -- and having served on a wage board of this Commission myself, and which I thought was a great pleasure, it did allow me to again see all the points of view -- I want to come right down to the merits, because I don't think you should be compelled to make decisions based on technicalities, however ineluctable they area. And that is, very simply speaking, the labor contracts and the wages that are paid in the -- in California are not properly reflected in what the California Apprenticeship Council has done.

Let's take a couple of examples. I'm speaking broadly. The general framework of what has occurred before the CAC is to import a portion of the geographic schema that is represented in California prevailing wage law. Now, I'm certain you're all quite familiar with that, but I'll recap it a little bit for the record. And that is, California establishes prevailing wages in construction based on the -- determined by the modal rate, the prevailing wage rate in a particular area. And that can be in a local county, as low as a local county level. Generally, because of the prevalence of union construction in California and the modal rate, that ends up being the union labor rates. So the union labor rates, under various contracts, all have certain geographic restrictions as to which they apply. They then become translated into the prevailing wage. That's not at issue here.

COMMISSIONER CREMINS: (Not using microphone) I would disagree with you.

MR. FRIED: Well, I understand. There's

probably --

COMMISSIONER CREMINS: (Not using microphone) I think the question, if at all --

MR. FRIED: I understand that.

COMMISSIONER CREMINS: (Not using microphone) -- (inaudible).

MR. FRIED: You're right. And actually, I think I oversimplified.

COMMISSIONER CREMINS: (Not using microphone) (Inaudible).

MR. FRIED: That was a very fair comment.

But one of the characteristics of all this is that when the CAC then implemented -- and they did hold hearings on different aspects of how to do this -- they tried in a certain way to mirror some of the collective bargaining rates or some of the prevailing wage rates that applied. Now, what's critical is that their focus was based primarily on public-sector construction.

So, for example, let me give you a couple of case studies to think about.

Let's assume you are working in the refinery industry and you're a contractor who is very committed to safety, very committed to training, but 98 or 99 percent of your work is private sector. So you wish to avail yourself of the opportunity to participate in an apprenticeship program. As long as you are participating in the schema established by the CAC, even though you may only do one percent or less of your work as public works, you are now embraced within the public-sector apprenticeship rates that have been established by the CAC, even though you're working on purely private work most of the time. One of the harms this has produced is that a number of contractors involved in this have curtailed the use of apprenticeship in California -- very unfortunate and not a good thing.

Let's take it a little differently. One of the characteristics of a number of the refinery locations is that some of the unions that are involved are not ones whose prevailing wage rates have been established as the prevailing wage rates in particular regions, petroleum workers, for example, or others. In that situation, you have individuals and companies that have many, many unionized workers, and yet their rates are not the ones that have any real impact on the rates apprentices are paid.

Let's take it a little -- in a little different direction. One of the characteristics, I think, that some of those who represent the merit shop tend to say of the union movement, "Oh, you're just -- you're just the opposition," or "You're a monolith." This is very much not the case, particularly if you spend as much time as I do working with unionized employers and working with the various complex issues that arise between different labor unions. It becomes very clear to me that you need to be able to fully -- fully incorporate and understand the particular concerns. Different unions have different rates for residential work, which is often primarily private. There's a whole series of complex issues that my friends on the labor side of the picture understand.

I think -- and I'm going to conclude my remarks soon -- I think what I'm telling you is that, in addition to the fact that I believe the legal choices presented cannot be avoided, I also suggest to you that this is an opportunity, an opportunity -- and I'm not -- your processes for public hearings are generally efficient and expeditious, and my suggestion is, this is an opportunity to visit this issue, using this Commission's expertise, to establish wage rates that the entire industry, both the merit shop and the unionized industry, feel truly reflect working conditions that would most appropriately apply. And I would suggest that the CAC would be well advised to be cooperative with the Commission if you decided to take this course.

So I'm going to thank each and every one of you for listening carefully. I can tell that you have. And I'm open for your questions.

COMMISSIONER CREMINS: (Not using microphone) A couple of quick questions, if I may, (inaudible).

COMMISSIONER DOMBROWSKI: Turn your microphone on.

COMMISSIONER CREMINS: On the issue of -- you had mentioned that these wage rates were based just on public -- based on public works wages, that were -- basically, sir. I'm not sure if that's true. When they do surveys, they first -- the first rate they consider is the private-sector wage rates. In most cases, they use those. I mean, they're done county by county. It's the practice inside the department now.

And, number two, you -- prior to Wage Order 16, who do you think was responsible for the wages and welfare of apprentices?

MR. FRIED: Well, first of all --

COMMISSIONER CREMINS: I assume it would be the California Apprenticeship Council, correct?

MR. FRIED: Right. And I think that's a -- I see where you're going, and I agree with where you're going. There's no question that the California Apprenticeship Council has statutory authority to regulate apprentices in California and make some determinations as to what -- how apprenticeship programs are approved and what their needs are and what the standards are.

The problem occurs because of the current state of Wage Order 16. I think it would have been perfectly acceptable for the Commission, in crafting Wage Order 16 and presenting it for analysis, to have included the exemption for apprentices that is present in the other wage orders.

So, what I'm suggesting to you now is -- I don't want to present this is a draconian issue, saying the role will disappear. But what I am suggesting to you is that, in addition to the fact of the technical, legal issue is right there and can't be avoided, this is also an opportunity. And I suggest that taking advantage of the opportunity would be a good idea.

COMMISSIONER CREMINS: And I would just mention, short of an outright granting of authority to the Commission, I would assume it's still the jurisdiction of the California Apprenticeship Council --

MR. FRIED: And --

COMMISSIONER CREMINS: That's obviously the big issue, isn't it?

MR. FRIED: And I think that's -- actually, that's one of the most intriguing questions that's ever been presented to me, because in this context, while I believe the jurisdictional question is -- is squarely presented by the peculiar dynamic of Wage Order 16 and Labor Code 208, at the moment, I can't resolve it by -- I don't think the Commission can resolve it, say, by resolution saying, "We will defer to." You can resolve it by reopening Wage Order 16 and adding back in the exemption for apprenticeship.

COMMISSIONER BOSCO: Could I ask -- and maybe Bridget would know this -- was the failure to include an exemption in Wage Order 16 -- I don't know if "exemption" is the proper word, but to exclude the apprentice wage from that, was it inadvertent or had it been hashed over by the various parties and purposely left out? Or do we know?

MS. BANE: I can't answer that question. I would need to go back to the transcripts to see if there was a reason given in the transcripts. And I would be glad to do that. And perhaps there is someone sitting out there who was part of that process who might shed light on that, because I was not.


COMMISSIONER CREMINS: I was on the periphery of that process, and it certainly was our intent and our notion to keep the jurisdiction of the Council intact. And they are responsible for the welfare of the apprentices. And part of the welfare of the apprentices is wage rates.

MS. BANE: And, Commissioner Bosco, I cannot indicate to you what the reason was for the -- for the leaving out of that particular section that apparently is in every other section. But it does not -- it is -- does not present, in the minds of the legal -- attorneys, the attorneys in our department who have analyzed this, it does not present a conflict. There is no conflict in jurisdiction. There is jurisdiction in the IWC to set a minimum wage, which the IWC has done and which -- and included apprentices in that minimum wage of $6.75. There is also authority given to the California Apprenticeship Council to set other wages. If they went below the minimum wage, then there would be a conflict. If they go above the minimum wage, it does not appear that there is a conflict. That's -- that's the opinion I've been given.

COMMISSIONER BOSCO: I understand that. But I just -- if we were to want to defer to the CAC, wouldn't that mean that we would put that section in our wage order, because then it would be clear that we were saying, "We're not dealing with this issue," that the CAC can do it?

In some ways, we've sort of usurped the CAC by -- I guess, by inadvertence. I don't know that. But I was more asking whether we did it purposely or by inadvertence, but I guess we don't have the answer to that.

MR. FRIED: Commissioner, I have a -- imagine -- although I'm not your lawyer, imagine that I was for a moment. The moments that occurred at the time when 208 was -- came in and all the fight over it, I think those were very heated moments. They were not the time for all the appropriate points of view, every aspect of the industry, including the -- every aspect of the unionized industry to be fully appreciated.

And frankly, there have been quite a lot of lawsuits filed over 208 and all this stuff. To what purpose, I'm not 100 percent sure. But regardless of that, I just want to re-emphasize that I don't think that the Commission can act without reopening Wage Order 16, one way or the other. And I will point out that the entire structure of all the wage orders is uniform with respect to some exempt apprenticeship and some, like this one, do not.

Secondly I just want to re-emphasize that this truly is an opportunity. And by framing it that way, I think one suggestion that wouldn't be inappropriate, if panels were set up, that a representative of the CAC was included in the appropriate panels. And then, certainly, they could be -- would be well encouraged to give their own input into what the shape of the ultimate wage should be.


MR. STEPHENS: Thank you. Frank Stephens, from the Western Electrical Contractors Association. We represent about 200 electrical contractors throughout California, employing about 10,000 or more workers and training about 700 apprentices throughout California.

We are concerned about this statute. I would take you to Section 1173 of the California Labor Code, which states:

"It is the continuing duty of the Industrial Welfare Commission to ascertain the wages paid to all employees in this state, to ascertain the hours and conditions of labor and employment in the various occupations, trades, and industries in which employees are employed in this state, and to investigate the health, safety, and welfare of those employees."

The California Apprenticeship Council has no such controlling authority. And there is a conflict between the two, and it needs to be resolved. It needs to be resolved by the legislature.

And I would encourage you to go back to the legislature and ask for clarification before other boards, commissions, or councils decide to set wages in California also. This is your authority, given to you by the State of California.


(No response)


MR. RANKIN: Good morning. Tom Rankin, California Labor Federation.

We view this petition basically as an attempt by the Associated Builders and Contractors to undermine the wages of apprentices. It's very clear from the statute, 3071 of the Labor Code, that the California Apprenticeship Council has the specific authority to set minimum wages for apprentices. It reads:

"The California Apprenticeship Council shall issue rules and regulations which establish standards for minimum wages, maximum hours, and working conditions for apprentice agreements hereinafter in this chapter."

And so forth and so on.

They've had that authority since, I think, 1939. It's a much more specific statute than the statute that gives you the authority to set minimum wages. And I agree with Ms. Bane's analysis that, yeah, if they were to set something lower than $6.75 an hour, there may be a problem, but if they set it higher, there's no problem. We have parallels all over the place with local living wages ordinances and so forth, which set higher minimum wages than the IWC's.

The ABC has filed and, I believe, lost, at least at the original stage, a lawsuit challenging the Apprenticeship Council's authority to set a new minimum wage. They're just trying again here.

And, actually, as the last witness stated, you know, conflicts in law are not your business. They're the legislature's business. So I would respectfully request that you deny the petition. And if there indeed is a conflict, which I don't believe there is, let the appropriate body take care of it.


(No response)


COMMISSIONER CREMINS: I would move to deny.



COMMISSIONER DOMBROWSKI: Okay. Go ahead and call the roll.

MS. BANE: Mr. Cremins.


MS. BANE: Mr. Rose.


MS. BANE: Mr. Bosco.


MS. BANE: And Mr. Dombrowski.


MS. BANE: The petition is denied by a unanimous vote.

COMMISSIONER DOMBROWSKI: Item Number 2 is consideration of a petition requesting the IWC to investigate amending Wage Order 5 as it pertains to employees of 24-hour group homes.

Lonnie Nolta.

I'd also ask Wardell Jackson to come up.

Is Tony -- I'm sorry if I can't read this right --

MR. MARTINHO: (Not using microphone) Martinho.

COMMISSIONER DOMBROWSKI: Martinho -- are you in support? Why don't you come up too?

Sister Marygrace -- I think we have another seat up here.

And then Barbara Chappell.

MS. CHAPPELL: (Not using microphone) Chappell.


MS. CHAPPELL: (Not using microphone) Well, you know, that's okay. We're all going -- we're going to all speak to the same concept.


Do you want to go first, Lonnie?

MS. NOLTA: Let's let Sister go first this time.

SR. MARYGRACE: Good morning, respected members of the Industrial Welfare Commission. I'm Sister Marygrace, from East Bay Services to the Developmentally Disabled. And I also represent the provider-vendor advisory community in the East Bay.

We implore you to please amend the Wage Order 5 as it stands in regard to group homes for the elderly and for the developmentally disabled. You wonderfully made a consideration for group homes for children, and we would like you to really take a close look at granting the same consideration for homes that serve elderly and for homes that serve people with developmental disabilities.

This is crucial, I think, to sustaining and protecting the 24-hour very fine quality of service for some of our most vulnerable citizens in our state. It -- to provide this ongoing service with great respect and care and compassion, it takes a special dimension or a special layer of commitment. This is there. We've got such fine quality of care. If we put another dimension of the financial burdens of the high rising cost of workers' comp, utilities -- every day I get a letter in the mail saying, "Our air conditioning maintenance cost is going up, the elevator maintenance is going up." It's like there's a constant escalation of this.

This wage order has a direct impact on wages for staff, and we ask that this really be looked at from many angles.

We thank you for even agendizing this.


MS. NOLTA: Good morning. Lonnie Nolta, with the Residential Care Society. I'm delighted to have the opportunity to come before you again.

I have been communicating with you since February of the year 2000 regarding this issue, and we certainly urge you to accept the petition and to appoint a new Wage Board 5 to review this problem of the lack of clarification regarding the sleep time exemption for adult facilities and for the elderly.

You were kind enough this last year to include the meal issue and the rest period, and you have my testimony, so I'm not going to be lengthy and redundant on that. But it's absolutely critical that we have this issue reopened again.

I do training and travel from Eureka to Ventura, and from Redding all the way down to Bakersfield. And everywhere, I am hearing the potential closure of programs. We know that a number of facilities have closed. There was one facility that has an organization in the Lafayette area last year. They've been in business since the late 1940's. They had five group homes for people with developmental disabilities, and they're now down to three. Clearly, with the stress of increase in wages, the 9/11 impact on insurance, particularly in the area of workers' comp and property and liability insurance, we are absolutely dragging these programs into oblivion. There are a few new folks going into the business because of the economy and the high layoffs in California, such as Silicon Valley. But it is not filling the gap.

The other issue here, as we talk about people with developmental disabilities or the elderly, I would implore you to please consider inclusion of folks living with mental illness. That is a critical, critical segment in the State of California for adults particularly.

I am certainly happy to answer any questions that you may have. And I would hope that we can protect the -- or give some protection to the current providers that we have and encourage new people to go into this industry.

By the year 2020, the estimate is, in that year, that California's senior population is going to double. And so we are going to continue to have critical needs for placements for these folks. This is also true in the increasing placement in the community for people with developmental disabilities, as well as mental health needs. And as I'm sure you are aware, the fastest growing population in mental health needs are children, and of those children, teenagers in particular. And those youngsters are going to be in need of placements in the community before very long.

Thank you very much.


MR. JACKSON: First of all, I'd like to thank all of you for allowing us to address you once again. I am Wardell Jackson, the president of the Association of California Care Operators. And I have appeared before you a number of times before.

I'm stressing that there is a crisis right now in our field. This year alone, we have not gotten any increases at all for our rates. When Shelton Dent, who is the residential director, came the last time we were here, from the Department of Developmental Services, he stated that when the ARM rate, the alternative rate model, was put into place in 1985, he admitted that DDS did not take into consideration the fact that we have to have 24-hour supervision in our homes. And that is basically a law, according to Title 22 and Title 17. So we as providers have to provide 24-hour care. If the consumers don't go to programs, they are left in our homes, and we have to provide staffing.

So, therefore, it is a crisis because there is no increase in our rates for this year. We have not had any major increases for the last ten years.

As Ms. Nolte just stated, I know my personal liability insurance basically doubled this past year. Last year it almost doubled. My workers' comp insurance went up 50 percent. And we're talking about across-the-board increases, whereas the -- whereas there's no increase, as far as our rates are concerned.

Also, when we lose a consumer, if a consumer is moved from our home, if we are a six-bed facility, we still have basically the same expenses that we would have if we have four consumers than if we have six. And this is a problem that came about in the way the system works. But still, we as providers, we suffer because of these things.

So I'm asking that you -- that an exemption be placed -- some kind of consideration be given to us with Wage Order 5 because there are a lot of homes that will be closed, that have closed, and will continue to close because we just can't pay.

Thank you for your consideration.


MR. MARTINHO: Well, ladies and gentlemen, thanks once more for the opportunity to express our opinion. I think I cannot add too much to what my colleagues have just been describing to you. But I've got something else that -- you know, so many times I bring -- I've been bringing some of the papers to show how much money we make, how much we -- you know, we expend.

It's like Wardell was just saying, that we have a big problem. And the big problem is the government has set up our wages. And they -- the last couple of years that we have increased our employees by amounts that they dictated

-- the legislature passed the bill -- and they made all those arrangements based on six consumers per facility. In my case right now, I used to have six consumers, and unfortunately, one died. Another had an accident and he has to move elsewhere. But now I have four consumers for the last four months, and I cannot go to my employee and say, "Listen, you know, I'm going to cut down your wage because I only have four consumers." Definitely, my employee would leave. And I know they'd go behind me and they'd sue me. I have no doubts about that. He has the right to.

And what that means right now, I'm in the hole every month until another client comes to my facility. You know, I'm losing $4,000 a month. I'm not losing, no -- I'm not collecting the money because of the decisions by the legislature, the way they made this bill.

And definitely -- I've been in this business for over twenty years. My family has been in this business for over twenty-five years. My sister has just closed a facility because of the same problem. She had six clients. The legislature said to give the increases, for us to pay the employees based on six consumers. She has four consumers. She cannot afford it. She closed the facility, after twenty years. And in my case, I'll give it just one more month. If I don't have consumers, definitely I will close too.

COMMISSIONER DOMBROWSKI: Have any of you sat down with the Service Employees International Union and asked them and tried to talk to them about this?

MS. NOLTA: Yes. I met with them the 1st of March of this year. That was prior to the last wage board. I -- in fact, I met with them in January and then set up a meeting at the Department of Developmental Services on March 1st, which included a representative, Allen, from the union. And also, we invited a representative from the Department of Social Services, Community Care Licensing. Social Services called me, were concerned about having a representative in attendance, did not show. However, I have to say that the Department of Developmental Services and their staff did a great job in reviewing the fiscal problems with the union representative, and the fact that, as you know, today the budget is in dire straits, and these programs are probably not going to get any type of reasonable adjustment for some years to come.

COMMISSIONER DOMBROWSKI: The reason I ask is we're a five-member commission.


COMMISSIONER DOMBROWSKI: And we are superseded by the legislature.


COMMISSIONER DOMBROWSKI: What you see, where we are most effective is where we can encourage parties to get together and work out their differences, as opposed to coming to us with a petition that, just on the face of it, is going to be opposed by a significant party.

MS. NOLTA: I just had communication from John Tanner with the union late yesterday. And he was emailing me information on what they had been doing. So, I've also met with him after the meeting there at DDS. And I have my calendar; I can dig those dates out for you. But it's been ongoing.

COMMISSIONER DOMBROWSKI: Well, where I'm going is, I have a couple problems. Number one, we looked at this issue -- Bridget, I don't remember when we did the wage board, but it was within the last year, I believe.

MS. BANE: It was at the beginning of last year.

COMMISSIONER DOMBROWSKI: And I don't really -- I don't believe our Commission should continually be reopening issues up. I mean, in terms of the process, I don't -- I think if someone comes here and they reach an agreement, they should feel confident that that agreement has some lifespan.

Now, that doesn't mean I'm not sympathetic to your problems. I am sympathetic to your problems. But I think the approach you have to take is to sit down with SEIU, as you apparently are doing, and try to work the issues out before you come to us and ask us to form a wage board, because, if you don't, the wage board is simply going to come -- not have agreements, and we're going to be sitting here in the same spot six months from now. And you're going to be sitting in the same spot financially. And that doesn't help anyone.

MS. NOLTA: I guess the real issue for us is that we have made an effort to sit down with the union representatives. That has been going on for over one year now. We have facilities that we are losing in the community that are extremely beneficial for the State of California. If these folks did not have these resources --


MS. NOLTA: -- it's going to cost more.

COMMISSIONER DOMBROWSKI: But you're not hearing what I'm saying.

MS. NOLTA: Yes, I did hear it.

COMMISSIONER DOMBROWSKI: No, I don't think you are. But let me just -- let me -- and I'm trying to be -- I'm trying to be very candid with you. We are a commission superseded by the legislature.


COMMISSIONER DOMBROWSKI: If we don't get the parties to have an agreement, any one of those parties could go to the legislature and override whatever we do. That's just, in general terms, how this process can work.

So it doesn't behoove any party that comes before this Commission to try to override another party on any issue. You have to reach some consensus.

MR. JACKSON: Well, you know, as far -- years ago, my organization met with unions. They wanted to unionize our association. And we came to the conclusion at that point that we couldn't be unionized because there's nothing in the budget, the state budget, that would guarantee a salary. So unions won't touch us, because there's a -- because of the rate-setting mechanism. If they were to try to go to -- if we were in negotiation, budget negotiations, they can't negotiate a salary for us.

Then, on the other side, the governor commissioned a study, a rate study that the Department of Developmental Disabilities went through, which I have mentioned in one of the letters I gave you. And that -- the department found that we are basically 50 percent underpaid. This is a study that's been done, and not -- and there's even a rate -- a new rate-setting or whatever else that has not been adopted -- adopted by the governor or the legislature. But they spent like $10 million to do this rate study. Now it's on the shelf because the state doesn't have any money to give us. So the state has recognized the fact that we are being 50 percent underfunded, and then -- so now nothing can be done. So the governor should have had this in hand, but what did he do?

COMMISSIONER DOMBROWSKI: Mr. Jackson -- Mr. Jackson, please. What I'm trying to say is you have arguments that have merit. But you have to follow a process and get buy-in on those arguments. And that process doesn't start here. It starts off-line, meeting with other parties who care about this. And that means, directly, SEIU.

Now, when I talked to SEIU -- I mean, this is -- they're telling me they haven't had discussions. So there's a miscommunication going on. And I don't care -- I mean, I'm not saying you're misrepresenting, I'm not saying -- I don't -- that just tells me there isn't something moving forward here.

Now, what I want to do -- what I want to do is see if there's a way to put some process together, short of going to wage boards, that would get the parties in a room talking.

MS. NOLTA: Yeah, I would like to respond, because Carl Carlton, chief deputy director from DDS, was in that meeting and had some of his staff there when Allen came in and met.


MS. NOLTA: And so, we have been trying. And I had arranged for another meeting with John Tanner -- this was several months ago -- never heard back from him. The first communication -- I called, I left a message -- the first communication that I had from Mr. Tanner was late yesterday afternoon wanting to send me an email.

And so it's not that we aren't trying --


MS. NOLTA: -- and I appreciate what you are saying --

COMMISSIONER DOMBROWSKI: What I'm offering -- what I'm offering, and the other commissioners can tell me to shut up or whatever they want -- but what I'd like is for Ms. Bane to see if she can put together a meeting -- I don't know where it is, if it's in Sacramento or San Francisco or whatever works for the parties -- but let's see if there's something that can be done through her offices to get the parties to sit down and chat.

MS. NOLTA: Can I --


COMMISSIONER ROSE: If I may, I believe, in the last year or so when you folks have been here before -- and I'm not going to pick anybody out -- just anybody can answer -- we were told that, you know, you came here for an exemption, and then you were going to the legislature, and then you were going to the federal government. Well, every time one of those don't pan out, you come back here. And then we -- we were approaching what Mr. Dombrowski's talking about.

So, you know, first of all, I don't know what you've done with the legislature. You told me you were going to go there, but I don't see that, you know -- that you have.

MS. NOLTA: And if we indeed testified and said that, it certainly was not me.

COMMISSIONER ROSE: Well, and I understand that, you know, you say the governor says that he knows that you're 50 percent underfunded --

MR. JACKSON: We have been to legislators.

COMMISSIONER ROSE: -- and then I don't know what the federal government has to do about it, whether it would be MediCare or --

MR. JACKSON: Well, we do -- some of our homes do get a MediCal waiver, which is from -- which is from the federal government. We have not directly contacted them as far as rates are concerned. But the state basically is in negotiations with the federal government regarding MediCal waiver. A lot of our consumers get a MediCal waiver. And right now a lot of those funds go directly to the general fund of the state, and not to the Department of Developmental Services. So we are in negotiations of getting more consumers on MediCal waiver, which would be federal funds, and then trying to convince the state to give those monies to the Department of Developmental Services, which is -- so, right now, we have consumers that are doing services for the federal government that -- that the regional centers are not being reimbursed for. So we are in the process of trying to get them to reimburse us for those services.

I mean, that's another thing. We're doing services that we're not getting reimbursed for. But they're federal services. Some said --

COMMISSIONER ROSE: I guess what I'm saying is that you're not asking for a concession from the state, you're not asking for a concession from the federal government, but you are asking for a concession from the IWC, an exemption.


COMMISSIONER ROSE: Okay. That's my --

MR. JACKSON: That's basically it, yes.

SR. MARYGRACE: You know, I was in the audience when you gave consideration for the 24-hour living for children. And I could not believe that it stopped there. It was like sand through our hands, you know. I couldn't understand why the same consideration was not given to elderly and adults. It was like a shock.

COMMISSIONER DOMBROWSKI: The short answer -- the short answer is because those parties representing those interests got together with SEIU and worked out agreements. And that's exactly what I'm asking you to do.


MS. NOLTA: Mr. Dombrowski, in many discussions with union representatives, both Allen and Mr. Tanner, they indicated that they probably do not represent more than one percent, maybe two percent at most -- but they indicated one percent of the individuals in this industry. And then, you know, we are faced with absolutely a crisis, as Mr. Johnson (sic) has said out there. We are losing programs, which means we are losing jobs for people also.

What we're trying to do is a stopgap so that we can at least continue these programs. And none of us are anti working with union representatives. And we've been very open to doing that. I spent two or three months waiting for Mr. Tanner to call back. These people can't wait. Their bills are going on, they're increasing. We are losing programs, and that's why we're here today.

MR. JACKSON: And as for the record, I worked for SEIU for five years. Tony Martinho has also worked for unions. We're not anti-union, we're not anti-labor. I mean, we're willing to work with them, but until something works out, there are going to be places that are going to close. There are going to be consumers in the streets. That's basically what's going to happen. We can't -- we cannot continue to do it, you know.


MS. NOLTA: Even if someone -- if you reconsider giving us a short-term -- two years or something --

COMMISSIONER BOSCO: Let me make an observation. First of all, I don't think, if you wanted a finer group of people, you could find one, than all of you. You're not getting rich. You're serving an extremely needy class of people. And everybody recognizes that. And I think that we're all extremely sympathetic.

But having recognized the problem, we have to come up with a solution that's going to work for you, not just this year or next year. I mean, I think the idea of a couple years always sounds great. You know, put the Bandaid on it. But what you really need, when all is said and done, is juice up here. And you don't have it. That's why you're here.

And is the answer to have your employees work longer and affect their families in that manner, and to take the 8-hour day and kind of tweak it and shred it and say, "Okay, that'll help you folks out?" Well, that might be an answer, but the better answer, I think, is to do what everybody else has done -- the nurses, the prison guards, the police, the sheriffs. You know, I mean, every one of those groups was just like you at one time. And they got smart, and they either got organized themselves or they joined with people who already are organized and know how to get what they need, not only here, but in Washington.

And having said that, I know it's hard to do that, and it sounds like we're, you know, kind of throwing you to the wind, but I've been involved in this a long, long time, and I think the other people here have. And that's the only thing I've ever seen work for groups.

I would be happy to volunteer my own services to, first of all, see that if the union hasn't been responsive to you, that they are, because I think that may very well be a type of group that can help you, that can walk the halls up here and get you what you really need, and that is the money to pay your employees so that you don't have to come to us or anybody else. That may be -- I'm not -- you know, I'm not a union organizer or anything else, but I do know that -- I think that some of the unions have been extremely successful up here in raising the pressure on the legislature.

But, in any case, I'd be happy to work with the chair and Ms. Bane and others to see that maybe we can reach a resolution to this. And then maybe, if we can't, then in six months, you know, we may have to do something.

But I really don't -- am not inclined toward a Bandaid approach. I think that maybe we're better off trying to get -- help you get situated to where this problem doesn't keep recurring.

MS. BANE: In regard to that, Mr. Rankin has provided a letter today to the Commission that indicates that alternatives -- and I'm quoting from the letter:

"Alternatives that may alleviate the funding crisis for all residential facilities are currently being pursued. We hope that there will be a unified effort among all stakeholders, including both labor and management, in supporting reforms that reach this common goal."

So, I don't want to speak for Mr. Rankin -- his letter speaks for himself -- but I am sure that, since he is here, he is sending this letter in the spirit that Commissioner Bosco is talking about. And if there is an indication from the chair that he would like for us to participate in a meeting, which I think I was -- I was hearing, then we would do so.

And I would also like to indicate that the 120-day period for consideration of this petition still has 35 days before it tolls, if that has any relevance for any of the commissioners.

COMMISSIONER DOMBROWSKI: I would like to have you -- I mean, just -- I would like you to get that meeting or meetings set up. Coordinate it with Commissioner Bosco.

Mr. Rankin, I think I can assume -- thank you.

Any other questions?

COMMISSIONER CREMINS: I would just concur. And I'm actually a bit conflicted here, as a labor appointee on the board, but also, I three aunts who are nuns. And I would like to see some resolution also. If we can help, I'd love to.

MS. NOLTA: Thank you for your consideration.

MS. BANE: Thank you.

COMMISSIONER DOMBROWSKI: Mr. Rankin, do you still wish to testify?

MR. RANKIN: Tom Rankin, California Labor Federation.

I don't think it's really necessary. We would be happy to get together with the folks who are here and other people from the industry and try to work something out. This is really a bigger problem. It's not going to be solved by denying people overtime.

Maybe the best example of a recent solution to a similar problem was with the in-home support service workers, who actually became organized, and they set up public authority so they could bargain and so forth. And they are now getting more funding from the legislature. They're all making, I think, at least $8.50 an hour. So maybe we could look at that as a model for trying to solve this problem.

MS. BANE: And could I -- Mr. Chair, in regard to the people who have appeared here today and in the past, they have been in discussion with the staff of the Commission, and we have recommended at various times that they do consult with members, such as Mr. Davenport from SEIU. And I -- and they -- I'd just like to say that they did follow up on the recommendations, to the best of their ability at that time.

And the staff, of course, has the same interest that the Commission does and would like to indicate that we feel a great compassion and empathy and think that this is a fine group of people who are engaged in a noble cause.

And that was completely gratuitous, for the record, but thank you for listening to me.

COMMISSIONER DOMBROWSKI: Okay. Let's -- I want you to follow up on the meeting or meetings. I say that without any insights into what the issues are between either the parties and organized labor and without any foregone conclusions about what the parties have to do. And just what I would really, really like to see is, get together and find out what the issues are, put it on the table, and see if there's a way to just hammer them out that works to everybody's benefit.

MS. BANE: I will certainly do that. And I would -- I will take cards and call or speak to you after this meeting today, whatever you prefer.


Do we have a motion?


COMMISSIONER ROSE: Yes. I move that we deny the petition for Wage Order 5 at this time.


COMMISSIONER BOSCO: May I ask, do we even have to take any action on this?

COMMISSIONER DOMBROWSKI: Yeah, I think we do, because I don't think we're going to have another meeting in 35 days. And statutorily, we have to make a decision one way or the other.

COMMISSIONER BOSCO: Are they free, then, to reapply?


MS. BANE: Anyone can apply at any time.


MS. NOLTA: (Not using microphone) A question?


MS. NOLTA: Thank you. My question would be, is it possible to delay action until after we have a meeting?

COMMISSIONER DOMBROWSKI: It's possible for you to withdraw the petition. We have to either deny or approve within the specified time frame. But you can withdraw it and then resubmit it, if you wish.

MS. NOLTA: Because -- oh, because you're saying there's no meeting within the next 35 days.


COMMISSIONER BOSCO: Why don't you do that?

MS. NOLTA: You want -- you want us to withdraw it, then?

COMMISSIONER DOMBROWSKI: That would be -- that would be fine. You're not giving up any opportunity to reapply and resubmit it. So, it's just simply we have to meet a statutory deadline.

MS. NOLTA: Right. I understand that. All right. Then I -- on behalf of myself, my colleagues, we would --


MS. NOLTA: -- withdraw the petition at this time.


Okay. We're going to go into executive session, so I need to have the room cleared. And then we will come. If you have any new business to raise, you can do that after the executive session. It should not be a very long executive session.

(Thereupon, at 11:05 a.m., the Industrial

Welfare Commission adjourned to executive

session. The public meeting was reconvened

at 11:12 a.m.)

COMMISSIONER DOMBROWSKI: All right. We're back in session, just to announce that the commissioners have decided by a majority vote not to pursue the appeal that was currently in place. I don't have the actual court case name in front of me. But it's the only litigation we have going on, so I think everyone can understand that.

MS. BANE: It's AFL-CIO, et al., versus the IWC.


COMMISSIONER CREMINS: And thus, the orders of the judge will proceed.


COMMISSIONER CREMINS: And thus, the orders of the judge also will proceed, right?


COMMISSIONER BOSCO: Could I -- I don't like to press what seems like a minute point, but -- and I don't have the judge's order in front of me, but I read it. And the judge ordered us to take an action, not just -- the judge didn't just make a series of actions himself. He ordered us to take an action.

So I'm going to move that the Commission effectuate the judge's decision in whatever manner is required under the -- under the order.

COMMISSIONER DOMBROWSKI: Okay. Do we have a second?



Call the roll.

MS. BANE: Mr. Cremins.


MS. BANE: Mr. Rose.


MS. BANE: Mr. Bosco.


MS. BANE: Mr. Dombrowski.


All right. Anything else? Any new business?

(No response)

COMMISSIONER DOMBROWSKI: We lost our audience.

Motion to adjourn?

COMMISSIONER ROSE: I move we adjourn.


COMMISSIONER DOMBROWSKI: All in favor, say "aye."

(Chorus of ayes)


(Thereupon, at 11:14 a.m., the public

meeting was adjourned.)








I, Cynthia M. Judy, a duly designated reporter and transcriber, do hereby declare and certify under penalty of perjury under the laws of the State of California that I transcribed the tape recorded at the Public Meeting of the Industrial Welfare Commission, held on September 4, 2002, in Sacramento, California, and that the foregoing pages constitute a true, accurate, and complete transcription of the aforementioned tape, to the best of my ability.

Dated: September 18, 2002 ______________________________