Bulletin 97-16
November 17, 1997


DWC Issues 1996 Annual Report on Carve-Out Programs

California's new "carve-out" programs, which allow employers and unions in the construction industry to establish alternatives to the traditional workers' compensation system, continue to demonstrate less litigation and lower overall costs for the participants, according to a new Division of Workers' Compensation report.

The report, covering calendar year 1996, shows that participants' experience in the program's second full year of operation was similar to the generally positive experience found in the first year, according to DWC Administrative Director Casey L. Young.

"This approach is still very new and it's still too early to come to any definitive conclusions yet, but overall the Ôcarve-outs' that have been approved to date seem to be meeting the objectives of the program and achieving the results that were hoped for," he said.

In both 1995 and 1996, participating contractors and labor organizations found that both the amount of litigation and cost of adjudicating disputed workers' compensation claims was very low, compared to what is generally experienced in the traditional, state administered system, he said.

Overall costs also continued to be comparatively low, he said.

"Carve-out" programs were established by the enactment of Labor Code Section 3201.5, one of the workers' compensation reform measures signed into law in 1993. The statute allows collective bargaining agreements to establish exclusive lists of medical providers and examiners as well as alternative dispute resolution systems that generally use the services of an ombudsman to facilitate resolution of problem claims.

To be eligible to establish and participate in a "carve-out" program, an employer must prove that it is engaged in construction and pays a workers' compensation insurance premium of at least $250,000 per year, or belongs to a multi-employer "safety group" which pays a premium of at least $2,000,000 a year. Self-insured employers are also eligible. A labor organization must prove that it is a bona fide independent union, as defined in the statute.

To date, the DWC administrative director has approved ten programs as eligible and rejected one. One application was never completed, and one program, involving the Cherne Contracting Corporation and Steamfitters Local 250, came to an end in 1996 after their construction projects were completed. One application is now pending.

The seven active and reporting carve-out programs reported a total of 11,645,267 person-hours -- equivalent to 5822 full-time employees, figuring 2000 person-hours for one employee-year. A list of the eight currently approved programs (seven active and one complete) is attached.

The 1996 Annual Report of the Carve-Out Program can be obtained by writing to DWC at California Division of Workers' Compensation, P.O. Box 420603, San Francisco, CA 94142. It can also be found on the DWC website, accessable from the Department of Industrial Relations home page at http://www.dir.ca.gov. Click on "Workers' Compensation," then on "Division of Workers' Compensation."

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NOTE TO ONLINE READERS: The full report can be found here.

Master List of Employers and Unions
Entering into Collective Bargaining Agreements
as of October 10, 1997
(Labor Code Section 3201.5(j))

1. An agreement between the California Building & Construction Trades Council and the Metropolitan Water District of Southern California. This is a project labor agreement covering all contractors and sub-contractors on the $2 billion, 5-year Eastside Reservoir Project.

2. An agreement between the District Council of the International Brotherhood of Electrical Workers and its 20 local unions and a multi-employer group called the National Electrical Contractors Association, consisting of about 300 contractors. Each individual employer chooses whether to sign the master carve-out agreement.

3. An agreement between the Southern California District of Carpenters and its 19 local unions and six different multi-employer groups consisting of about 1000 contractors. Each individual contractor chooses whether to sign the master carve-out agreement.

4. An agreement between the Southern California Pipe Trades District Council No. 16 and a multi-employer group called the Plumbing & Piping Industry Council, Inc. Each individual contractor chooses whether to sign the master carve-out agreement.

5. Two agreements between the Cherne Contracting Corporation and Steamfitters Local 250 covering two projects at different oil refineries. [completed]

6. An agreement between TIMEC Co., Inc., and TIMEC Southern California, Inc., and the International Union of Petroleum and Industrial Workers.

7. An agreement between the Contra Costa Building & Construction Trades Council and the Contra Costa Water District. This is a series of three project labor agreements covering all contractors and sub-contractors on a $200,000,000, 2 & 1/2 year dam project called the Los Vaqueros Project.

8. An agreement between the Southern California District Council of Laborers and four different multi-employer groups: the Associated General Contractors of California, Inc., the Building Industry Association of Southern California, Inc., the Southern California Contractors' Association and the Engineering Contractors' Association. Each individual contractor chooses whether to sign the master carve-out agreement.

9. An agreement between the California Building & Construction Trades Council and the Metropolitan Water District of Southern California. This is a project labor agreement covering all contractors and sub-contractors on the $1.1 billion, multi-year Inland Feeder Project.

10. An agreement between the Building & Construction Trades Council of Alameda County and Parsons Constructors, Inc.. This is a project labor agreement covering all contractors and sub-contractors on the $1.2 billion, multi-year National Ignition Facility at Lawrence Livermore National Laboratory.

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Current Active Applications

1. An application from District Council of Painters and Allied Trades No. 36 and the Los Angeles County Painting & Decorating Contractors Association, Inc., the Tri-County Painting & Decorating Contractors Association, Inc./Union Management Labor Relations Committee, the San Diego Painting & Decorating Contractors Association/LMLRC, the Ventura, Santa Barbara, San Luis Obispo Master Painters Association, Inc., and the Drywall Conference of the California Wall and Ceiling Contractors Association.

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