Bulletin No. 99-07
November 18, 1999


DWC Issues Annual Report on Construction Carve-Out Program

 DWC's alternative workers' compensation program for the construction industry, commonly known as "carve-outs," has grown considerably since its inception but is still of limited size, according to the fifth annual report on the innovative program's activities.

 The report, covering calendar year 1998, is based on aggregated data from 683 California employers in the 12 programs certified as eligible during the year.  Together, these employers reported over 18.5 million person hours of labor, equivalent to about 9,270 full-time employees, and over $414 million in wages.

 As of March 31, 1999, the various programs reported 1,261 claims filed due to 1998 injuries, with incurred losses totaling $9,172,279.    These figures are expected to increase over time, as cases filed during this time period mature and disputes are settled.

 The number of claims filed in 1998 approximately doubled from the 661 reported the previous year, while the incurred losses rose about 41.5 percent from the $6,481,564 reported in 1997.  These figures are commensurate with the increases in hours worked and total payroll, the report says.

In 1997, employers in the program reported a total of 10.4 million hours of labor, equivalent to 5,186 full-time employees, and approximately $243.5 million in wages.

 The carve-out program was established by Labor Code Section 3201.5, which was originally enacted in 1993.  Subsequent legislation clarified that only bona fide construction industry contractors and unions were eligible to participate in these programs.

 Carve-outs allow participants to establish alternative dispute resolution (ADR) programs in their collective bargaining agreements.  The programs also provide for the establishment of an agreed list of medical treatment providers to help assure quality medical care for workers injured on the job, as well as joint labor-management safety committees, return to work programs, and vocational rehabilitation training provisions.

 The ADR process generally begins by making an "ombudsperson" available to help the parties informally resolve disputes over workers' compensation claims.   If this fails, the matter typically moves to a formal mediation before either an outside neutral or a joint-labor management committee.  If mediation is unsuccessful, the parties turn to a neutral arbitrator, frequently a retired workers' compensation judge, whose decision can be appealed to the Workers' Compensation Appeals Board.

 Copies of the report of 1998 activities may be obtained by writing to the California Division of Workers' Compensation, P.O. Box 420603, 9th floor, San Francisco, CA 94142, or by calling (415) 703-4600.  It may also be downloaded from the DIR website at http://www.dir.ca.gov/dwc/carveout.html.


NOTE:   A list of the 12 programs certified as eligible and active during 1998 can be found here.