SACRAMENTO, Calif. -- Gov. Arnold Schwarzenegger here last week signed a comprehensive workers' compensation reform bill that should "greatly reduce costs for employers" in the state, according to the California Grocers Association, also based here.
Peter Larkin, president, CGA, told SN the reforms are even more far-reaching than those first sought by a special CGA task force that was formed two years ago to tackle the issue. California businesses pay the highest rate in the United States for workers' compensation insurance, according to reports.
One retailer who asked not to be identified said his workers' comp costs have tripled in the last few years.
"It's definitely very beneficial for the industry," Larkin said of the measure, adding that it also includes provisions designed to improve care for injured employees.
The new law, which is more comprehensive than the reforms enacted in 2003, should enable businesses in the state to see cost savings this year, the CGA said. By working with key legislators to get the reform through quickly, Schwarzenegger also prevented the issue from appearing as a ballot initiative in the November elections.
Bill MacAloney, chairman and chief executive officer, Jax Markets, Anaheim, Calif., said the new rules are definitely more business-friendly than the reforms passed last year, which cut workers' comp rates by 7% and canceled a planned 12% hike for 2005.
"I think we're looking at a 33% reduction in workers' comp costs, so it's going to be very good for retailers," he told SN last week.
MacAloney recently lost a bid to earn a seat in the state assembly, and workers' comp reform was one of the key pro-business issues in his platform.
"There were a lot of factors that went into why we needed reform," he said. "I think the message here in California was that if you want businesses to stay in the state, you have to do something about the cost of doing business here."
A major aspect of the reform, he said, is allowing employers and insurers to control which doctors employees use when they are injured on the job. Previously, he said, lawyers for the injured workers often selected doctors, which sometimes prolonged cases and made them more expensive to resolve, driving up premiums.
"Before, if a lawyer didn't like one physician, he'd go to another, and you had to keep working all the time to put out the fires," MacAloney said.
The tort reform components of the new regulations should help businesses in the state, he said, as will caps on temporary disability.
According to the CGA, the reform package also includes a new standard for evaluating permanent disability, and prohibits workers from receiving disability payments for injuries -- or portion of injuries -- that occur outside the workplace. The new law also caps penalties assessed on insurers for late payments.
"Ten months ago, if you had said that we would get all of the reforms the task force outlined and more, I would have said otherwise," said Bill Zachry, vice president, workers' compensation, Safeway, Pleasanton, Calif., in a prepared statement. "Not only did we get all of the four points outlined from our task force proceedings, but we were also successful in obtaining other reforms that we have sought for decades."
Zachry served on the CGA task force that had been pushing for the reform.
Robert Piccinini, chairman and CEO, Save Mart Supermarkets, Modesto, Calif., said he is hopeful that the new law will provide cost savings for his company, but he's reserving judgment until he has more time to review the details. He said Save Mart spent about $22 million last year on workers' comp insurance.
"I think everybody -- big businesses, small businesses, service stations [and] grocery stores -- understood that the system we had was in great need of repair," Piccinini said.