LOS ANGELES — Score one for Gov. Arnold Schwarzenegger and quite possibly the state’s apparel community as well.
The California Legislature passed a landmark bill on Friday to reform the state’s costly workers compensation system after weeks of negotiations with the governor, who made the bill a top priority during last year’s gubernatorial recall campaign. The Assembly passed the bill by a 77-3 vote and the Senate voted 33-3 to adopt the compromise measure.
Schwarzenegger, who withdrew his voter initiative on the matter Thursday, will sign the bill in a ceremony today at the Boeing facility in Long Beach that is home to the C17 cargo airplane. “Our state can now become once again the job-creating machine it once was,” the governor said in a statement.
The legislation aims to do so by requiring employees to use doctors approved by their employers and insurance companies; limiting more costly temporary disability payments to two years, with some exceptions in time period; reducing payments for injuries if a preexisting condition contributed to the work-related problem, and standardizing workers’ impairment ratings using American Medical Association guidelines.
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Jobs and business retention are the reasons cited for the state’s three-year lag in economic growth. Last month, California added only 5,200 jobs compared with 308,000 jobs nationwide. Within the state’s apparel industry, for example, manufacturing employment in March fell about 8 percent to 86,300 jobs. In Los Angeles, the figure dropped about 7 percent to 67,000 jobs.
According to various estimates, the reform measure, SB899, authored by Sen. Charles Poochigian (R-Fresno), could cut between $4 billion and $7 billion in costs out of the state’s $22 billion system for aiding injured workers. For the apparel industry — one of the sectors hardest hit by costly state regulations — the bill could bring savings sooner than later. “At least something has been done and businesses don’t have to wait for the [November] initiative process to work, which wouldn’t have brought relief till next year,” noted Jack Kyser, senior economist at the Los Angeles County Economic Development Corp. “Companies have been on the knife-edge waiting for savings, or else they plan to move out of state. For the apparel industry, which is a narrow margin industry, the concern is they’ll continue to move production offshore, unless business costs decrease.”