Tag Archive for Sacramento Business Journal

Union Sues ObamaCare Program in California to Axe Kaiser Permanente from List of Twelve Qualified Health Plans

On August 7, Covered California – the program of the California Health Benefit Exchange established by the California Patient Protection and Affordable Care Act to implement the federal Patient Protection and Affordable Care Act (aka ObamaCare) – announced that it had executed agreements with twelve insurance companies in its market for individuals.

But wait! On September 4, the National Union of Healthcare Workers (NUHW) sued the California Health Benefit Exchange for the purpose of disqualifying Kaiser Permanente from participation in the program. (See National Union of Healthcare Workers v. California Health Benefit Exchange.) Of course, the lawsuit against Kaiser isn’t really about health care: it’s about union organizing.

There has been surprisingly little news coverage of this lawsuit, with the Sacramento Business Journal being the only news source with firsthand reporting on it. (See “Union Seeks to Block Kaiser from Health Benefit Exchange.”) Perhaps the topic is too complex or obscure, or perhaps news organizations are hesitant right now to show weaknesses in ObamaCare.

However, I reported on the lawsuit in my September 10, 2013 article in www.UnionWatch.orgUnion Files Lawsuit Exploiting ObamaCare in California for Organizing Purposes. I introduce the article by directing readers to “Add ObamaCare to the list of laws that California unions are exploiting for ‘corporate campaign’ strategies to coerce labor agreements or exert pressure during labor disputes.”

Request for Proposal for Prime Contractor for New Sacramento Kings Arena Refers to Project Labor Agreement with Construction Unions

As reported in the article Next Step for Kings: Bids for Professional Services in the July 2, 2013 Sacramento Business Journal, the new owners of the Sacramento Kings professional basketball team are moving forward with plans to build a new downtown arena:

City of Sacramento officials expect Sacramento Basketball Holdings LLC to select by August an architect and perhaps a general contractor or construction manager for early design work for the arena, which could break ground as soon as a year from now. Assistant city manager John Dangberg said the ownership’s arena design development will happen concurrently with gaining the necessary entitlements from the city, including development of an environmental impact report … construction could start next summer with the goal of being completed before October 2016, when Kings would open their first NBA season in a new site. Dangberg said a more detailed construction plan schedule will be developed alongside the EIR process.

Roebbelen Contracting Inc., a Sacramento firm, has announced it would be one of the bidders for the role, in partnership with PCL Construction, which built Los Angeles’ Staples Center, home to the Lakers and Clippers.

Despite the claim in this article that “the game is afoot for locals hoping for a piece of the most high-profile project in recent city history,” some local contractors won’t be inclined to participate because team owners feel politically compelled to impose a union Project Labor Agreement on construction companies working on the project.

The “Request For Proposal For Lead Contractor” issued on June 21, 2013 by Sacramento Kings Basketball Holdings informs prospective respondents that “The Contractor shall also meet and negotiate with local labor regarding a possible Project Labor Agreement for the ESC,” that is, the “entertainment and sports center.” In addition, respondents are asked to “Please describe your experience, if any, with labor on construction projects in northern California including, without limitation, negotiations with labor and the results, the size of the project, and project labor agreements.”

As far back as October 2003, Sacramento construction trade union officials were reportedly alluding to their desire for a Project Labor Agreement on a possible new Kings basketball arena. See my articles about the history of the Project Labor Agreement threat on this project:

The Union Quest for a Project Labor Agreement on a New Sacramento Kings Basketball Arena: Part One – 2006www.LaborIssuesSolutions.com – January 21, 2013

Out of Nowhere: Project Labor Agreement and Community Benefit Agreement Tacked on End of Motion for New Sacramento Kings Basketball Arena – www.TheTruthaboutPLAs.com – March 9, 2012

Protecting the Valley Elderberry Longhorn Beetle: One of Many Species Used By Unions to Block Projects Under CEQA Until the Owner Signs a Project Labor Agreement

Public objections based on the California Environmental Quality Act (CEQA) to proposed projects in California’s Central Valley often focus on how these projects could affect habitats of several species. Some prominent examples of these creatures are the Swainson’s Hawk (a California threatened species), the San Joaquin kit fox (a federally endangered species and a California threatened species), the Western burrowing owl (a California species of special concern), the giant garter snake (a federally threatened species and California threatened species), the vernal pool fairy shrimp (a federally threatened species), the Delta smelt (a federally threatened species and California threatened species), the California red-legged frog (a federally threatened species), and the Valley elderberry longhorn beetle (a federally threatened species).

Now, the U.S. Fish and Wildlife Service is preparing to remove the Valley elderberry longhorn beetle from the federal Endangered Species Program list, according to articles in the October 1, 2012 Sacramento Business Journal (Feds Urge Beetle’s Removal from Endangered Species List) and the October 2, 2012 Sacramento Bee (Valley Elderberry Longhorn Beetle May Fall from ‘Threatened’ List). This move is a result of legal actions by the Pacific Legal Foundation, backed by farm bureaus, developers, and special district public agencies that build and manage flood control systems such as levees.

As early as 2006, the U.S. Fish and Wildlife Service proposed to end the beetle’s threatened species status: “The slowdown in habitat loss, the protection and restoration of riverine habitat, and the increase in valley elderberry longhorn beetle occurrences, together have been the major reasons for the Fish and Wildlife Service (FWS) having considered delisting this species.”

Valley Elderberry Longhorn Beetle Habitat – still protected in 2012 in Roseville, California

Protecting and relocating existing elderberry shrubs and planting new elderberry seedlings is apparently expensive and inconvenient. The Rio del Oro development in the City of Rancho Cordova actually has its own “Valley Elderberry Longhorn Beetle Mitigation Plan” in its final Environmental Impact Report.

I checked to see if environmental law firms specializing in “greenmail” on behalf of construction unions had used threats to the Valley elderberry longhorn beetle as an environmental objection to proposed projects under the California Environmental Quality Act (CEQA). I did find one.

In a January 3, 2011 comment letter concerning the Initial Study/Mitigated Negative Declaration for the Fink Road Solar Farm in Stanislaus County (proposed by Turlock-based JKB Energy), the law firm of Adams Broadwell Joseph & Cardozo had this to say on behalf of California Unions for Reliable Energy (CURE) about the Valley Elderberry Longhorn Beetle:

3. The Project may result in significant impacts to the Valley Elderberry Longhorn Beetle

The Valley elderberry longhorn beetle is a federally threatened species. The MND states that the beetle may be present on the Project site but does not propose adequate mitigation measures to avoid or reduce the Project’s impacts. In Mr. Cashen’s opinion, impacts to the Valley elderberry longhorn beetle are not less than significant.

The preconstruction surveys described in the MND may not be sufficient to detect elderberry shrubs within the Project site. Specifically, the MND does not provide basic information as to who will conduct the survey and when it will be conducted. The Project may, therefore, cause undisclosed and unmitigated impacts to a federally threatened species.

If elderberry shrubs are found during preconstruction surveys, the MND proposes to prohibit ground-disturbing activities within 20 feet of the shrub to avoid impacts.117 This measure, however, would not avoid the Project’s impacts. The USFWS only assumes complete avoidance when a 100-foot buffer is established. Shading and wind deflection caused by the Project’s structures will impact soil temperature and evaporation. In addition, maintenance water to clean the solar panels will increase soil moisture. According to Mr. Cashen, these factors may have an adverse impact on elderberry plants if an adequate buffer is not established.

If avoidance is not feasible, the Applicant will have to obtain a federal Incidental Take Permit and comply with USFWS guidelines regarding transplanting affected elderberry shrubs to a conservation area and potential replacement planting.122 The MND, however, does not require the Applicant to comply with these federal rules if impacts to elderberry shrubs cannot be avoided. Without specific, enforceable mitigation measures to reduce the Project’s impacts, the County may not conclude that impacts to Valley elderberry longhorn beetles will be less than significant.

The elderberry longhorn beetle objections, along with the other objections, apparently did the job for California Unions for Reliable Energy. As reported in a March 1, 2012 staff report to the Stanislaus County Planning Commission:

The County received a comment letter from Adams Broadwell Joseph & Cardozo representing the California Unions for Reliable Energy (CURE). In response to this comment letter, the project applicant and CURE have signed an Agreement outlining how the applicant will address the issues and concerns raised by CURE in their comment letter. As a result, the project applicant has made minor revisions and modifications to the proposed project, including commitment to various environmental commitments that will be incorporated into the proposed project and made conditions of approval by the County.

I’m going to guess that this was one of the three Project Labor Agreement negotiations “resolved” for projects in Stanislaus County, as cited by Tony LaDoux of the Sheet Metal Workers Union Local No. 162 (now part of the consolidated Sheet Metal Workers Union Local No. 104) at the June 28, 2011 meeting of the Stanislaus County Board of Supervisors (who voted 5-0 for a Fair and Open Competition ordinance to ban Project Labor Agreements on county projects).

The county’s final approval of the Fink Road Solar Farm included the following plan regarding the Valley elderberry longhorn beetle:

To avoid and minimize impact to valley elderberry longhorn beetle, prior to construction, a survey shall be conducted for elderberry shrubs. The survey area shall include all areas subject to disturbance, and a 250 buffer area extending beyond areas subject to disturbance. In the event that any elderberry shrubs are found, the project applicant shall determine if the shrubs can be completely avoided. Complete avoidance would require no ground disturbance with 20 feet of the shrub. If complete avoidance is not feasible, the project applicant shall comply with USFWS compensation guidelines for valley elderberry longhorn beetle (USFWS 1999).

With California Unions for Reliable Energy out of the way and the Valley elderberry longhorn beetle safely preserved wherever it might be found, the Stanislaus County Planning Commission approved a CEQA Mitigated Negative Declaration for the Fink Road Solar Farm on a 5-0 vote on April 19, 2012, with no public objections.

Workers’ Compensation Reform Bill Sent to Governor Jerry Brown Has One Change to Union-Exclusive Alternative Dispute Resolution Carve-Out Program

On August 31, 2012 (the last day of the 2012 California legislative session), the California State Assembly voted 72-5 and the California State Senate voted 34-4 for Senate Bill 863, a bill making various changes to California’s workers compensation system.

As is customary in the California State Legislature, the bill was created as a gut-and-amend at the last minute (amended on August 24, August 27, and August 30) and whipped through the legislative process to Governor Jerry Brown on August 31 without adequate review.

As Sacramento Bee columnist Dan Walters wrote in his September 2, 2012 column entitled The Legislative Process Does Count:

A 170-page overhaul of California’s multi-billion-dollar workers’ compensation system – hammered out during months of secret negotiations between business and labor union lobbyists – was dumped on the desks of 80 Assembly members late Friday after being whisked through two perfunctory committee hearings…

So is SB 863 good public policy or not?

One can’t really answer that question, and the same ambiguity envelops almost everything else that was done, and left undone, in the final days of the session.

SB 863 was one of countless measures that popped up during those days, entirely new bills that were hustled through the process with little or no detailed knowledge of what they really do, or whose interests they serve.

I looked at the final version of Senate Bill 863 to see if the bill changed the obscure alternative dispute resolution “carve-out” program authorized exclusively for the unionized construction industry. It does. For some reason (innocuous or sinister?), Senate Bill 863 eliminates this reporting requirement, which was part of the original 1993 authorization:

By June 30, 1996, and annually thereafter, the Administrative Director of the Division of Workers’ Compensation shall prepare and notify Members of the Legislature that a report authorized by this section is available upon request. The report based upon aggregate data shall include the following:

(1) Person hours and payroll covered by agreements filed.

(2) The number of claims filed.

(3) The average cost per claim shall be reported by cost components whenever practicable.

(4) The number of litigated claims, including the number of claims submitted to mediation, the appeals board, or the court of appeal.

(5) The number of contested claims resolved prior to arbitration.

(6) The projected incurred costs and actual costs of claims.

(7) Safety history.

(8) The number of workers participating in vocational rehabilitation.

(9) The number of workers participating in light-duty programs.

The division shall have the authority to require those employers and groups of employers listed in subdivision (c) to provide the data listed above.

Why was this language eliminated? The legislative analyses for the bill don’t say.

Background on Alternative Dispute Resolution in Carve-Outs for Unionized Companies

This program was established as California Labor Code Section 3201.5. It was part of a workers compensation reform enacted by Governor Pete Wilson in 1993. The program was expanded by reform legislation signed by Governor Arnold Schwarzenegger in 2004. (Section 3201.7 allows unionized employers in other industries to set up similar programs.)

An article in the March 10, 2006 Sacramento Business Journal (“Unionized Firms Save in Workers’ Comp Plan“) gave rare news media attention to this program, which is only available to construction companies in a collective bargaining agreement with unions or signatory to a Project Labor Agreement. I’m quoted in the article:

Too bad this kind of program is only allowed in the construction industry when companies and employees are part of a collective bargaining agreement, said Kevin Dayton, state government affairs director for Associated Builders and Contractors of California, a merit-shop group.

The California Department of Industrial Relations maintains a list of what are now 34 carve-out programs established to date. Unions have promoted this program as a benefit of unionization. For example, the California Commission on Health and Safety and Workers’ Compensation (CHSWC) – then (and now) chaired by California Labor Federation lobbyist Angie Wei – was able to commission what is now the University of California Miguel Contreras Labor Program to produce a 2006 report entitled How To Create a Workers’ Compensation Carve-Out in California: Practical Advice for Unions and Employers. The California Commission on Health and Safety and Workers’ Compensation has also hosted at least one conference on Workers’ Compensation Carve-Outs and Alternative Dispute Resolution.

Although I never hear carve-outs cited nowadays as a reason to require contractors to sign a Project Labor Agreement, unions and pro-union construction management firms such as Parsons Constructors used the existence of this alternative dispute resolution carve-out program as an argument in support of Project Labor Agreements for large infrastructure projects during the early years of government-mandated Project Labor Agreements in California (1993-2000). One example was the Project Labor Agreement for the U.S. Department of Energy’s Lawrence Livermore National Laboratory National Ignition Facility in Livermore, California. It was negotiated in 1997 between construction manager Parsons Constructors and officials of the Building and Construction Trades Department, AFL-CIO and the Building and Construction Trades Council of Alameda County.

Seeking Access to Alternative Dispute Resolution for Non-Union Contractors

In 1998, then-Senator Dick Mountjoy introduced Senate Bill 2019, sponsored by the California Business Properties Association (the contract lobbying firm at the time for three California chapters of Associated Builders and Contractors), which would have eliminated the requirement that alternative dispute resolution programs for workers compensation in the construction industry be part of a collective bargaining agreement. Opposed by unions and trial lawyers, the bill did not get out of committee, and since then there have been no attempts to expand alternative dispute resolution in the construction industry outside of the unionized arena.

Before the 2011 legislative session, I attempted on behalf of my former employer (Associated Builders and Contractors (ABC) of California) to develop language that would allow non-union contractors to reduce workers compensation costs through participation in an alternative dispute resolution program. I was unable to figure out a way to graft such a program onto the existing law, which is dependent on the models of union collective bargaining agreements and labor-management cooperation committees.

Trying to Eliminate Favoritism in California State Law for Bidders in the Union-Exclusive Alternative Dispute Resolution System

Various laws authorize state agencies and local governments in California to award contracts for construction projects with subjective “best value criteria” under the “design-build” alternative bidding procedure. Unionized contractors that are part of alternative dispute resolution carve-out programs get a special exemption from safety requirements.

Design-build authorization language throughout California law includes the following:

A bidder’s safety record shall be deemed acceptable if their experience modification rate for the most recent three-year period is an average of 1.00 or less, and their average Total Recordable Injury/Illness rate and average lost work rate for the most recent three-year period does not exceed the applicable statistical standards for its business category, or if the bidder is a party to an alternative dispute resolution system, as provided for in Section 3201.5 of the Labor Code.

So a bidder in an alternative dispute resolution system (under California Labor Code Section 3201.5) does not have to worry about the experience modification rate or injury/illness/loss rate. As noted above, Section 3201.5 only applies to contractors in either a collective bargaining agreement or a Project Labor Agreement. Non-union contractors cannot use this method of alternative dispute resolution.

On January 11, 2010, the Assembly Business and Professions Committee considered Assembly Bill 1063, introduced by Assemblyman Martin Garrick and sponsored by my former employer, Associated Builders and Contractors (ABC) of California. It would have removed language that allows a contractor with a poor safety record to be “acceptable” if it is part of an alternative dispute resolution program that by law is restricted to contractors in a collective bargaining agreement or project labor agreement.

ABC of California argued that all design-build entities should have a decent safety record, without exceptions. The Western Electrical Contractors Association stated that “A safety record should be based on safety – not the existence of a side-agreement over dispute resolution – the two have nothing to do with each other! There is simply no valid public policy served by this requirement.” But the California Labor Federation, AFL-CIO opposed AB 1063 by praising unions and their activities, which was sufficient for the bill to fail on a party-line vote (Democrats opposed, Republicans in support.)


Update, October 31, 2013: The California Department of Industrial Relations (DIR) issued a bulletin on October 28, 2013 announcing The Division of Workers’ Compensation (DWC) Approves Carve-Out Agreement Covering 22,000 Workers in Southern California between seven Southern California United Food and Commercial Workers (UFCW) local unions, Vons and Super A Foods. I sent this tweet in response:

A labor attorney representing management emailed me a response:

But Kevin this can only work under a union contract because the health plan workers comp plan and grievance process are combined. A good idea. Still, few unions have implemented as it is a lot of work to make it work…Impossible to do in a non-union setting as the grievance process side of things would be cost prohibitive and disruptive – only works in union setting as the grievance process is already in place, as is the trust health plan administration system which does double duty – that is reason for efficiencies. Maybe some giant corporation might try it non-union but doubt it – frankly most unions see the benefits but it is so much work and can cause employee dissatisfaction if a comp case goes wrong that not worth it. And then what do you do with claimants’s lawyers? – nice idea, but generally a no-go.