At a time when workers compensation benefits have been reduced and worker benefit packages shrunk, you'd think that many companies would have "cooled it" on executive compensation.

Not so.

Today's Wall Street Journal article by Ellen E. Schultz and Theo Francis
(see link at the close of my post) investigates the growing practice of funding executive pay packages out of pension funds. Companies doing this-which include the Bay Area's Intel-can get tax breaks intended for pensions of regular workers and use them for executive pay.

This adds further risk to many of the pension plans, many of which are underfunded. In the case of Consolidated Freightways, this type of pension shift resulted in Consolidated having just 79% of the assets it needed for paying obligations. The Pension Benefit Guaranty Corp
(not the Rock of Gibraltar itself) had to step in.

The Wall Street Journal investigation found that in Intel's case, a majority of the assets in the pension plan are dedicated not to the pension of rank and file workers but rather to the payout of executives who make up only 4% of Intel's workforce.

This blog usually focuses on workers' comp. But it's important to step back sometimes to get the big picture. Workers-including injured workers-are sometimes suffering while the hogs feed at the trough.

Julius Young
http://www.boxerlaw.com/news.html
(you can subscribe to the blog by clicking on the RSS button on the lower right column under "Most Recent Entries")

You can see the Wall Street Journal article here:
http://online.wsj.com/article/SB1217619 ... s_page_one

Those folks in Bentonville are at it again. Wal-Mart is jumping into the political arena.

Today's Wall Street Journal reports that Wal-Mart is organizing all its store managers and department heads to warn that an Obama victory would make it easier for workers to unionize.

Thousands have been summoned to mandatory meetings meetings which
advise about the concern that a Democratic victory could lead to more
union membership.

Wal-Mart is bitterly opposed to the proposed Employee Free Choice Act.
If enacted, the Employee Free Choice Act would allow workers to vote for unions by signing a card rather than just in one secret ballot election. The bill passed the House last year but was taken off the Senate floor after a fillibuster and threatened veto by President Bush.

This comes at a time when Labor Department stats show that workers are losing ground to soaring energy and food costs. Workers are paying a higher share of their benefits. To see some of the stats, click here:
http://latimesblogs.latimes.com/money_c ... surge.html

You can find the Wall Street Journal article here:
http://online.wsj.com/public/article_pr ... 03381.html

Stay tuned.

Julius Young
www.boxerlaw.com

Feel better now?

President Bush, Henry Paulson and Congress have cooked up their $300 billion housing rescue package. Perhaps this may help you, or your neighbors (if your lender cooperates and if the numbers still make sense for hanging onto a house rather than walking away from it).

Or as a taxpayer, perhaps you are bemused. You, the taxpayer, and your government, now explicitly guarantee Freddie Mac and Fannie Mae and
are responsible for propping up their stock price. Public guarantees for
private risk taking enterprises. The times, they are a'changin....

One commentator, Bert Ely, was quoted as saying "We have two gigiantic hedge funds out there that now are almost wards of the federal government".

It's part of the "too big to fail" philosophy that seems to have taken root in Washington.

It got me thinking about CIGA, the California insurance Guarantee Association. CIGA is funded by surcharges on solvent insurers. CIGA pays the California workers' comp liabilities of insolvent carriers. Although financially stressed a few years ago when several insurers were liquidated , CIGA came through the crisis.

Could a CIGA-like system be designed where mortgages were surcharged to create a national bailout fund to deal with the kind of crisis we're seeing? Perhaps not. I'm no mortgage industry expert.

But taxpayers-and renters-are now on the hook. The potential exposure is absolutely astounding.

It's also a generational issue. Gen Next kids may be holding the bag for the foibles of Baby Boomer and Gex X folks. Go buy a copy of Christopher Buckley's "Boomsday" for your August read on the beach.

The Fannie and Freddie bailouts create a precedent for other bailouts that is disturbing. Big banks may fail. It's not likely, but what if a large insurer should fail? CIGA will cover the California comp liability, but then there's always Uncle Sam.

You and me.

Julius Young
www.boxerlaw.com

George Carlin had his 7 words. The 7 words you can't say on television.
Remember what they were?

If Gov. Schwarzenegger has his way with an executive order dropping state worker pay to minimum wage levels during the budget impasse , many Department of Industrial Relations employees will have their "two words".... "f-him"

Let's hope the budget crisis doesn't impact hard working folks at the district offices of the California Workers Compensation Appeals Board, or the consultants who are working on a number of projects for the DWC.

Tonight we're focusing on some other, more lofty words.

Take Tom Geoghegan. Geoghegan, a Chicago labor lawyer and author has his "6 words". The 6 words? "On the basis of union membership".

The idea is to add union membership to Civil Rights laws as a protected category. This would broaden worker protection for union activity at a time when management has gotten the upper hand in federal labor law under the National Labor Relations Board. Union membership has fallen
to very low levels in most California industries. Certain law firms are noted for their union busting talents.

Most kids now growing up in California don't understand unions and the role they've played in the development of this country. I'm not saying that they need to know who Samuel Gompers, Walter Reuther or John L. Lewis were. But few kids now have any exposure to unions.

Yet its unions that have led the push for worker safety and better conditions.

The "6 words" would help level the playing field.

This is the thesis of an op-ed piece by labor and economic justice advocate David Sirota. Check out Sirota's piece (that appeared in the San Francisco Chronicle) by clicking here:
http://www.sfgate.com/cgi-bin/article.c ... =printable

This is a concept that might get traction under a Democratic Governor in California or under an Obama presidency.

The California Labor Federation held its convention in Oakland last week. Some unions have their back to the wall, while others are pressing ahead to organize new swaths of the labor force.

It's been good to see organized labor show more interest in workers' compensation recently. In case you missed it, the California Labor Fed did a study on workers' comp:
http://www.calaborfed.org/PDFS/2007/Leg ... .27.07.pdf

Legislative director Angie Wei spoke at last week's hearings on the PD schedule proposal, urging that it be revamped even more.

Stay tuned.

Julius Young
www.boxerlaw.com
(you can subscribe to the blog by clicking on the RSS button on the lower right column under "Most Recent Entries")

My last post covered Tuesday's Oakland hearings on the DWC proposal for a small increase in benefits for permanently disabled workers.

What's the position of the applicant attorneys on the issue? Is CAAA setting forth a proposal of its own?

After all, interest groups are often reluctant to set forth policy proposals for fear that such proposals will set up a negotiating disadvantage. When's the last time you heard a proposal for meaningful immigration reform from either the Federalist Society or FAIR (on the right) or La Raza or ACLU (on the left)? I'm a non-doctrinaire ACLU member, so I can say that. Sometimes it's easier to harp on the most extreme abuses of the system than it is to suggest the hard choices neccesary to create workable reform.

CAAA was basically excluded from the table during negotiations on comp reform in 2005 and from meaningful participation in design of the 2005 PDRS.

But this week CAAA took the leap, setting forth a proposal for revise of the 2005 permanent disability schedule.

Below I've posted a pdf of the CAAA position papers.

If you're not a workers' comp groupie, put on your thinking cap. There's a lot of jargon. RAND report. Concept of diminished future earning capacity. Crosswalk factors. FEC modifiers.

A good place to start is the piece by insurance consultant Mark Gerlach which explains the background of the diminished future earning capacity concept:

Diminished Future Earning Capacity

Here is the July 2008 PDRS revise proposal by CAAA (in pdf format):

Proposed Regulation

For more background on the issue, here's the link to my recent piece in the California Progress Report:
http://www.californiaprogressreport.com ... ork_2.html

Those wanting more background might want to look at the 2006 CHSWC report on PD schedule reform:
http://www.dir.ca.gov/CHSWC/Reports/CHS ... 3-2006.pdf

Ultimately, action on the PD schedule will be political. Now that hearings are done, Ms. Nevans (DWC AD) must take a stand.

The outcome may determine whether Nevans is confirmed or whether she becomes a casualty of the ongoing comp wars in one of the last acts of the Perata period.

More later on details of the CAAA proposal.

Julius Young
www.boxerlaw.com
(you can subscribe to the blog by clicking on the RSS buttons on the right column under "most recent entries")