Labor Battling Governor Over Key Appointee

An expected showdown over a key appointment by Gov. Arnold Schwarzenegger could mark the beginning of a yearlong battle between the governor and organized labor over workers’ compensation, employee pensions, mandatory lunch breaks and a host of other workplace issues.

Unions and attorneys for injured workers are planning a coordinated attack on Andrea Hoch, the governor’s point person for implementing last year’s landmark workers’ compensation insurance overhaul, when she appears before the Senate Rules Committee for confirmation.

Labor intends to mount “a mass turnout,” union officials say. Public relations experts will stage media events. Dozens of injured workers have signed up to testify about benefit cuts, and scores of others will be packing the hearing room. The California Applicants’ Attorneys Assn., which represents accident victims, is urging its 1,000 members to write letters of opposition.

“We want her to follow the law, and if she doesn’t, she should not be the administrative director,” said Angie Wei, a lobbyist with the California Labor Federation.

Hoch’s supporters are marshaling as well, and the intensity of interest is such that the Rules Committee decided late Friday to postpone the confirmation hearing indefinitely to give both sides more time to file comments.

The battle over the Hoch appointment is just one part of the broader conflict between the forces of labor and the governor and his business allies.

“The governor had declared war on organized labor,” said Barry Broad, a lobbyist for the International Brotherhood of Teamsters. “He calls the lowest-paid workers in the state ‘special interests,’ and the corporations, who make [political] contributions, decent people.

“When you’re attacked and attacked, you just have to fight back.”

Schwarzenegger spokesman Vince Sollitto counters that the governor has no anti-labor agenda. Rather, he is intent on pursuing a series of changes aimed at creating jobs and boosting the economy.

“It’s no surprise that the opponents of reform feel beleaguered,” Sollitto said. “Special interests always fight tooth and nail to protect their gravy train.”

It’s also no surprise that political storms are gathering over the workplace. Schwarzenegger or his deep-pocketed backers are threatening to go to the ballot box this year with at least five issues that could significantly affect labor.

The potential ballot measures would put automatic spending caps on state budgets; shift public employee pensions to 401(k)-type investment plans; tie teacher pay increases to classroom performance; restructure state agencies, including some that oversee the welfare of workers; and bar labor unions from making certain types of political contributions.

In addition, labor is fighting proposed regulations governing employee lunch breaks and staffing levels for nurses in hospitals. Conflicts in the Legislature over minimum-wage hikes and health insurance benefits also are likely this session.

If the opening skirmish over the Hoch nomination is any indication, common ground won’t be easy to find.

“I’ve got a stack of correspondence” about the Hoch nomination, said Senate Rules Committee member Debra Bowen (D-Marina del Rey). “If I read it all, I would think I was dealing with two completely different people.”

Unions accuse Schwarzenegger and Hoch, the administrative director of the state’s Division of Workers’ Compensation, of double-crossing them on a deal struck in April that changed the way compensation benefits are calculated for victims of workplace accidents. Unions argue that the shift -- spelled out in regulations issued by Hoch on Jan. 1 -- cuts overall benefits by as much as 50%.

Proponents say the new system, based on American Medical Assn. standards and estimates of employees’ lost future earnings, serves to increase fairness and objectivity without cutting payments, so injured workers can get on with their lives.

Labor maintains that its campaign against Hoch is meant to “send a signal” to the Schwarzenegger administration and not to be a personal attack on the workers’ comp director. Indeed, Hoch, a career attorney at the state Department of Justice, enjoys a stellar professional reputation and served most recently as head of the civil law division for Atty. Gen. Bill Lockyer, a Democrat.

“We don’t like to oppose confirmations, but in this case we have been left with no choice,” said Wei, the California Labor Federation lobbyist. “The governor needs to know that breaking a deal does not work around here.”

The Schwarzenegger administration and its business allies call such criticism “buyer’s remorse.” Ousting Hoch, they warn, could slow the process of putting in place all the complex regulatory pieces needed to enable the overhaul legislation to meet its goal of curbing the nation’s highest workers’ comp costs. And recalculating permanent disability payments is a big part of cutting rates by the minimum 30% that Schwarzenegger promised.

Labor and the Applicants’ Attorneys Assn. are trying to turn back the clock in “the misguided hope that the fervor for reform has faded,” Sollitto said.

Allan Zaremberg, president of the California Chamber of Commerce, said Hoch was “being made a target for doing her job,” because “the only thing she’s guilty of is following the Legislature’s intent to reduce costs” in the workers’ comp system.

Insurance industry executives are solidly in Hoch’s corner.

“Andrea has been probably the most proactive director I’ve seen in that job for years,” said Jim Little, president and chief executive of Employers Direct Insurance Co., a 2-year-old workers’ comp carrier in Agoura Hills. “The woman has done a fantastic job of getting things done.”

Hoch, whom Schwarzenegger appointed shortly after he signed his workers’ comp bill in April, declined to be interviewed before her confirmation hearing. By law, to remain in office, she must be confirmed by the state Senate by April 25, the one-year anniversary of her appointment.