California’s largest provider of workers’ compensation insurance plans to lay off more than 500 employees in Glendale next year — part of an overall strategy to cut up to 1,800 jobs statewide.
The government-controlled State Compensation Insurance Fund had planned to reduce expenses through negotiated concessions, consolidating offices and relocating thousands of workers, but officials said a drop in premiums paid by client companies forced the more drastic action.
The agency has already closed its Burbank claims-processing office at 2400 W. Empire Blvd., moving most of the 200 jobs to Fresno and Redding, but even some of those employees could lose their jobs.
“This decision was not easy,” fund spokeswoman Jennifer Vargen said.
Dozens of workers on Wednesday protested the layoffs outside the firm’s six-floor claim adjustments office at the Unum building near the Ventura (134) Freeway in Glendale. The office is slated to close in September.
“We all feel like he [Chief Executive Tom Rowe] lied to us,” said Richard Orrange, who has worked for the company for more than eight years.
Employees said they were told that, in general, clerical workers with less than 15 years of seniority will be laid off.
Carlos Juarez, who has worked for the company for 11 years, said he will likely be let go. With three children and a wife with a part-time job, he said he is worried about how his family will make ends meet.
“It’s very stressful,” he said. “I have trouble sleeping at night.”
Marina Strandjva, who has also worked for the firm for 11 years, said her job is on the chopping block, too.
She lives with her daughter, who recently graduated from college and landed an internship, but it doesn’t pay much.
“It’s just the two of us. It’s going to be very hard,” she said. “We have rent to pay.”
About 20 people at a time took part in the lunchtime protest, with workers rotating in and out so they could get something to eat.
The proposed list of layoffs is scheduled to be submitted soon to the Department of Personnel Administration, which must be notified because the employees are state workers and represented by a union.
The fund receives no tax dollars and is funded solely by premiums, which are paid by companies throughout the state.
About 10 years ago, the marketplace for workers’ compensation insurance was volatile, and several private carriers became insolvent or left the state, Vargen said.
In 2004, the fund’s peak year, it had $8 billion in premiums.
But reforms by Gov. Arnold Schwarzenegger to the workers’ compensation insurance industry attracted private insurance companies back to California, competing with the State Compensation Insurance Fund and taking more of the market share.
The fund’s premiums have now dropped to less than $1 billion annually, and its market share has plummeted from 52% in 2005 to 15% today — a 70% decline, Vargen said.
Meanwhile, the fund’s staff has decreased only 21%, mostly through attrition, according to a company report.
But protesters pointed to Rowe’s $450,000 annual salary with up to a 30% bonus as flying in the face of cutting expenses.
“If they don’t have money for workers, why do they pay bonuses?” said Debra Barsky, an employee who is district president of Service Employee International Union, Local 1,000. “Where does that money come from?”