Clearly calling it what it appears to be, the Service Employees International Union Local 1000 (SEIU) says State Compensation Insurance Fund’s restructuring plan is actually an illegal layoff plan. SEIU wants it stopped. The union sent California’s largest workers’ comp carrier a cease-and-desist letter demanding that it stop all implementation efforts.

More important, State Fund personnel are suffering a great deal of angst and most are demoralized over the choices and actions that management has decreed.

“The union understands that SCIF intends to transfer staff to other geographic locations, close offices and downsize approximately 1,400 positions through means other than layoffs. The Union also understands that SCIF intends to give employees an options letter as early as January, 2011 and to require individual decisions about transfers by May for a fall, 2011 move,” writes Carrie Cianchetti, director of strategic campaigns for SEIU Local 1000, in a letter to State Fund’s labor relations officer.

“The Union believes that SCIF intends to proceed with this process in an illegal manner and in violation of the MOU negotiated between the parties.”
— Carrie Cianchetti, SEIU Local 1000

“The Union believes that SCIF intends to proceed with this process in an illegal manner and in violation of the MOU negotiated between the parties. As a result, unless SCIF is willing to cease and desist, the Union will have no other alternative but to seek appropriate legal remedies to enjoin SCIF’s illegal actions.”

While the union was drafting its response, thousands of State Fund workers spent a stressful holiday season mulling the developments and their options. But soon they will get the opportunity to vent some of this frustration and deliver their own message personally.

State Fund’s board is scheduled to review issues surrounding the relocation plan during its upcoming meeting: once during a presentation by human resources director Andreas Acker, and then again during president Tom Rowe’s presentation. The union and its members are expected to have something to say on the matter as well.

“Per SB 1145, SCIF Board meetings are subject to the Bagley-Keene Open Meetings Act. In compliance with Bagley-Keene, parts of the meeting are held in open session and the public is welcome to attend and make comments,” the union noted in a reminder to its members that the meeting was approaching. Barring any legal challenges, the relocation plan is scheduled to kick off in the first quarter. But the bulk of it will play out over the next three years.

Next Steps

Beyond expressing their displeasure directly to the board, workers affected by the moves do have options. But those options appear to be of the “pick your poison” variety, if worker feedback is any indication.

“Everyone here is devastated and in complete shock. We haven’t been able to do hardly any work due to being so upset and stressed from this information. It would be different if we were able to move to an office one to two hours away, but they are sending us 300 miles away,” noted one worker after receiving word of the relocation from management. “Don’t believe the statement [from State Fund management] that our service will not be affected; it already is and will just get worse once people start leaving.”

The workers’ comp carrier will get the ball rolling by closing State Fund offices in Commerce and San Bernardino. Combined, the two offices house nearly 270 employees. Workers staffing the state contracts claims office in Commerce will move to the relatively nearby Santa Ana office, while that office’s state contracts legal operations will move to Santa Ana and Glendale. Underwriters from the San Bernardino office also are moving nearly 50 miles away to the Santa Ana office. The longer-distance transfers, many involving moves of hundreds of miles across the state, are slated to begin in the fall.

What options do employees have? One is to accept the transfers and follow their jobs to the new locations, whether across the Los Angeles basin or across the state. This is clearly not the option that State Fund management wants, as the bulk of the program’s planned $200 million in savings is tied directly to savings from reduced personnel costs.

And therein lies the real issue. Rather than a layoff, which at least would have been honest, and maybe even a class act, as one employee told Workers’ Comp Executive, “they hide and duck and cover and move people out of the same office they are moving others into. This was not even a subtle screw job.”

“Without delving into the detail of budget projections, I can tell you that the bulk of the anticipated savings are salary-related and tied to a predicted increase in attrition.”
—Jennifer Vargen, State Fund

“Without delving into the detail of budget projections, I can tell you that the bulk of the anticipated savings are salary-related and tied to a predicted increase in attrition,” says Jennifer Vargen, State Fund spokeswoman. “The next most significant targeted savings come from real estate and the costs associated with maintaining real estate. While the numbers will vary from office to office, overall we expect most employees will remain with State Fund.”

Hidden Cost of Savings

For those workers who do accept the transfer, the quasi-governmental agency will be on the hook for a hefty set of moving expenses.

Under state regulations, employees can qualify for relocation assistance if the involuntary transfer involves a move that is more than 50 miles, plus the distance of the prior commute. In these instances, workers can be reimbursed for the cost of packing, transporting and unpacking household effects; and traveling, lodging and meal expenses for up to 60 days while locating a permanent residence. The lodging and meal expenses will be reimbursed at the normal state rate for business travel. The carrier will also be on the hook for storing the workers’ household goods for up to two months while they look for a new place.

Employees forced to sell their homes or break a lease as part of the relocation could get additional help. The regulations could put State Fund on the hook for up to a year’s worth of rent or the brokerage costs and other fees in case of a sale.

Just how much all of this will cost the carrier in the short term is unknown. “I can tell you that relocation and other benefits contained within our announced plans to consolidate State Fund operations are contained within operating budgets and forecasts through 2013,” says Vargen. “The $200 million estimate is net of all anticipated costs associated with moves and closures.”

 Unlikely Alternatives

So where might these displaced workers go if and when they refuse a transfer?

All employees affected by the involuntary transfers are placed on a State Restriction of Appointments (SROA) list that gives hiring preference to state employees facing a layoff. The SROA lists give affected State Fund employees a leg up on finding a job with departments filling a vacancy in the employee’s current class over other employees just looking for a new position. The State Personnel Board maintains lists of open positions with state agencies. But State Fund’s unusual classifications do not necessarily track the normal state classification system.

While State Fund maintains that the relocation program is not a layoff, it will treat employees who refuse the transfer as voluntary layoffs. This will make them eligible for unemployment benefits and may give them additional rehire rights, such as “list preference” once they separate from the state. The Department of Personnel Administration (DPA) defines this as “Hiring departments must give first preference to employees on reemployment lists, followed by SROA lists.”

“They trained me and have wasted their resources if I move on to another company or a different industry.”
— State Fund employee

Whether this will apply to any of the displaced State Fund employees is unclear, as neither State Fund nor DPA could answer that question. “The hiring preference that applies in cases of layoff may or may not apply in this case, since the SCIF employees aren’t being laid off. That decision hasn’t been made,” says Lynelle Jolley, communications director for DPA. Vargen also begged off on the question, saying, “I don’t have the details of how the DPA lists work.”

In addition to potential moves within state employment, State Fund says it will help prepare workers for jobs in the private sector. “We will also provide assistance with resume writing, job search, interviewing skills, etc.,” says Vargen. “We can also provide some assistance with counseling and legal, real estate advice through our EAP program.”

Some workers are prepared to go that route. Another worker noted to Workers’ Comp Executive that she is keeping her options open. “If I have to move, I will. However, I am looking at other options,” she said, noting that family considerations make the choice to move a difficult one. “They trained me and have wasted their resources if I move on to another company or a different industry.”

State Fund will send workers affected by the 2011 transfers an option letter later this spring to ascertain who will move and who will leave. Workers will have about a month to consider their future with the carrier. In the meantime, many are considering their future away from the carrier, which fits into State Fund’s overall plan just fine.

Click here  for a copy of the cease-and-desist letter.

(Filed in San Francisco by Brad Cain, edited in Sacramento by Dale Debber)