Dual Wage Hike for California Contractors

The Workers' Compensation Insurance Rating Bureau (WCIRB), isn't taking no for an answer. It is making another attempt to increase the dual wage thresholds for three construction classifications. Last year, conscientious about the economic implications, Insurance Commissioner Dave Jones rejected the proposal. The WCIRB is completely supported by and primarily governed by insurance carriers.

This years proposed increase in the split point for electrical wiring is the same as what was rejected, but the Bureau is backtracking on two other classes and recommending a smaller increase for plumbing and sheet metal work.

The move for a $2 per hour increase was approved by the Classification and Rating Committee but must still be ratified by its Governing Committee before it can be added to the next rate filing. As currently drafted, the proposal would boost the threshold for electrical wiring (classifications 5190/5140) to $30 per hour, while sheet metal work (5538/5542) would climb to $27. Plumbing (5183/5187) would increase to $26. The commissioner rejected last years proposals for increases of $2, $3 and $5 per hour respectively.

In the California Department of Insurance's decision rejecting the increase, hearing officer Chris Citko maintained that there's a "distinct possibility" that affected employers would just boost wages to retain access to the lower cost coverage. "This will result in the redistribution of the risks right back to where they currently are," Citko reasoned in rejecting the increase.

Employers most affected by the move - primarily non-union shops-remain opposed to any increase at this time while they are still dealing with California's poor economic conditions.

"I look at it from the perspective of how it is going to affect the individual contractor - they're either going to have to give a $2 increase to those in the threshold or pay the higher premium," says Richard Markuson, a representative for the Western Electrical Contractors Association (WECA), Plumbing-Heating-Cooling Contractors Association (PHCC), and the Air Conditioning Trade Association (ACTA), noting that in either case the contractor will be paying more premium. "The employer simply sees it as no change to the workplace that would make it safer - it just raises costs."