Calif. Injured Workers Protest Gov. Schwarzenegger’s Permanent Disability Compensation Cuts

April 5, 2005, the California Labor Federation, AFL-CIO, and the California Applicants’ Attorneys Association, Monday rallied injured workers in opposition to Governor Schwarzenegger’s new rating schedule that they said dramatically reduces compensation for injured workers who suffer permanent disabilities.

Hundreds of injured workers protested the schedule both outside and inside at a San Francisco public hearing on Gov. Schwarzenegger’s reductions, originally adopted on Jan. 1, 2005 under the governor’s emergency powers and are now proposed to become permanent. Studies have reportedly shown Schwarzenegger’s schedule will reduce permanent disability compensation by an average of 50 percent to 70 percent.

Advocates for injured workers said that the Schwarzenegger Administration’s permanent disability compensation schedule “will cost California families their homes, their cars and their hope. Hundreds of thousands of Californians are injured at work each year, and tens of thousands endure lifetime disabilities from those injuries,” said Mark Hayes, president of, a non-profit political organization of injured workers and their families. “They never regain the earnings lost. Governor Schwarzenegger is cutting already-inadequate compensation by 50% to 70% for permanently disabled workers. There is a crisis across California. Injured workers are being driven to the poorhouse by this governor. He has cut the meager compensation that injured workers receive, while letting insurance companies pocket billions of dollars taken away from injured workers. That’s both a tragedy and a travesty. This schedule must not stand.”

“Adopting this rating schedule will result in a tremendous reduction in permanent disability compensation for injured workers,” said California Applicants’ Attorneys Association President David Schwartz. “The ratings under this schedule do not provide fair or adequate compensation for injured workers. The Administrative Director has refused to follow the statute and the Legislature’s intent. We are asking that the Governor and Administrative Director immediately withdraw this improper schedule, but if they do not, we intend to continue our legal challenge to the validity of this schedule.” Schwartz said that the new cuts set permanent disability levels “lower than they were in 1983.”

Injured workers have no right to sue their employer for the damages caused by their work-related injuries. Their only compensation comes under the state’s workers’ comp system. Permanent disability compensation compensates workers for the lifetime consequences of their injuries, including their reduced ability to compete equally with other similarly skilled workers.

Several studies of workers injured on the job reportedly show that these workers lose a substantial portion of what they would have earned over their working lifetimes. Despite the fact that the permanent disability compensation provided to these workers does not replace even half of that earnings loss, the new rating schedule being adopted by Gov. Schwarzenegger will reportedly further reduce the compensation provided to these permanently disabled workers.

The reductions in compensation were documented in the only scientific study of the new schedule. Conducted by University of California at Davis Professor Dr. J. Paul Leigh, the study of 218 back, shoulder, wrist and knee injuries reportedly found that under the governor’s proposed disability schedule, on average injured workers would receive a disability rating that is just one-third as high as the rating that would have been assigned before the governor’s changes. Schwartz said that cutting compensation for injured workers by two-thirds, on average, is not only unjustified, but threatens the very foundation of the workers’ compensation system.

A study by the California Health, Safety and Welfare Commission reportedly found that the governor’s proposed ratings reduces permanent disability compensation an average of 50%.

Injured workers told the state administrators and a noon rally that the proposed reductions would wreak economic havoc on their families’ finances.

Marie Fanelli, a salesperson at Nordstrom and a teacher, suffered a disabling injury at work when a ladder fell across her back. The new schedule would reportedly reduce her disability rating from 52% to 18%, and her Permanent Disability compensation from $52,000 to $11,500, a reduction of 78%.

“As a single parent of two college students, the loss of health and job was a catastrophic event for my family,” said Fanelli at the news conference. “The system is struggling at current levels to keep DWC’s mission — to minimize the adverse impact of work-related injuries on California employees and employers. In my mind, the devastation caused in implementing the proposed devalued guidelines would be a clear breach of that mission and another broken promise from my governor.”

Peter Balestrieri, a store manager at Shamrock Materials in Cotati, fell and injured his back, neck, hips and knees. He would reportedly see his disability rating of 57%, meriting an award of $54,782, reduced to 30%, meriting an award of $21,420, a reduction of 61%. “My work injury has cost our family dearly. We have lost so much income that we are struggling to keep our home, which we have done only due to my wife’s employment. I am the father of two kids, and I lay awake at night wondering how we’ll survive. This is not what the governor promised. The workers’ compensation system has not been fixed, and this new permanent disability schedule will harm my family and thousands of others like us.”

Angie Wei, legislative director for the California Labor Federation, AFL-CIO, told the news conference, “The new permanent disability schedule violates both the spirit and the letter of SB 899. These regulations do not accurately reflect an injured worker’s lost future earnings, and result in drastic cuts to permanent disability compensation. The governor promised that benefits would not be taken away from truly injured workers, but that is what this regulation does.” and the California Applicants Attorneys Association have filed a lawsuit to stop the Schwarzenegger Administration from implementing its new schedule.

According to a RAND Institute for Civil Justice study, permanent disability benefits under California’s prior rating schedule replaced less than 40 percent of the earnings losses experienced by injured workers. Now, Gov. Schwarzenegger is reportedly reducing the low compensation even further.

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