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What Is a Carve-Out Agreement?

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Archive: Jan 2018

What Is a Carve-Out Agreement?

On December 6th, 2017, the California Division of Workers’ Compensation (DWC) announced the approval of a carve-out agreement between the Los Angeles Police Protective League (LAPPL) and the City of Los Angeles. The approval of this agreement affects about 10,000 union members and gives employers more flexibility in terms of workers’ compensation benefits and policies. Learn exactly what a carve-out agreement is and how the latest development in California could affect you.

About Carve-Out Programs

In business, a “carve-out” refers to a partial sale, or spinoff, of a company. If a parent company sells another party a minority share of a child company but keeps the rest, it’s called a carve-out. In these situations, the child company will then operate with its own board of directors, but it will still receive support and resources from the parent company. In most carve-out agreements, the parent company will eventually sell all the shares of the child company.

A carve-out means something slightly different in the context of labor laws, but it helps to first understand its business meaning. The goal is basically the same for both types of carve-outs – to establish a separate unit that was previously part of the larger unit. In labor laws, a carve-out agreement is when one employer establishes a separate bargaining unit with its employees, instead of continuing to operate under just one, already-established larger unit and management.

In general, the law does not allow carve-out agreements to take place when a productive relationship between the larger unit and its management already exists. Two parties can only form this type of agreement if the administrative director of the DWC approves the program. This has been the case in the recent carve-out agreement in Los Angeles. The recent suggestion fulfilled the carve-out agreement provisions the California Labor Code established, and the DWC approved the program.

What Does the LA Carve-Out Agreement Mean for Workers?

The DWC approval of a carve-out agreement for the LA Police Protective League and the City of LA means employers and unionized workforces within the scope of the agreement can now create alternatives to typical workers’ compensation benefit delivery and dispute resolution. The parties the DWC approves to join the collective bargaining agreement can enjoy the freedom to come up with their own solutions for worker-related systems state laws previously controlled. It is one of 57 currently active labor-related carve-out agreements in California.

Approval of the agreement means that alternatives to the traditional workers’ compensation system in LA may now come to fruition. The point of the agreement is to avoid the costly and time-consuming administrative processes that currently make the workers’ comp claims process inefficient. It is for the employers and the unions to negotiate the terms of the carve-out agreement between themselves. Parties can come up with alternative systems as long as they still provide employees the benefits that the statutory workers’ compensation system offer.

Carve-outs are labor management solutions that can fix issues like high insurance premiums and unnecessary delays in injured employees returning to work. Carve-outs are the most common in the construction industry in California, since this industry has a history of serious injuries and worker fatalities. The latest carve-out agreement affects the LAPPL, the labor union for the LA Police Department, and it may come with changes to workers’ compensation systems for police officers and other professionals in the union. Talk to a lawyer for the latest information.

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2017 Recap in Workers’ Compensation Developments

Last year was big for the California workers’ compensation system. A list of bills passed through legislation, all signed by Gov. Jerry Brown, bringing on sweeping changes. As a worker in the state of California, knowing all you can about the workers’ comp system can help you stay protected in the event of a workplace accident or injury. Use this overview of recent changes to the system to stay up to date, and contact an attorney for questions or concerns you may have regarding a recent claim.

Convicted Physicians Cannot Care for Injured Workers

Right at the beginning of 2017, several powerful California labor laws took effect to improve life for workers. As part of these new laws, certain doctors can no longer provide care to injured workers within the state. Physicians the state has convicted of certain types of abuse or fraud in relation to health insurance are no longer eligible to care for injured employees. Examples include doctors who would receive kickbacks for prescribing unnecessary treatments, tests, and medications. The law aims to decrease the costs of workers’ comp while ensuring the safety and rights of injured workers.

Liens Run Longer for Charged Doctors

Assembly Bill No. 1422, passed on September 26th, 2017, also changed the rules for doctors charged with fraud. It extends the stays on liens convicted medical providers file, so that liens run from the time someone files charges until the suspension hearing. AB 1422 closed a loophole that had been permitting medical providers to pursue liens for payment during this time period. The new law also applies to companies in control of people charged with criminal fraud.

Medical Providers Can Access CURES

The California Controlled Substance Utilization Review and Evaluation System (CURES) mandate created a database of controlled substance prescriptions medical practitioners dispense in the state of California. The goal of CURES is to regulate the prescribing and dispensing of prescription drugs in an effort to decrease the rate of prescription drug misuse, abuse, and addiction.

As of October 9th, 2017, Assembly Bill No. 40 grants physicians and other medical providers the right to use third-party software to access CURES information. Medical providers have always been able to access CURES but only through the CURES website. Now, physicians can see patients’ prescription drug history on CURES through third-party sites. They can link the CURES database directly with their systems to eliminate the need to log in and perform a search. AB 40 seeks to increase physicians’ awareness of patients’ prescription histories and habits.

Corporate Officers and Directors Can Opt Out of Workers’ Comp Coverage

Senate Bill No. 189 allows certain corporate officers and directors the change to opt out of workers’ compensation coverage for themselves, as long as they sign waivers of consent stating they have health insurance coverage. SB 189 only applies to those persons who own at least 10% of a business. In the past, the threshold was 15% ownership in a business. SB 189 also has a new provision stating the presumption that a person who chooses to sign the waiver does not have workers’ compensation coverage.

Retaliation Complaints Get Deeper Investigations

Senate Bill 306 lets the Labor Commissioner more deeply investigate complaints employees make regarding employer retaliation or discrimination – including retaliation for filing a workers’ compensation claim. The Commissioner can now initiate investigations of these claims without first acquiring a court enforcement order. Employees can benefit from easier access to more thorough retaliation investigations.

Extended Deadline for Workers’ Compensation ER Bill Submissions

Emergency room physicians now have 180 days instead of 30 days to submit their bills for caring for injured workers to workers’ comp claims administrators, thanks to Senate Bill 489. The bill only applies to treatment doctors provide under Senate Bill 1 160’s pass-through provisions, in the first 30 days after the accident. The extension could mean injured workers have to wait longer for the division to process workers’ comp claims and issue benefits.

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Do Volunteer Firefighters Get Workers’ Compensation?

California depends upon its volunteer firefighters. In 2017, almost 9,000 wildfires devastated California communities. Fires consumed more than 1.2 million acres, destroyed at least 10,800 structures, and took 46 lives. It was the volunteers fighting the fire side-by-side with professionals that helped firefighters control the conflagrations and save lives. Sadly, not every volunteer firefighter came away from last year’s aggressive outbreaks unscathed. A common question now on the minds of volunteers and their families is, “Do volunteer firefighters qualify for workers’ comp?”

California Workers’ Compensation Laws

In general, workers’ compensation insurance only covers employees of the company. In California, all employers must maintain this type of insurance, even if they only employ a single person. If workers suffer injuries or illnesses at work, workers’ compensation insurance kicks in to cover medical bills, lost wages, and disability. While it is mandatory for employers to cover their employees with workers’ comp insurance, covering non-employee volunteers is optional. This means many volunteer workers are at risk of paying for their job-related harms out-of-pocket.

People who volunteer at public agencies are not employees. They are volunteers who may or may not fall under the company’s workers’ compensation insurance, depending on whether or the department paid extra to cover volunteers of the organization. Volunteer firefighters and police officers, however, are exceptions to the rule. In the eyes of California law, firefighters and other emergency service volunteers are employees. Therefore, fire departments’ workers’ compensation insurance will usually cover volunteers’ work-related injuries.

Volunteer firefighters who suffered injuries in the recent California wildfires need to report the incident to authorities within the fire department as soon as possible. Prompt reporting is a requirement for the Division of Workers’ Compensation (DWC) to consider a workers’ request for compensation. If the injury occurred in the line of duty, such as while trying to put a wildfire out, the Division will most likely accept the claim. What happens next depends on the circumstances of the accident.

Workers’ Compensation Options for Volunteer Firefighters

When a volunteer firefighter pursues damages through the workers’ compensation system, he or she may receive compensation for loss of earnings. Most volunteers don’t receive wages for their work, but they may end up missing time from their day jobs because of injuries sustained while volunteering to fight fires. California laws guarantee volunteer firefighters receive wage loss benefits based on the statewide average weekly wage for workers. In contrast, when an employee files a claim, he or she receives benefits equal to two-thirds of the actual weekly wage.

If for some reason you do not qualify for workers’ compensation as an injured volunteer firefighter in California, seek help from a lawyer. You may be able to bring a personal injury lawsuit against one or more parties in pursuit of compensation instead. The same is true if a loved one died while volunteering to fight fires. A wrongful death lawsuit can often garner your family better compensation than a workers’ compensation claim.

Volunteer firefighters are noble and brave, and they don’t deserve to pay for their work-related injuries out-of-pocket. They are often more at risk of serious injuries compared to professional firefighters, due to lack of training and less protective equipment. Luckily, California workers’ comp will typically cover volunteer firefighters. If not, retain a lawyer for assistance.

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