Fortnightly
LADWP to Cut Staff by a Third?Employee group questions funding for severance, presses lawsuit under A.B. 1890.
June 15, 1998
By Joseph F. Schuler Jr.
EVEN IF 3,000 WORKERS AT THE LOS ANGELES DEPARTMENT of Water and Power should opt for a separation package instead of wholesale layoffs, an ad hoc employee group plans to go ahead with a lawsuit claiming the deal violates California's restructuring statute, Assembly Bill 1890.
That move to go to court - as described by a representative of the Employees Legal Defense Fund - could supply a bargaining chip to help the ELDF save the jobs of a few hundred workers who might not take the package but whose positions are targeted for cuts. The department has about 8,600 employees.
It's a complex story. The ELDF lawsuit is not the only one to be filed on downsizing at the Department of Water and Power. In the end, however, it could find the LADWP in court explaining why it will fund the $410 million severance package out of the pension and general funds instead of via a competition transition charge, as dictated by A.B. 1890.
Back to the Beginning
The acrimonious dispute between employees and the LADWP stretches back to Oct. 29 when S. David Freeman, LADWP's new general manager, announced the department would lay off 2,000 employees and that the layoffs would be nonnegotiable.
On Jan. 22, Freeman said the LADWP's debt was more than $7 billion - $4 billion in stranded investment. Given the enormity of the debt, he said, the department must participate in deregulation by joining the state's independent system operator so that it could recover its stranded investment via a nonbypassable competition transition charge. A layoff of 2,000 employees would save $2.5 million a week in labor costs, he said.
The LADWP unions - the Management Employees Association, the International Brotherhood of Electrical Workers and the Engineers & Architects Association - claimed that nonnegotiable layoffs would be an unfair labor practice. The EAA then filed suit (Engineers & Architects Asso. v. LADWP, Case No. bc 183186, Calif. Super. Ct., Los Angeles County).
Because IBEW employees weren't targeted and because MEA was close to settling, neither chose to sue.
In the end, LADWP sought 1,738 reductions; of that number, 517 were EAA employees in job classes targeted for layoffs. According to Heidi Bass, the ELDF representative, Freeman has said that the 517 positions would be cut, even if the total number of layoffs exceeded the target.
Freeman could not be reached for comment.
When it learned of the funding plans for the layoff package, the ELDF decided to sue the LADWP and the city of Los Angeles, citing A.B. 1890 (Cameron T. McNeil, et al v. City of Los Angeles, et al, Case No. bc186746, Calif. Super. Ct., Los Angeles County).
According to Section 9603(a) of the state public utilities code, municipal utilities moving toward direct access must set up a non-bypassable, generation-related transition charge. The charge must include employee-related transition costs for severance, outplacement, retraining, early retirement and related expenses. This special CTC applies only to municipal utilities.
The ELDF's lawsuit was later put on hold as negotiations between the unions and the department ensued. On March 17, the unions signed a separation pact. The Board of Water and Power Commissioners approved the agreement May 5. From there, the agreement was to go before City Council and the Retirement Board.
If those approvals go as expected, the package could be opened to workers on June 1, said Bass, also an LADWP customer services account manager.
"It looks like there's going to be close to 3,000 people taking a package," she said. "That's kind of what's going around the retirement office based on inquiries into the packages and into leaving."
A Bargaining Chip?
No matter what, Bass insisted, the ELDF will go ahead with its lawsuit.
"The week of May 18 we will be filing an amended complaint on Assembly Bill 1890," she said. "The basis of this complaint is that this money should not be coming out of the retirement plan¼ that a separate CTC should be established to pay for these separation packages.
"If anything happens in the marketplace and anything happens where we need a larger cost-of-living increase in the retirement plan, those monies will not be available," she said. "That's not what the retirement plan is made for."
She said although the suit calls for damages and an injunction to prevent the layoff, the group would not seek the injunction immediately to see if the LADWP proceeds with the layoff.
"We're thinking when this lawsuit comes out that it may be enough of a bargaining chip to say, well, 3,500 people or 3,000 people left the company, if you'll drop your lawsuit, we're willing to agree not to lay off the remaining 150 people or whatever out of 517" in the EAA.
She said her ad hoc employee group would settle if the LADWP said there would be no layoffs of those remaining employees and that the pension fund would be reimbursed. No matter what, she said, damages will be sought to repay the $360 million taken from the retirement fund and the $50 million out of general fund.
Bass says the ELDF also will be looking at seniority and civil service violations. She claims civil service seniority was tainted because administrators, since 1995, did not follow strict civil service rules in transferring and promoting people. These rules affect seniority, which could make one person targeted for layoff who shouldn't be, had the rules been followed. She says there are "hundreds" of such instances.
"If the layoff occurs, it will be an administrative nightmare because there has just been so much inconsistency in the way employees have been moved around," Bass said.
The EAA and the ELDF were looking into the matter. "We are trying to come up with a remedy and approach the Civil Service Commission," Bass said.
Bass says about 100 people have left the LADWP over the past year. In some areas, like wholesale trading, it lost 10 out of 10 people, all highly experienced.
"This is why we are pushing not to have layoffs," she said. "There's no way to protect critical employees."
Joseph F. Schuler Jr. is senior associate editor at Public Utilities Fortnightly.
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