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News Analysis

Fortnightly Magazine - June 15 1998

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,