Union officials question governor’s proposal

Jennifer Coleman

Wednesday, April 14, 1999 | 9:33 a.m.

CARSON CITY - Union representatives are questioning Nevada Gov. Kenny Guinn's proposal to convert a state-run workers' compensation insurance division to a private corporation.

The plan to privatize the state Employers Insurance Company of Nevada was presented Tuesday to the Senate Commerce and Labor Committee. Advocates say it's a necessary step as Nevada's workers compensation market opens up later this year.

Because EICON will be competing with other firms for the first time in its 86-year history, the company is expected to lose 50 percent to 65 percent of its business. Up to 600 employees could be laid off. And those who remain with the company would lose civil service protections.

SB37 proposes to buy out workers who want to retire early, set aside $2 million for retraining, give priority to laid-off EICON employees seeking other state jobs and allow agencies under a hiring freeze to employ the former EICON workers. The bill also gives employees the right to be placed on a priority list for other state positions for three years.

But not everyone at the hearing was satisfied with the protections for state employees.

"This sounds great, but what type of jobs?" said Bob Gagnier, executive director of the Nevada State Employees Association. "Most new openings are for correctional officers."

Guinn has also proposed privatizing the state prison medical services, but employees of that agency haven't been offered provisions such as the three-year rehiring priority. About 320 state jobs would be lost if a private company takes over prison health care.

Scott Scherer, Gov. Guinn's legal counsel, said the details of Guinn's plan to privatize the prison system haven't been worked out yet. Similar benefits could be afforded to displaced prison medical workers, he added.

Gagnier is also concerned with EICON employees losing retirement benefits, though Leonard Ormsby, general counsel for EICON, said the company will try to protect those close to retirement.

About 150 employees are within five years of retirement, Ormsby said, and EICON could purchase the additional credits needed to allow them to retire now without reducing their benefits.

Gagnier estimated that would cost EICON $7 million to $10 million.

Danny Thompson, lobbyist for the Nevada State AFL-CIO, has called the effort "union-busting" by taking away many of the rights of state employees.

The bill also gives the governor the authority to cancel the plan to privatize EICON if the IRS determines there would be millions of dollars of tax consequences to the state for the conversion.

Until now, only self-insured employers were able to operate outside the state system. Self-insurance rules allow companies to either pool their resources or individually develop their own industrial insurance coverage.

Once the market is open, insurers will compete for $440 million a year in premium income. The state's current share amounts to $385 million in premiums from 46,000 employers. The rest goes to self-insured programs.