DWP’s Power Surge

A sweet but stalled deal between the Department of Water and Power and the International Brotherhood of Electrical Workers Local 18 has provoked union threats of a lawsuit or a strike. Mayor Antonio Villaraigosa has promised to dive into the fray. The City Council braces for a debate about pay disparities between DWP and city workers. Los Angeles has been here before. The outcome hasn’t been pretty. The IBEW salary strike of 1993 lasted just nine days, but ushered in a decade of union control over the nation’s largest public utility. Now the new mayor is the beneficiary of $307,000 in IBEW campaign expenditures, and very well may have informally blessed the deal in the first place. He insists he had nothing to do with it. Either way, it is a big problem for DWP managers, who have let go of the reins, and city leaders — particularly Villaraigosa — preparing to grapple with issues of fairness and fiscal responsibility. Lurking are potential consequences for public safety and the broader labor community, two lethal driving forces in electoral politics. Veteran labor lawyers shot down talk of a potential unfair-labor-practices lawsuit last week by the IBEW’s business manager, Brian D’Arcy, who had a deal with city officials that would raise DWP salaries between 16 percent and 30 percent over five years. That is, until the Jim Hahn–appointed Board of Water and Power Commissioners balked. City Councilman Tony Cardenas is asking City Attorney Rocky Delgadillo for a legal opinion. Expert observers focused instead on the real power D’Arcy wields as boss of 8,000 DWP employees, in the event the commissioners or the City Council refuses to ratify the current proposed IBEW contract, which would widen the salary gap between DWP and other city workers. “Welcome to the world of power,” said private arbitrator Douglas Collins, former head of the Employee Relations Board, which will hear an unfair-labor-practices lawsuit if one is filed by the IBEW. Collins, like several other labor lawyers interviewed last week, said the City Council still has final authority to approve the contract, despite signing off on bargaining instructions for city officials who negotiated the IBEW deal. “The best-case scenario for the city is a lawsuit. The city wins. But then they are back to the table, where it’s about who has the bigger cojones. Brian’s are bigger than anyone at City Hall.” Collins and others noted that the IBEW has acted on strike threats before and could again. It’s the ultimate leverage for a union that makes up more than 95 percent of the DWP. In 1993, middle managers were able to keep the utility running while the city’s lawyers struggled to enforce a court order forcing the striking union members back to work for the good of public safety. Since then, middle management has folded into the IBEW’s ranks. Upper management has bent to D’Arcy’s demands. On Friday, with DWP General Manager Ron Deaton away on vacation, DWP managers distanced themselves from the below-the-radar deal, struck during the transition between Hahn and Villaraigosa. “I was not involved,” said Henry Martinez, chief operating officer. “I cannot confirm who was. You’ll have to talk to Deaton.” Said Ronald Vasquez, the chief financial officer, “I was not involved. I recommend you call the chief administrative officer.” Robert Rozanski, the chief administrative officer, said, “I’m not privy to who actually did the deal.” An assistant general manager, who asked not to be identified by name, said at least five other managers were cut out of the loop, including Assistant General Manager Hal Lindsey, the head of employee relations. Deaton has not returned calls. Nor has City Administrative Officer Bill Fujioka, who briefed the Executive Employee Relations Committee and the City Council on the progress of the negotiations. Both men know the dynamics of the DWP’s labor situation. As the city’s former legislative analyst, Deaton expressed concern in the past over growing salary disparities between DWP and city workers. Fujioka presented a report to the Executive Employee Relations Committee on December 1, 2003, in which he found salary differences as high as 61 percent. Fujioka pointed to longevity bonuses and the DWP’s practice of approving its own advancements between pay levels within classifications, resulting in significant “pay-grade creep.” Those pay levels, according to news reports, now exceed those of many private utilities. The Board of Civil Service Commissioners asked the City Council in February to take steps to reduce the salary gap between DWP and city workers. In a letter to city Personnel Manager Margaret Whelan dated May 9, 2005, Deaton acknowledged that the Civil Service Commission, not the DWP, is the appropriate entity to assign duties and job responsibilities — essentially to consolidate job classes. Yet on May 24, 2005, the DWP’s Joint Labor Management Committee received a recommendation consolidating truck drivers and equipment operators into a class called “utility operator.” The issue of job classifications dates back to the last DWP strike. After settling the 1993 work stoppage, then-Mayor Richard Riordan attempted to consolidate job classes citywide as a means of trimming the budget. After butting heads with the IBEW over this and other contentious issues, Riordan made peace with D’Arcy by granting him increased powers on a newly created Joint Labor Management Committee, including a say over who would be named general manager of the DWP. Since then, the IBEW has steadily amassed power. “I wonder what a pro-business Republican like Riordan has to say about all this now,” says former Assistant City Attorney Richard Grey, who has advised the DWP on labor matters. “It sounded like a good idea at the time?” In 2002, the DWP Board of Commissioners received a report from an employee named Daniel Shrader, who alleged that short-term political interests and mismanagement have contributed to an environment of cronyism and waste. Shrader outlined the consolidation of job classifications and traced personnel moves that resulted in his own demotion and the rise of midlevel managers allegedly beholden to D’Arcy. Shrader has hired a veteran labor lawyer who ordinarily represents unions, and has fought DWP attempts to discipline him. In August 2004, Shrader filed a report with the DWP board regarding allegations of harassment, retaliation and perjury. As it has done in the past, the DWP has hired a private lawyer to investigate the allegations. Shrader has brought these matters to the attention of the City Council and the Commerce, Energy and Natural Resources Committee, chaired by Councilman Tony Cardenas. Councilwoman Janice Hahn and Councilman Bill Rosendahl also sit on that committee, which is becoming wary of the DWP. Jenny Chavez, an aide to Hahn, told the Weekly, “The DWP pays for and hires its own consultants to look into these matters. At the same time, we’re seeing a lot of negative things happen at the DWP to employees who speak out. The committee is nearing a point where it may be forced to recommend a council investigation.” Commerce Committee staffers acknowledge a nexus between labor-relations issues and IBEW control of the DWP. The questions then are whether the DWP managers can be trusted to run the place, and whether the IBEW deserves to be rewarded under these circumstances, when other city workers settled for frozen salaries in the first year of their contract, followed by inferior 6 percent raises over three years thereafter. On July 30, SEIU Local 347 president Julie Butcher wrote to Fujioka and demanded that he meet with her bargaining team regarding issues of “equity and equal treatment of workers.” Butcher requested documents analyzing wage and benefits comparisons over the last 10 years between her service employees and DWP workers, and reports of the last 15 years documenting complaints of discrimination, disparate treatment and hostility in the workplace concerning the DWP. The Personnel Department reported to the City Council earlier this year that 1,000 such complaints have been filed against the DWP in the last decade. Labor experts say the DWP is an example of how superior pay and benefits do not guarantee happiness. “If your gains come from a process and a system that isn’t fair, then you’ll always be looking over your shoulder, wondering when someone else is going to get the better of you,” says a labor adviser to the city. So why did the Executive Employee Relations Committee approve bargaining instructions on such a sweet deal for such a seemingly troubled public utility? And what are Villaraigosa, his soon-to-be-appointed Board of Commissioners and the City Council prepared to do about it? Council sources say D’Arcy would have settled for a three-year deal, but members insisted on a five-year pact, sparing them — and perhaps Villaraigosa — from dealing with IBEW anytime soon. Jim Alger, a former Neighborhood Council liaison and a Democratic candidate for the state Assembly, says the IBEW deal has been in the works since last year. Alger was involved with budget talks related to the DWP while working for the neighborhood councils last November. “They were just finished with water-rate hikes and about to call for new ones again in March, but labor costs were not negotiable,” Alger says. “That was built into the budget. The problem for officials is you can’t grandstand on this issue and get elected.” No need to tell Councilwoman Jan Perry, who is eyeing a seat on the County Board of Supervisors, and who was endorsed by IBEW in her recent re-election. She declined to comment on the issue. As did Councilman Dennis Zine, an executive committee member who also chairs the Personnel Committee and has joined in a motion to head off pay disparities, but who voted repeatedly to approve raises for DWP workers. Then there is Councilman Bernard Parks, who, in addition to serving on the executive committee, also chairs the Budget and Finance Committee. After speaking out against soaring public salaries during the mayoral election, Parks balked recently when asked to comment on the IBEW deal. Since it has blown up, he has regained his form. “I will likely vote against the salary increase,” he told the Weekly through a spokesperson. Soon all eyes will turn to Villaraigosa, who is known to work wonders behind the scenes. City Hall insiders and seasoned labor lawyers are not optimistic. To them, bargaining is not rational, or even fair. It’s about power and pragmatism, two things Villaraigosa instinctively understands. “D’Arcy doesn’t give a damn about what the public thinks,” says Douglas Collins, the former head of the Employee Relations Board. “He can shut that place down. Then people who squawk about high public salaries will be in the minority, and people who want their air conditioner to work will say, ‘Where’s my juice?’” Beyond the threat of a strike and the resolution of the salary flap, Villaraigosa and his appointees will have their hands full. “If D’Arcy is running the place, then someone isn’t doing their job,” Collins says. “Where is the management? Have they capitulated because it is easy, or because they benefit from it?”


To see how Los Angeles City Council members responded to questions about the pay disparity, click here to launch a pdf file.

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