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Costco Wholesale Corp. CEO Jim Sinegal said Friday that the company has ordered enough petition forms to gather up to 900,000 signatures - 300,000 more than it needs - that would force a referendum that would overhaul the state insurance program it blames for cutting into profits.

"Costco's signature-gathering drive shows the retailer has become fed up with plodding legislative talks about reshaping the state's insurer of last resort," Reuters reports. "About a third of Costco's work force is in California, but the state accounts for more than two-thirds of its workplace injury expenses."

California doctors reportedly have leeway to generously diagnose and treat injuries. One study suggests that injured California employees visit chiropractors twice as often as injured workers in other large states.

Sinegal estimated that the retailer overpaid by $40 million for workplace injury insurance last year. "We think this is a very important issue," Sinegal told Reuters. "Workers comp in California costs us more than in the other 36 states (where Costco has stores) combined."

Sinegal added, "It's an out-of-whack system. I think it's a corrupt system. Everybody pays a price for it. The consumer pays a price for it and shareholders pay a price for it, and worst of all, employees don't get the money."

Also behind the referendum: California Governator Arnold Schwarzenegger, who last week spent some time gathering signatures at one California Costco.

"I'm out here gathering signatures because I want to put the pressure on the legislators and let them know that the people of California will vote 'yes' on that proposition, will vote 'yes' on workers comp reform," Schwarzenegger said to applauding crowds at the Roseville, California Costco market.

The move comes as Costco is being criticized by some analysts for paying its employees too much money, which cuts into the company's profitability.
KC's View:
Our view about the criticism of Costco on this issue was obvious last Friday. We think it is a crock.

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