After months of political wrangling and last-minute hitches, legislative leaders and Gov. Arnold Schwarzenegger agreed Wednesday on a sweeping plan to overhaul California's beleaguered workers' compensation system.

The plan was quickly criticized by rank-and-file lawmakers, however, forcing leaders and members into a series of closed-door meetings that continued late into the night.

The landmark agreement was supposed to be considered by a special conference committee Wednesday morning and approved by the end of the day in order to assure floor votes in the Senate and Assembly by the governor's Friday deadline.

[Associated Press update: The conference committee passed the bill at 3:30 a.m. Thursday.]

Asked Wednesday evening whether he could get most Democrats to go along with the deal by Friday, Senate President Pro Tem John Burton, D-San Francisco, said, "We'll see." He added, "I don't like answering questions I don't have the answer to."

The legislation could be passed with a simple majority vote on the floor, which would normally be expected for a bill that has been endorsed by the governor and all four legislative leaders representing both chambers and both parties. A delay by the conference committee could require special procedures to expedite the bill, meaning a higher vote threshold for passage.

Democrats in particular were unhappy that their leaders had withdrawn an earlier demand that the bill regulate insurance rates for workers' compensation. Others complained about the way doctors would be selected to treat injured workers and the process for determining cash benefits for various injuries.

"There is quite a bit of consternation within the Democratic caucus," said Sen. Richard Alarcón, D-Sun Valley, chairman of the conference committee. "There isn't a 100 percent deal."

Both Democrats and Republicans complained that the highly technical and far-reaching legislation - contained in hundreds of pages of text - was being rushed through the Legislature.

"This is a momentous crisis involving a matter of complex legislation," said state Sen. Tom McClintock, R-Simi Valley, "and that requires sufficient time to study and analyze."

The Friday deadline for a floor vote is intended to head off an initiative that Schwarzenegger has threatened to place on the November ballot if a legislative remedy is not reached this week.

Since January, sponsors of the initiative have said they would submit signatures by this Friday to qualify the measure for the ballot. They said Wednesday that they plan to examine the agreement to see whether it is an adequate substitute for the Schwarzenegger proposal that is contained in the initiative.

"The clock is absolutely ticking," said Rob Stutzman, spokesman for Schwarzenegger. "Whether they will submit all the signatures (Friday) is something we're talking to them about in order to buy some more time."

Joel Fox, the initiative leader, also said a decision about the signatures is still pending.

Even if the agreement is passed to the floor, some lawmakers suggested there could be several attempts to amend the bill.

In particular, Democratic lawmakers said they will continue to pursue legislation that would regulate insurance premiums for workers' compensation. Without regulation, they said insurance companies might not lower premiums for employers even if they realize a savings from the overhaul legislation.

California insurance rates have skyrocketed in recent months, and now the state's employers pay the highest premiums in the nation. Some companies have blamed those costs for driving them out of business or forcing them to move out of state.

"Workers' comp reform without rate relief does not accomplish for the businesses and the nonprofits what is absolutely essential. We are committed to send a bill to the governor which contains actual rate relief," said Assemblyman Darrell Steinberg, D-Sacramento.

Stutzman declined to say whether Schwarzenegger would support separate Democratic legislation to regulate insurance rates.

The deal would take effect within 90 days of the governor's signature after passage, or possibly sooner. No firm estimate of the expected savings was immediately available.

Reforming the $17.9 billion workers' compensation system was one of Schwarzenegger's major campaign issues during the recall election last fall.

In addition to the cost for employers, labor groups say the state program pays some of the nation's lowest benefits and is fraught with delays.

Some elements of the proposed workers' compensation deal:

* A key part of the legislation seeks greater standardization of benefits for each category of injuries. The standards would be determined using American Medical Association guidelines. Experts say California's system is too litigious, partly because of the discretion involved in determining benefits paid for injuries.

* One piece of the proposed legislation would eliminate disability benefits for an employee who refuses a new job offered by his or her employer. Employers would have to pay higher benefits if they don't offer a job after an employee is ready to return to work.

* One of the most controversial issues in workers' comp is whether employers or workers choose the doctor to treat job-related injuries. Under the plan, injured workers would pick a treating physician from a pool of doctors approved by employers. Lawmakers were also debating how to provide workers with an independent medical review.

* For injuries that are hard to diagnose, such as back pain, the legislation would require employers to treat the injury immediately and determine later whether it is job-related. In some cases today, disputes and litigation about whether "soft tissue" injuries are job-related can delay medical treatment.

* Penalties for companies that miss medical and disability payments to injured workers would be based on only the amount of the late payment instead of the whole award.

* The legislation would create a pilot program for union-represented companies to purchase workers' compensation and health insurance from one carrier. Described as single-payer or 24-hour care, the experiment would apply to the existing "carve-out" programs in which unions and building trades employers negotiate their own workers' compensation-like system. Normally, participants agree on a list of treating physicians and hire an ombudsman to resolve disputes.