Bill Text: CA SB313 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Workers' compensation: penalty assessments.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2009-11-02 - Chaptered by Secretary of State. Chapter 640, Statutes of 2009. [SB313 Detail]

Download: California-2009-SB313-Amended.html

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BILL NUMBER: SB 313	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  SEPTEMBER 2, 2009
	AMENDED IN ASSEMBLY  AUGUST 24, 2009
	AMENDED IN ASSEMBLY  JUNE 29, 2009
	AMENDED IN SENATE  APRIL 27, 2009
	AMENDED IN SENATE  APRIL 20, 2009

INTRODUCED BY   Senator DeSaulnier

                        FEBRUARY 25, 2009

   An act to amend  Sections 62.5 and   Section
 3722 of the Labor Code, relating to workers' compensation 
, and making an appropriation therefor  .



	LEGISLATIVE COUNSEL'S DIGEST


   SB 313, as amended, DeSaulnier. Workers' compensation: penalty
assessments.
   Existing law requires every employer, except the state, to secure
the payment of workers' compensation. Existing law requires the
Director of Industrial Relations to issue and serve on any employer
that has failed to secure the payment of workers' compensation a stop
order prohibiting the use of employee labor. Under existing law, at
the time the stop order is issued and served, the director is
required to issue and serve a penalty assessment order requiring the
uninsured employer to pay to the director, for deposit into the State
Treasury to the credit of the continuously appropriated Uninsured
Employers Benefits Trust Fund, the sum of $1,000 per employee
employed at the time the order is issued and served. Existing law
provides that in lieu of the aforementioned penalty assessment, at
any time that the director determines that an employer has been
uninsured for a period in excess of one week during the calendar year
preceding the director's determination, the director may issue and
serve a penalty assessment order that requires the uninsured employer
to pay to the director, for deposit into the State Treasury to the
credit of the Uninsured Employers Benefits Trust Fund, the greater of
(1) twice the amount the employer would have paid in workers'
compensation premiums during the period the employer was uninsured or
(2) the sum of $1,000 per employee employed during the period the
employer was uninsured.
   This bill would increase the penalty assessment to 
$1,500. The bill would specifically provide that any additional
moneys collected as a result of the increase in the penalty
assessments pursuant to the bill shall be deposited in the State
Treasury to the credit of the Uninsured Employers Benefits Trust
Fund, but that the moneys be available only upon appropriation by the
Legislature.   $1,500 per employee employed during the
period the employer was uninsured. Because the money from the
increased penalty assessment is deposited into the continuously
appropriated Uninsured Employers Fund, this bill would make an
appropriation. 
   The bill would also clarify that the director is required to issue
and serve either of the above-mentioned penalty assessments.
   Existing law provides that if the employer is currently insured,
or becomes insured during the period during which the above penalty
is being determined, the amount an employer would have paid in
workers' compensation premiums shall be calculated by prorating the
current premium for the number of weeks the employer was uninsured.
   Existing law provides that if the employer is uninsured at the
time the above penalty is being determined, the amount an employer
would have paid in workers' compensation premiums shall be calculated
by applying the weekly premium per employee on file with the
Insurance Commissioner to the number of weeks the employer was
uninsured. Existing law provides that each employee of the uninsured
employer shall be assumed to be assigned to the governing
classification for that employer as determined by the director after
consultation with the Insurance Commissioner. Existing law provides
that if the employer contends that the assignment of the governing
classification is incorrect, or that any employee should be assigned
to a different classification, the employer has the burden to prove
that the different classification should be utilized.
   This bill would require that, if the employer is currently
insured, or becomes insured during the period during which the above
penalty is being determined, the amount an employer would have paid
in workers' compensation premiums shall be calculated by prorating
the current premium for the number of weeks the employer was
uninsured within the 3-year period immediately prior to the date the
above penalty assessment is issued.
   This bill would also provide that if the employer is uninsured at
the time the above penalty is being determined, the amount an
employer would have paid in workers' compensation premiums shall be
the product of the employer's payroll for all periods of time the
employer was uninsured within the 3-year period immediately prior to
the date the above penalty assessment is issued multiplied by a rate
determined in accordance with regulations that may be adopted by the
director or, if none have been adopted, the manual rate or rates of
the State Compensation Insurance Fund for the employer's governing
classification, as determined by the director, pursuant to the
standard classification system approved by the Insurance
Commissioner. This bill would provide that, unless the amount of the
employer's payroll for all periods during which the employer was
uninsured within the 3-year period is otherwise proven by a
preponderance of evidence, the employer's payroll for each week the
employer was uninsured shall be presumed to be the state average
weekly wage, as defined, multiplied by the number of persons employed
by the employer at the time the penalty assessment is issued.
   Vote:  majority  2/3  . Appropriation:
 no   yes  . Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
   
  SECTION 1.    Section 62.5 of the Labor Code is
amended to read:
   62.5.  (a) (1) The Workers' Compensation Administration Revolving
Fund is hereby created as a special account in the State Treasury.
Money in the fund may be expended by the department, upon
appropriation by the Legislature, for all of the following purposes,
and may not be used or borrowed for any other purpose:
   (A) For the administration of the workers' compensation program
set forth in this division and Division 4 (commencing with Section
3200), other than the activities financed pursuant to Section 3702.5.

   (B) For the Return-to-Work Program set forth in Section 139.48.
   (C) For the enforcement of the insurance coverage program
established and maintained by the Labor Commissioner pursuant to
Section 90.3.
   (2) The fund shall consist of surcharges made pursuant to
paragraph (1) of subdivision (f).
   (b) (1) The Uninsured Employers Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in paragraph (1) of subdivision (f). Notwithstanding Section
13340 of the Government Code, the fund is continuously appropriated
for the payment of nonadministrative expenses of the workers'
compensation program for workers injured while employed by uninsured
employers in accordance with Article 2 (commencing with Section 3710)
of Chapter 4 of Part 1 of Division 4, and shall not be used for any
other purpose. All moneys collected shall be retained in the trust
fund until paid as benefits to workers injured while employed by
uninsured employers. Nonadministrative expenses include audits and
reports of services prepared pursuant to subdivision (b) of Section
3716.1. The surcharge amount for this fund shall be stated
separately.
   (2) Notwithstanding any other provision of law, all references to
the Uninsured Employers Fund shall mean the Uninsured Employers
Benefits Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Uninsured Employers
Benefits Trust Fund. Expense advances made pursuant to this paragraph
shall be reimbursed in full to the Uninsured Employers Benefits
Trust Fund upon enactment of the annual Budget Act.
   (4) Any moneys from penalties collected pursuant to Section 3722
as a result of the insurance coverage program established under
Section 90.3 shall be deposited in the State Treasury to the credit
of the Workers' Compensation Administration Revolving Fund created
under this section, to cover expenses incurred by the director under
the insurance coverage program. The amount of any penalties in excess
of payment of administrative expenses incurred by the director for
the insurance coverage program established under Section 90.3 shall
be deposited in the State Treasury to the credit of the Uninsured
Employers Benefits Trust Fund for nonadministrative expenses, as
prescribed in paragraph (1), and notwithstanding paragraph (1), shall
only be available upon appropriation by the Legislature.
   (5) Any additional moneys collected from penalties pursuant to
Section 3722 as a result of the increase of those penalties pursuant
to the amendments to Section 3722 made by the act that added this
paragraph shall be deposited in the State Treasury to the credit of
the Uninsured Employers Benefits Trust Fund for nonadministrative
expenses, as prescribed in paragraph (1), and notwithstanding
paragraph (1), shall be available only upon appropriation by the
Legislature.
   (c) (1) The Subsequent Injuries Benefits Trust Fund is hereby
created as a special trust fund account in the State Treasury, of
which the director is trustee, and its sources of funds are as
provided in paragraph (1) of subdivision (f). Notwithstanding Section
13340 of the Government Code, the fund is continuously appropriated
for the nonadministrative expenses of the workers' compensation
program for workers who have suffered serious injury and who are
suffering from previous and serious permanent disabilities or
physical impairments, in accordance with Article 5 (commencing with
Section 4751) of Chapter 2 of Part 2 of Division 4, and Section 4 of
Article XIV of the California Constitution, and shall not be used for
any other purpose. All moneys collected shall be retained in the
trust fund until paid as benefits to workers who have suffered
serious injury and who are suffering from previous and serious
permanent disabilities or physical impairments. Nonadministrative
expenses include audits and reports of services pursuant to
subdivision (c) of Section 4755. The surcharge amount for this fund
shall be stated separately.
   (2) Notwithstanding any other law, all references to the
Subsequent Injuries Fund shall mean the Subsequent Injuries Benefits
Trust Fund.
   (3) Notwithstanding paragraph (1), in the event that budgetary
restrictions or impasse prevent the timely payment of administrative
expenses from the Workers' Compensation Administration Revolving
Fund, those expenses shall be advanced from the Subsequent Injuries
Benefits Trust Fund. Expense advances made pursuant to this paragraph
shall be reimbursed in full to the Subsequent Injuries Benefits
Trust Fund upon enactment of the annual Budget Act.
   (d) The Occupational Safety and Health Fund is hereby created as a
special account in the State Treasury. Moneys in the account may be
expended by the department, upon appropriation by the Legislature,
for support of the Division of Occupational Safety and Health, the
Occupational Safety and Health Standards Board, and the Occupational
Safety and Health Appeals Board, and the activities these entities
perform as set forth in this division, and Division 5 (commencing
with Section 6300).
   (e) The Labor Enforcement and Compliance Fund is hereby created as
a special account in the State Treasury. Moneys in the fund may be
expended by the department, upon appropriation by the Legislature,
for the support of the activities that the Division of Labor
Standards Enforcement performs pursuant to this division and Division
2 (commencing with Section 200), Division 3 (commencing with Section
2700), and Division 4 (commencing with Section 3200). The fund shall
consist of surcharges imposed pursuant to paragraph (3) of
subdivision (f).
   (f) (1) Separate surcharges shall be levied by the director upon
all employers, as defined in Section 3300, for purposes of deposit in
the Workers' Compensation Administration Revolving Fund, the
Uninsured Employers Benefits Trust Fund, the Subsequent Injuries
Benefits Trust Fund, and the Occupational Safety and Health Fund. The
total amount of the surcharges shall be allocated between
self-insured employers and insured employers in proportion to payroll
respectively paid in the most recent year for which payroll
information is available. The director shall adopt reasonable
regulations governing the manner of collection of the surcharges. The
regulations shall require the surcharges to be paid by self-insurers
to be expressed as a percentage of indemnity paid during the most
recent year for which information is available, and the surcharges to
be paid by insured employers to be expressed as a percentage of
premium. In no event shall the surcharges paid by insured employers
be considered a premium for computation of a gross premium tax or
agents' commission. In no event shall the total amount of the
surcharges paid by insured and self-insured employers exceed the
amounts reasonably necessary to carry out the purposes of this
section.
   (2) The surcharge levied by the director for the Occupational
Safety and Health Fund, pursuant to paragraph (1), shall not generate
revenues in excess of fifty-two million dollars ($52,000,000) on and
after the 2009-10 fiscal year, adjusted for each fiscal year as
appropriate to reconcile any over/under assessments from previous
fiscal years pursuant to Sections 15606 and 15609 of Title 8 of the
California Code of Regulations, and may increase by not more than the
state-local government deflator each year thereafter through July 1,
2013, and, as appropriate, to reconcile any over/under assessments
from previous fiscal years. For the 2013-14 fiscal year, the
surcharge level shall return to the level in place on June 30, 2009,
adjusted for inflation based on the state-local government deflator.
   (3) A separate surcharge shall be levied by the director upon all
employers, as defined in Section 3300, for purposes of deposit in the
Labor Enforcement and Compliance Fund. The total amount of the
surcharges shall be allocated between employers in proportion to
payroll respectively paid in the most recent year for which payroll
information is available. The director shall adopt reasonable
regulations governing the manner of collection of the surcharges. In
no event shall the total amount of the surcharges paid by employers
exceed the amounts reasonably necessary to carry out the purposes of
this section.
   (4) The surcharge levied by the director for the Labor Enforcement
and Compliance Fund shall not exceed thirty-seven million dollars
($37,000,000) in the 2009-10 fiscal year, adjusted as appropriate to
reconcile any over/under assessments from previous fiscal years, and
shall not be adjusted each year thereafter by more than the
state-local government deflator, and, as appropriate, to reconcile
any over/under assessments from previous fiscal years pursuant to
Sections 15606 and 15609 of Title 8 of the California Code of
Regulations.
   (5) The regulations adopted pursuant to paragraph (1) to (4),
inclusive, shall be exempt from the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
   (g) On and after July 1, 2013, subdivision (e) and paragraphs (2)
to (4), inclusive, of subdivision (f) are inoperative, unless a later
enacted statute, that is enacted before July 1, 2013, deletes or
extends that date. 
   SEC. 2.   SECTION 1.   Section 3722 of
the Labor Code is amended to read:
   3722.  (a) At the time the stop order is issued and served
pursuant to Section 3710.1, the director shall also issue and serve a
penalty assessment order requiring the uninsured employer to pay to
the director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the sum of one thousand five hundred
dollars ($1,500) per employee employed at the time the order is
issued and served, as an additional penalty for being uninsured at
that time or issue and serve a penalty assessment order pursuant to
subdivision (b).
   (b) At any time that the director determines that an employer has
been uninsured for a period in excess of one week during the calendar
year preceding the determination, the director shall issue and serve
a penalty assessment order requiring the uninsured employer to pay
to the director, for deposit in the State Treasury to the credit of
the Uninsured Employers Fund, the greater of (1) twice the amount the
employer would have paid in workers' compensation premiums during
the period the employer was uninsured, determined according to
subdivision (c), or (2) the sum of one thousand five hundred dollars
($1,500) per employee employed during the period the employer was
uninsured. A penalty assessment issued and served by the director
pursuant to this subdivision shall be in lieu of, and not in addition
to, any other penalty issued and served by the director pursuant to
subdivision (a).
   (c) If the employer is currently insured, or becomes insured
during the period during which the penalty under subdivision (b) is
being determined, the amount an employer would have paid in workers'
compensation premiums shall be calculated by prorating the current
premium for the number of weeks the employer was uninsured within the
three-year period immediately prior to the date the penalty
assessment is issued. If the employer is uninsured at the time the
penalty under subdivision (b) is being determined, the amount an
employer would have paid in workers' compensation premiums shall be
the product of the employer's payroll for all periods of time the
employer was uninsured within the three-year period immediately prior
to the date the penalty assessment is issued multiplied by a rate
determined in accordance with regulations that may be adopted by the
director or, if none has been adopted, the manual rate or rates of
the State Compensation Insurance Fund for the employer's governing
classification pursuant to the standard classification system
approved by the Insurance Commissioner. The classification shall be
determined by the director or the director's designee at the time the
penalty assessment is issued on the basis of any information
available to the director regarding the employer's operations. Unless
the amount of the employer's payroll for all periods during which
the employer was uninsured within the three-year period is otherwise
proven by a preponderance of evidence, the employer's payroll for
each week the employer was uninsured shall be presumed to be the
state average weekly wage multiplied by the number of persons
employed by the employer at the time the penalty assessment is
issued. For purposes of this subdivision, "state average weekly wage"
means the average weekly wage paid by employers to employees covered
by unemployment insurance as reported by the United States
Department of Labor for California for the 12-month period ending
March 31 of the calendar year preceding the year in which the penalty
assessment order is issued.
   (d) If upon the filing of a claim for compensation under this
division the Workers' Compensation Appeals Board finds that any
employer has not secured the payment of compensation as required by
this division and finds the claim either noncompensable or
compensable, the appeals board shall mail a copy of their findings to
the uninsured employer and the director, together with a direction
to the uninsured employer to file a verified statement pursuant to
subdivision (e).
   After the time for any appeal has expired and the adjudication of
the claim has become final, the uninsured employer shall be assessed
and pay as a penalty either of the following:
   (1) In noncompensable cases, two thousand dollars ($2,000) per
each employee employed at the time of the claimed injury.
   (2) In compensable cases, ten thousand dollars ($10,000) per each
employee employed on the date of the injury.
   (e) In order to establish the number of employees the uninsured
employer had on the date of the claimed injury in noncompensable
cases and on the date of injury in compensable cases, the employer
shall submit to the director within 10 days after service of
findings, awards, and orders of the Workers' Compensation Appeals
Board a verified statement of the number of employees in his or her
employ on the date of injury. If the employer fails to submit to the
director this verified statement or if the director disputes the
accuracy of the number of employees reported by the employer, the
director shall use any information regarding the number of employees
as the director may have or otherwise obtains.
   (f) Except for penalties assessed under subdivision (b), the
maximum amount of penalties which may be assessed pursuant to this
section is one hundred thousand dollars ($100,000). Payment shall be
transmitted to the director for deposit in the State Treasury to the
credit of the Uninsured Employers Fund.
   (g) (1) The Workers' Compensation Appeals Board may provide for a
summary hearing on the sole issue of compensation coverage to effect
the provisions of this section.
   (2) In the event a claim is settled by the director pursuant to
subdivision (e) of Section 3715 by means of a compromise and release
or stipulations with request for award, the appeals board may also
provide for a summary hearing on the issue of compensability.