BILL ANALYSIS SENATE COMMITTEE ON BANKING, FINANCE, AND INSURANCE Senator Ronald Calderon, Chair AB 2151 (Torres) Hearing Date: June 30, 2010 As Amended: March 24, 2010 Fiscal: Yes Urgency: No VOTES: Asm. Floor.(05/20/10)72-0/Pass Asm. Appr. (05/12/10)16-0/Pass Asm. Ins. (04/21/10)12-0/Pass SUMMARY Would grant protections to peace officers, members of the California Highway Patrol, and firefighters, who use their private vehicles in the performance of their duty, during their hours of employment, as specified. DIGEST Existing law 1. Provides that no peace officer, member of the California Highway Patrol (CHP), or firefighter is required to report, to his or her private automobile insurance carrier, any accident in which he or she is involved, while operating an authorized emergency vehicle or any employer-leased or employer-rented vehicle, in the performance of his or her duty, during the hours of his or her employment (Insurance Code Section 557.5); 2. Provides that no insurer may increase the premium on a private automobile insurance policy, or deny renewal of the private automobile insurance policy, of a peace officer, member of the CHP, or firefighter, due to an accident in which that individual was involved, while operating an authorized emergency vehicle in the performance of his or her duty, during the hours of his or her employment (Insurance Code Section 488.5); 3. Provides that, if an employee or former employee of a public entity asks that public entity to defend him or her against any claim or action for an injury arising out of an act or omission occurring within the scope of his or her employment, as AB 2151 (Torres), Page 2 specified, and if the employee or former employee cooperates in good faith in the defense of that claim or action, the public entity must pay any judgment or any compromise or settlement of the claim or action to which the public entity agrees (Government Code Section 825); 4. Requires the driver of a motor vehicle that is involved in an accident, which results in property damage in excess of $750, or in bodily injury or death, to report the accident to the Department of Motor Vehicles (DMV), as specified, but specifies that a report is not required, if the motor vehicle involved in the accident is owned or leased by, or under the direction of, the United States, California, another state, or a local agency (Vehicle Code Section 16000); 5. Requires every driver or employer that is involved in an accident and is required to report that accident pursuant to Vehicle Code Section 16000 to provide evidence of financial responsibility to DMV, and states that evidence may be established by filing a report with DMV, indicating that the motor vehicle involved in the accident was owned, rented, or leased by or under the direction of the United States, California, or any political subdivision of California or a California municipality (Vehicle Code Section 16051). This bill 1. Would extend the exemption from having to report a vehicular accident to one's private insurance carrier to any peace officer, member of the CHP, or firefighter, who is involved in an accident when operating any private vehicle at the request or direction of their employer, while in the performance of their duty; 2. Would prohibit any private insurance carrier from increasing the premium on a private automobile insurance policy, or denying renewal of the private automobile insurance policy, of a peace officer, member of the CHP, or firefighter, due to an accident in which that individual was involved, while operating a private vehicle at the direction of their employer, while in the performance of their duty; 3. Would require peace officers, members of the CHP, and firefighters to be indemnified by their employers for all losses experienced by them or by a third party, which result from an accident in which they are involved, when driving an AB 2151 (Torres), Page 3 authorized emergency vehicle, any employer-leased or employer-rented vehicle, or any private vehicle, if that vehicle is operated at the request or direction of the individual's employer; 4. Would further provide that no private automobile or other private insurance policy covering an employee shall be required to provide defense or indemnification, when the employee is using a private vehicle at the request or direction of his or her employer, while in the performance of his or her duty; 5. Would authorize a peace officer, member of the CHP, or firefighter, who is involved in a vehicular accident while operating their private vehicle at the request of, or under the direction of the United States, California, or any political subdivision of California or a California municipality, to provide evidence of financial responsibility to the DMV following that accident, by filing a report indicating that they were operating that privately owned motor vehicle in the performance of their duty and at the request of, or under the direction of the United States, California, or any political subdivision of California or a California municipality. COMMENTS 1. Purpose of the bill To ensure that peace officers, members of the CHP, and firefighters are held financially harmless, if they are involved in an accident while operating a private vehicle at the request or direction of their employer. 2. Background Existing California law protects peace officers, members of the CHP, and firefighters who are involved in vehicular accidents, while on the job. These public safety personnel are not required to report accidents in which they are involved while on the job to their private automobile insurance carriers, nor are their private automobile insurance carriers allowed to increase their rates, or refuse to renew their policies, as a result of an on-the-job accident. However, existing law limits this protection to situations in which the peace officer, member of the CHP, or firefighter is operating an authorized emergency vehicle or an employer-leased or employer-rented vehicle at the AB 2151 (Torres), Page 4 direction of his or her employer. The operation of a private vehicle at the direction of his or her employer is not protected, something this bill seeks to change. 3. Support The California Professional Firefighters (CPF) is sponsoring AB 2151 to ensure that firefighters do not place their own personal finances at risk, when engaging in an on-duty, employer-directed activity. CPF observes that the number of daily details for California firefighters is on the rise. With more "detailing out," there is an increased demand on fire departments to provide transportation. In some cases, there is increased pressure on firefighters to use their privately-owned vehicles, when department-provided transportation is not authorized or available. In a few instances, where firefighters have been ordered or pressured to use their personal vehicles when on detail, a handful of employers have refused to indemnify firefighters who are involved in accidents, while using their personal vehicles to conduct fire department business. Some firefighters have been left financially on the hook by their private insurance carriers, in instances when they were using their personal vehicles and were involved in a crash, while detailed out. AB 2151 will ensure that, in cases where department transportation is needed but not available, and where private vehicles are used, employers must assume any liability for expenses resulting from an accident involving that vehicle. Several sheriffs', firefighters', and peace officers' associations sent identical letters of support, asserting that it is inappropriate for an employee to put his or her personal finances at risk, when engaging in an on-duty, employer-directed activity. 4. Opposition The California State Association of Counties (CSAC), League of California Cities (LCC), and Regional Council of Rural Counties (RCRC) believe that it is both inappropriate and unnecessary to shift the liability for accidents involving personal vehicles from individuals to public employers. If this bill is enacted, employers of public safety personnel will face increased liability for employees who drive their personal vehicles for work purposes, which, in turn, will increase the employers' insurance costs. When employees use their personal vehicles for work purposes, AB 2151 (Torres), Page 5 they are typically reimbursed at the Internal Revenue Service (IRS)-established mileage reimbursement rate, or, in some cases, at mileage rates that are negotiated with their employers. The IRS mileage reimbursement rate includes insurance costs among the items for which it is intended to reimburse those who drive their personal vehicles for work purposes. CSAC, LCC, and RCRC also note that local jurisdictions have adopted policies and memoranda of understanding which reflect local priorities and circumstances, to address liability for accidents involving personal vehicles. These policies very by jurisdiction. "This range of approaches suggests that a statewide, one-size-fits-all solution is unnecessary. If represented employees believe there is a problem, the local bargaining table is the appropriate place to address it." CSAC-Excess Insurance Authority (CSAC-EIA), a joint powers authority that is the largest property and casualty public entity risk pool in the nation, is also opposed to AB 2151. CSAC-EIA's membership includes 93% of California's counties, 80% of its cities, and 8% of all school districts and other special districts. The organization observes that AB 2151 will have a significant financial impact on its membership and their constituents, at a time when most public entities are already facing significant financial challenges. "Our Members have an obligation to their constituents to limit their financial exposures through contractual agreements and the use of collateral sources to ease financial burdens on the constituency. Through the passage of AB 2151, our public entity members, and their constituents, would be partially or fully funding the cost of insurance on the privately owned vehicle and prevented from shifting the financial burden of any losses to that private insurer. Effectively, AB 2151 requires public entities and their constituency to fund the cost of private insurance as well as the cost of any subsequent losses, which amounts to a 'double taxation' to our Members and their constituency." Peace officers and firefighters are already paid a mileage stipend, when utilizing their personal vehicles at the request of their employers, in the performance of their duty. A portion of that stipend, which is paid for through public funding, is intended to offset the cost of maintaining insurance on the privately-owned vehicle. AB 2151 (Torres), Page 6 The California Emergency Management Agency (Cal EMA) is opposed to the bill, because of its potential fiscal impact on the state. By allowing specified employees to avoid reporting accidents to their personal insurance carriers when operating their personal vehicles on state time, AB 2151 will shift financial liability for any costs incurred as a result of the accident to the state. Cal EMA states that there are already provisions in place to protect employees who use their personal vehicles during official state time. 5. Questions a. How would this bill impact contracts and memoranda of understanding that were entered into by public entities prior to the effective date of the bill, and which are in conflict with this bill's provisions? Would the contracts and memoranda remain in effect, until they expire? Or would they be overridden by AB 2151's changes? b. Will it always be clear when public safety personnel are using their personal vehicles at the request of their employers? Could this bill set up disagreements between employees and their employers about when the use of a personal vehicle was requested by an employer, versus when such use was volunteered by an employee? c. Could this bill lead to fraudulent claims by some peace officers, members of the CHP, or firefighters, who are involved in vehicular accidents while driving their personal vehicles on their personal time, yet who claim they were doing so at the request of their employers, while on the job? 6. Suggested Amendments a. When Insurance Code Section 557.5 was amended in 2008 to include employer-leased and employer-rented vehicles, a conforming change was never made to Insurance Code Section 488.5. Because AB 2151 proposes to amend Section 488.5, staff suggests adding the conforming amendment that was inadvertently excluded, when this section was last amended in 2008. This amendment would ensure that both sections cover AB 2151 (Torres), Page 7 the same three situations (use of emergency vehicles, employer-rented or employer-leased vehicles, and private vehicles). Page 3, line 5, after the comma, insert: any employer-leased or employer-rented vehicle, b. The June 21, 2010 amendments to AB 2151 expanded the bill to include any private vehicle operated at the request or direction of an employer. The prior version of the bill had included any private vehicle of the employee operated at the request or direction of an employer. According to the sponsor of the bill, this change was not intended. Because it is unclear why the bill was broadened, and because the broadening appears to go beyond the stated intent of the author and sponsor, staff suggests re-amending this portion of the bill, so that it covers private vehicles which are owned, leased, or rented by an employee, and which are operated by the employee at the request or direction of his or her employer, in the performance of his or her duty (Page 3, line 34, after "private vehicle," insert: , which is owned, leased, or rented by the employee); c. Staff additionally recommends deleting the sentence, which runs from page 3, line 39 through page 4, line 3 as unnecessary. Those lines merely restate protections, which are already provided to employees by Section 825 of the Government Code. 7. Prior Legislation a. AB 1115 (S. Runner), Chapter 85, Statutes of 2008: Expanded the definition of an authorized emergency vehicle used in the performance of duty by a peace officer, member of the CHP, or firefighter to include vehicles that are rented or leased by the employer for official purposes; b. SB 629 (Correa), Chapter 211, Statutes of 2007: Repealed the requirement that peace officers and firefighters involved in a vehicular accident submit a written statement, under penalty of perjury, or a copy of the incident report filed with their AB 2151 (Torres), Page 8 employer, to their private automobile insurer. POSITIONS Support California Professional Firefighters (sponsor) Association for Los Angeles Deputy Sheriffs California Association of Highway Patrolmen Los Angeles Police Protective League Orange County Professional Firefighters Association Peace Officers Research Association of California Riverside Sheriffs' Association Oppose California Emergency Management Agency California State Association of Counties CSAC-Excess Insurance Authority League of California Cities Regional Council of Rural Counties Consultant: Eileen Newhall (916) 651-4102