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  




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              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