BILL NUMBER: SB 313	CHAPTERED
	BILL TEXT

	CHAPTER  640
	FILED WITH SECRETARY OF STATE  NOVEMBER 2, 2009
	APPROVED BY GOVERNOR  NOVEMBER 2, 2009
	PASSED THE SENATE  OCTOBER 14, 2009
	PASSED THE ASSEMBLY  SEPTEMBER 8, 2009
	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 Section 3722 of the Labor Code, relating to
workers' compensation, and making an appropriation therefor.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 313, 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 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.
   Appropriation: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  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.