BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 228
                                                                  Page  1

          Date of Hearing:   March 30, 2011

                           ASSEMBLY COMMITTEE ON INSURANCE
                                 Jose Solorio, Chair
                 AB 228 (Fuentes) - As Introduced:  February 2, 2011
           
          SUBJECT  :   State Compensation Insurance Fund

           SUMMARY  :  Clarifies that employees of the State Compensation 
          Insurance Fund (SCIF) are exempt from work furlough orders.  
          Specifically,  this bill  adds "furloughs" to the Insurance Code 
          Section that exempts SCIF employees from "hiring freezes" and 
          "staff cutbacks" that are otherwise required by law.

           EXISTING LAW  :

          1)Establishes the State Compensation Insurance Fund to provide 
            workers' compensation insurance both as a competitor to 
            private insurers and as the insurer of last resort for 
            employers unable to procure insurance from private insurers.

          2)Provides that employees of SCIF, other than statutorily exempt 
            employees, are subject to the civil service laws applicable to 
            state employees.  However, SCIF employees are paid entirely 
            from premium and other revenues derived from SCIF's insurance 
            operations.

          3)Provides that SCIF is not subject to any other provisions of 
            the Government Code, except where certain provisions are 
            expressly made applicable.

          4)Provides that employees of SCIF are not subject to hiring 
            freezes and staff cutbacks otherwise required by law.

           FISCAL EFFECT  :   None anticipated.  The bill is nonfiscal.

           COMMENTS  :   

           1)Purpose  :  The purpose of this bill is to clarify that 
            "furloughs" do not apply to SCIF.  

           2)Background  :  Former Governor Schwarzenegger included SCIF 
            employees in the furlough orders that he issued as cost-saving 
            measures during the past several years.  While many lawsuits 
            were filed raising various legal issues surrounding these 








                                                                  AB 228
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            furlough orders, the lawsuit filed by representatives of SCIF 
            employees, which SCIF itself joined, was one of the first to 
            be decided.  In that case, the courts ruled that "furloughs" 
            were just another word for the hiring freezes and staff 
            cutbacks from which SCIF was already exempt.  The bill merely 
            conforms the statute to this ruling so that there is no doubt 
            in the future that furloughs of state employees do not apply 
            to SCIF employees.

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          State Compensation Insurance Fund
          California Chamber of Commerce (CalChamber)
          California Coalition on Workers' Compensation (CCWC)
           
          Opposition 
           
          None received.
           
          Analysis Prepared by  :    Mark Rakich / INS. / (916) 319-2086