BILL NUMBER: AB 1263	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  APRIL 7, 2011

INTRODUCED BY   Assembly Member Williams

                        FEBRUARY 18, 2011

   An act to add Section 11785.5 to the Insurance Code, relating to
the State Compensation Insurance Fund.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1263, as amended, Williams. State Compensation Insurance Fund:
 postemployment noncompetition clause.  
directors and officers: postemployment. 
   Existing law provides for the existence of the State Compensation
Insurance Fund to be administered by a board of directors for the
purpose of transacting workers' compensation insurance, and insurance
against the expense of defending any suit for serious and willful
misconduct, against an employer or his or her agent, and insurance to
employees and other persons of the compensation fixed by the workers'
compensation laws for employees and their dependents.
   Existing law provides that the board of directors shall appoint a
president, a chief financial officer, a chief operating officer, a
chief information technology officer, a chief investment officer, a
chief risk officer, and a general counsel. The positions are subject
to the Milton Marks Postgovernment Employment Restrictions Act of
1990 which, among other things, prohibits specified employees,
officers, and consultants, for one year after leaving office or
employment, from engaging in specified activities for the purpose of
influencing administrative or legislative action. This provision is
an exception to the general rule that contracts in restraint of trade
are void and unenforceable. 
   This bill would provide that, notwithstanding any other provision
to the contrary, the employment contracts of the above positions at
the fund shall contain employment restrictions prohibiting
competition of any kind during the term of contract of employment,
and prohibiting a person in any of those positions, for 2 years after
terminating his or her employment contract with the fund, from being
employed by a competitor of, consulting with, or lobbying the fund,
if those activities would result in competing with the fund through
the use of the fund's trade secrets or confidential information or if
those activities would constitute engaging in or aiding others in
engaging in unfair competition against the fund, use of the fund's
confidential information, or misappropriating the fund's proprietary
information. The bill would state the findings, declarations, and
intent of the Legislature relating to the need for enactment of this
measure.  
   This bill would prohibit the members of the fund's board of
directors and fund officers appointed by the board from lobbying the
fund for 2 years after leaving the fund. The bill would require that
any consulting for the fund by former members of the fund's board of
directors and former fund officers, who had been appointed by the
board, be approved by the board. 
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


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

  SECTION 1.   (a)    The
Legislature hereby finds and declares the following: 
   (1) 
    (a)  The State Compensation Insurance Fund is a
nonprofit, self-supporting, fairly competitive public enterprise that
serves a dual role as both a market of choice and the safety net for
California employers seeking workers' compensation insurance.

   (2) 
    (b)  The State Compensation Insurance Fund plays a
critical role in California's workers' compensation system.
   SEC. 2.    Section 11785.5 is added to the  
Insurance Code   , to read:
    11785.5.    (a) Notwithstanding any other provision
of law to the contrary, the members of the Board of Directors of the
State Compensation Insurance Fund and officers of the fund appointed
by the board of directors, including, but not limited to, the
president, chief financial officer, chief operating officer, chief
information technology officer, chief investment officer, chief risk
officer, and general counsel, are prohibited from lobbying the fund
for two years after leaving employment with the fund.  
   (b) Notwithstanding any other provision of law to the contrary,
any consulting for the fund by former members of the Board of
Directors of the State Compensation Insurance Fund and former
officers of the fund appointed by the board of directors, including,
but not limited to, the president, chief financial officer, chief
operating officer, chief information technology officer, chief
investment officer, chief risk officer, and general counsel, shall be
approved by the board of directors.  
   (3) The successful governance of the State Compensation Insurance
Fund directly correlates with a strong workers' compensation
insurance market.  
   (b) It is the intent of the Legislature in enacting this measure
to ensure that the State Compensation Insurance Fund is better able
to compete with other insurers and perform its various critical
functions.  
  SEC. 2.   Section 11785.5 is added to the
Insurance Code, to read:
   11785.5.  Notwithstanding any other provision to the contrary, the
employment contract of the president and officers of the board of
directors (hereafter "employees" or "employee") of the State
Compensation Insurance Fund, as specified in subdivision (a) of
Section 11785, shall contain the following employment restrictions:
   (a) (1) Competition of any kind whatsoever shall be prohibited
during the term of the contract of employment.
   (2) In support of the application of paragraph (1) to an employee,
it is agreed by the fund and by the employee that the fund would
suffer irreparable harm should the employee engage in competition in
violation of the employment contract and that the fund would be
entitled to injunctive relief.
   (b) After an employee terminates his or her employment contract
with the fund, the employee shall be prohibited for two years from
being employed by a competitor of, consulting with, or lobbying the
fund, if those activities would result in competing with the fund
through the use of the fund's trade secrets or confidential
information or if those activities would constitute engaging in or
aiding others in engaging in unfair competition against the fund, use
of the fund's confidential information, or misappropriating the fund'
s proprietary information.