BILL ANALYSIS Ó
SB 691
Page 1
SENATE THIRD READING
SB 691 (Lieu)
As Amended January 4, 2012
Majority vote
SENATE VOTE :33-0
INSURANCE 13-0 APPROPRIATIONS 17-0
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|Ayes:|Solorio, Hagman, |Ayes:|Fuentes, Harkey, |
| |Bradford, Fong, Carter, | |Blumenfield, Bradford, |
| |Feuer, Beth Gaines, | |Charles Calderon, Campos, |
| |Hayashi, Miller, Olsen, | |Davis, Donnelly, Gatto, |
| |Skinner, Torres, | |Hall, Hill, Lara, |
| |Wieckowski | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
| | | | |
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SUMMARY : Permits information sharing between the Employment
Development Department (EDD) and the Contractors' State License
Board (CSLB) to assist with its workers' compensation fraud
investigations.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs associated with this legislation should be minor
and absorbable within existing resources.
COMMENTS :
Purpose . According to the author, this bill seeks to assist the
CSLB in their investigation of workers' compensation fraud by
permitting the EDD to share employment data and information with
the CSLB for the purposes of investigating any specific workers'
compensation fraud investigation.
Workers' compensation fraud . One form of workers' compensation
fraud committed by unscrupulous employers is the failure by the
employer to report all of his or her employees to the insurance
company when creating a policy, misreporting the type of work
done by employees, or even failing to secure workers'
compensation coverage for all employees.
Testimony provided to the Senate Select Committee on Small
Business and the Underground Economy in 2011 indicated that $15
SB 691
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to $68 billion of annual payroll in California went unreported,
or 4-12% of the total payroll in California. This lack of
reporting by unscrupulous employers has significantly increased
premiums paid by law-abiding employers. The increase in premiums
creates competitive pressures for law-abiding employers to engage
in underreporting or go out of business.
CSLB . As the agency responsible for licensing contractors, CSLB
has frequent contact with employers engaged in workers'
compensation fraud. Contractors such as roofers and electricians
face some of the highest workers' compensation premiums due to
injuries, but also suffer from some of the most significant rate
distortion due to misreporting and underreporting. While the
CSLB must ensure that licensed contractors appropriately maintain
workers' compensation coverage, they do not currently have
statutory access to EDD's databases to investigate possible
workers' compensation fraud.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086 FN:
0005410