BILL ANALYSIS Ó
SB 691
Page 1
SENATE THIRD READING
SB 691 (Lieu)
As Amended August 24, 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. Also, requires the director of EDD to provide
the Agricultural Labor Relations Board (ALRB) with information
in EDD's possession including employee, wage, and employer
information for use in the investigation or enforcement of the
Agricultural Labor Relations Act (ALRA).
FISCAL EFFECT : According to the Assembly Appropriations
Committee, costs associated with this legislation should be
minor and absorbable within existing resources.
COMMENTS : According to the author, this bill seeks to assist
the CSLB in their investigation of worker's 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. Currently, the ALRB
has to negotiate a memorandum of understanding to receive very
limited types of data and is restricted by a confidentiality
clause from introducing it into evidence in hearings. This
creates unnecessary work for the ALRB's regional staff and
causes significant delays in enforcement. Similar departments
already have lawful access to this information. For example,
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the Division of Labor Standards Enforcement (DLSE) has access to
otherwise confidential information to seek criminal, civil, or
administrative remedies in connection with the failure to pay,
or the unlawful payment of, wages.
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
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 the
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.
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.
In September 2010, the Assembly Labor and Employment Committee
conducted an oversight hearing regarding the ALRB.
Specifically, the hearing focused on two cases (Ace Tomato
Company and San Joaquin Tomato Growers Inc.), which had been
pending since 1989. One of the reasons for delay in those cases
is that, despite the fact that a judgment and a make-whole
remedy had been issued to the workers, the ALRB had numerous
difficulties in determining a methodology for calculating the
make-whole relief, and calculating such backpay.
The EDD collects wage data and additional information that would
assist enforcement efforts and speed up the time it takes ALRB
employees to compute and disperse monetary remedies to
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employees. EDD is currently prohibited from providing this
information by Unemployment Insurance (UI) Code Sections 1094
and 1095, which prohibit the release of information collected
pursuant to administration of the UI Code except to specified
public agencies for specified law enforcement purposes.
The amendments to this bill add provisions originally passed by
the Assembly (54-22) in AB 2676 (Labor and Employment
Committee). The provisions amended into this bill were removed
from AB 2676 in the Senate.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0005498