BILL ANALYSIS Ó SB 1177 Page 1 SENATE THIRD READING SB 1177 (Leno) As Amended June 19, 2012 Majority vote SENATE VOTE :37-0 PUBLIC SAFETY 6-0 INSURANCE 12-0 ----------------------------------------------------------------- |Ayes:|Ammiano, Knight, Cedillo, |Ayes:|Solorio, Hagman, | | |Hagman, Mitchell, Skinner | |Bradford, | | | | |Charles Calderon, Carter, | | | | |Feuer, | | | | |Beth Gaines, Hayashi, | | | | |Miller, Olsen, Skinner, | | | | |Wieckowski | ----------------------------------------------------------------- SUMMARY : Provides that where an employer is convicted of a crime against an employee, the restitution order shall not be offset by workers' compensation payments unless the employer has paid workers' compensation insurance premiums in accordance with the law. Specifically, this bill : 1)Provides that where an employer is convicted of a crime against an employee, the restitution order shall not be offset by workers' compensation insurance payments unless the court finds substantial evidence that all insurance premiums have been made in full accordance with the law. 2)Makes technical, non-substantive changes. EXISTING LAW : 1)States it is the unequivocal intention of the people of the State of California that all persons who suffer losses as a result of criminal activity shall have the right to restitution from the persons convicted of the crimes for losses they suffer. Restitution shall be ordered from the convicted persons in every case, regardless of the sentence or disposition imposed, in which a crime victim suffers a loss, unless compelling and extraordinary reasons exist to the contrary. SB 1177 Page 2 2)Declares legislative intent that a crime victim who incurs an economic loss as a result of the commission of a crime shall receive restitution directly from the convicted defendant. 3)Requires full victim restitution for economic losses determined by the court. 4)States that economic losses include, but are not limited to, the following: full or partial payment for the value of stolen or damaged property; medical expenses; mental health counseling expenses; wages or profits lost due to injury incurred by the victim, and if the victim is a minor, wages or profits lost by the minor's parent, parents, guardian, or guardians, while caring for the injured minor; wages or profits lost by the victim, and if the victim is a minor, wages or profits lost by the minor's parent, parents, guardian, or guardians, due to time spent as a witness or in assisting the police or prosecution; noneconomic losses, including, but not limited to, psychological harm, for felony violations of Penal Code Section 288; interest at the rate of 10% per annum; actual and reasonable attorney's fees and other collection costs; relocation expenses incurred by an adult victim; expenses to install or increase residential security; expenses to retrofit a residence or vehicle, or both, to make the residence accessible to or the vehicle operational by the victim, where the victim suffers permanent disability as a direct result of the crime; and, expenses to monitor and repair the credit report of a victim of identity theft. 5)Defines a "victim" for purposes of restitution, as including any of the following: a) The immediate surviving family of the actual victim; b) Any corporation, business trust, estate, trust, partnership, association, joint venture, government, governmental subdivision, agency, or instrumentality, or any other legal or commercial entity when that entity is a direct victim of a crime; and, c) Any person who has sustained economic loss as the result of a crime and who satisfies any of the following conditions: SB 1177 Page 3 i) At the time of the crime was the parent, grandparent, sibling, spouse, child, or grandchild of the victim; ii) At the time of the crime was living in the household of the victim; iii) At the time of the crime was a person who had previously lived in the household of the victim for a period of not less than two years in a relationship substantially similar to a relationship listed above; iv) Is another family member of the victim, including, but not limited to, the victim's fiancé or fiancée, and who witnessed the crime; or, v) Is the primary caretaker of a minor victim. 6)Provides that a criminal restitution order shall be enforceable as though it were a civil judgment. 7)States that the determination of the amount of restitution ordered shall not be affected by the indemnification or subrogation rights of any third party. 8)Vests authority in the Legislature to create and enforce a system for workers' compensation making adequate provisions for the comfort, health, safety, and general welfare of any and all workers and those dependent upon them for support to the extent of relieving from the consequences of any injury or death incurred or sustained by workers in the course of their employment, irrespective of the fault of any party. 9)Provides that in the event of a compensable industrial injury, workers' compensation is the sole and exclusive remedy of the employee or his or her dependents against the employer, and that the employee or the employee's dependents cannot bring a civil action for damages against the employer, except under specified circumstances. 10)Provides that an employer is liable for a death benefit to the dependents of an employee who dies as a result of a work-related injury, and that, except in certain situations, SB 1177 Page 4 the death benefit is a dependent's exclusive remedy against the employer for the employee's work-related death. 11)Specifies exceptions to the general rule that workers compensation is the exclusive remedy for an industrial injury, including: a) Where the employee's injury or death is proximately caused by a willful physical assault by the employer; b) Where the employee's injury is aggravated by the employer's fraudulent concealment of the existence of the injury and its connection with the employment; c) Where the employer fails to secure workers' compensation coverage for his or her employees; and, d) Where the employee's injury or death is proximately caused by the employer's knowing removal of, or knowing failure to install, a point of operation guard on a power press. 12)Provides that when an injury causes death the employer shall be liable for all of the following: a) Reasonable expenses of the employee's burial, as specified; and, b) A death benefit, to be allowed to the dependents when the employee leaves any person dependent upon him or her for support, as specified. FISCAL EFFECT : Unknown. This bill is keyed non-fiscal by the Legislative Counsel. COMMENTS : According to the author, "SB 1177 will enable more victims and victims' families - in the event of a serious workplace injury or death where the employer is criminally responsible - to receive full restitution from the convicted employer. "Under California law, an employer may be charged criminally when an employee is killed or seriously injured on the job. Upon conviction, the employer will be ordered to pay restitution to SB 1177 Page 5 the victim or victim's family, which can include medical expenses and lost future wages. "If the victim or victim's family receives workers' compensation benefits from the employer's insurer, the employer will typically seek to reduce its restitution obligation to the victim or victim's family by arguing that the employer is entitled to an 'offset' for those benefits - that is, the employer will assert that restitution owed should be reduced (offset) by the amount of any workers' compensation insurance payments made to the victim or family. "However, in some cases, the convicted employer has also been defrauding its workers' compensation insurance carrier by, for example, underreporting or failing to report the employee's wages. Despite this, the employer may still claim a workers' compensation offset to the restitution ordered by the court. "Employers who are following the law are at a competitive disadvantage when less scrupulous employers cut corners for their employee's workplace safety and workers compensation coverage. In addition, criminally negligent employers are getting the extra benefit of restitution offsets when they have defrauded their workers' compensation insurer. "SB 1177 is necessary to clearly state in statute that an offset is prohibited unless the employer can prove that as of the date of the workplace injury or death all policy premiums actually owed were paid. Without offering such evidence to the court, the employer will be required to pay full restitution to the victim or victim's family without any offset for workers' compensation insurance payments." Please see the policy committee analysis for a full discussion of this bill. Analysis Prepared by : Sandy Uribe / PUB. S. / (916) 319-3744 FN: 0004348 SB 1177 Page 6