BILL ANALYSIS Ó
Senate Committee on Labor and Industrial Relations
Senator Ben Hueso, Chair
Date of Hearing: June 11, 2014 2013-2014 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 1746
Author: Alejo
As Introduced/Amended: March 20, 2014
SUBJECT
Workers' compensation: proceedings: expedited hearings.
KEY ISSUE
Should the Legislature require that issues relating to whether
an injured worker suffered injury while employed by an illegally
uninsured employer be resolved at an expedited hearing before
the Workers' Compensation Appeals Board (WCAB)?
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
Existing law provides that medical, surgical, chiropractic,
acupuncture, and hospital treatment, including nursing,
medicines, medical and surgical supplies, crutches, and
apparatuses, including orthotic and prosthetic devices and
services, that is reasonably required to cure or relieve the
injured worker from the effects of his or her injury shall be
provided by the employer.
(Labor Code §4600)
Existing law provides that, if an employer fails to pay the
compensation to an injured worker, the award, upon application
by the injured worker or his or her beneficiaries, the
compensation must be paid by the director from the Uninsured
Employers Benefits Trust Fund (UEBTF). The UEBTF is funded
through surcharges on workers' compensation insurance policies.
(Labor Code §3716)
Existing law provides that, if an award is issued from the
UEBTF, the amount of the award constitutes a liquidated damage
against the illegally uninsured employer, which may be pursued
by the director the Department of Industrial Relations in the
Superior Court of any county. (Labor Code §§ 3717 and 5806)
Existing law requires the administrative director of the
Division of Workers' Compensation (DWC) to create a priority
conference calendar for cases where the injured worker is
represented by an attorney and the issues in dispute are
employment or injury arising out of employment or in the course
of employment. The conference must be conducted by a workers'
compensation administrative law judge within 30 days after the
declaration of readiness to proceed.
(Labor Code §5502)
This bill would require the administrative director to include
injured workers who are or were employed by an illegally
uninsured employer on the priority conference calendar when the
issues in dispute are employment or injury arising out of
employment or in the course of employment.
COMMENTS
1. The Underground Economy and AB 1746:
The State of California faces significant challenges from the
underground economy, which is defined by the Employment
Development Department as individuals and businesses that deal
in cash and/or use other schemes to conceal their activities
and their true tax liability from government licensing,
Hearing Date: June 11, 2013 AB 1746
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
regulatory, and taxing agencies. Nowhere is this challenge
more difficult than in the enforcement of California's
workers' compensation system. Illegally uninsured employers
have an advantage over insured employers as they have lower
costs, and these uninsured employers' failure to secure
insurance leads to higher premium costs in their industries.
Adding insult to injury, while existing law allows for an
injured worker to pursue his or her claims against an
uninsured employer through the WCAB, the uninsured employer
may not be able to pay the full claim. In that situation, the
injured worker's rightful compensation comes from the UEBTF,
which is funded by employers who legally procure insurance.
In short, an employer who follows the law faces unfair
competitive disadvantages and higher premiums due to scofflaw
employers, and indirectly must pay for the conduct of the
scofflaw employers through the UEBTF.
AB 1746 would provide expedited hearings for workers who claim
to have been injured in the course of or arising out of
employment with an uninsured employer. Such an expedited
hearing process would allow for an expedited resolution for an
aggrieved employee, quickly identify an illegally uninsured
employer or employers, and allow the UEBTF and/or the director
to take appropriate action.
2. Proponent Arguments :
Proponents argue that AB 1746 is a necessary reform that will
help some of the most vulnerable injured workers and assist
California in its fight against the underground economy.
Specifically, proponents argue that injured workers who work
for illegally uninsured employers do not have the same access
to medical care, as insurers are required by law to provide
medical benefits in a timely manner with a significant pool of
medical providers. As injured workers who work or worked for
an illegally uninsured employer have none of these
protections, AB 1746 will ensure that they receive an
expedited hearing so that they can quickly receive the medical
care they need. Additionally, proponents note that AB 1746
allow for the rapid identification of illegally uninsured
employers, giving California another important tool in the
Hearing Date: June 11, 2013 AB 1746
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
fight against the underground economy.
3. Opponent Arguments :
None on file.
4. Prior Legislation :
AB 576 (Perez), Statutes of 2013, Chapter 614, creates a
multiagency team consisting of the Franchise Tax Board,
Department of Justice, State Board of Equalization, and
Employment Development Department, known as the Revenue
Recovery and Collaborative Enforcement Team, to collaborate in
combating criminal tax evasion associated with the underground
economy.
SUPPORT
American Federation of State, County and Municipal Employees,
AFL-CIO
Association of California Healthcare Districts
California Chamber of Commerce
California Coalition on Workers' Compensation
California Labor Federation, AFL-CIO
California Professional Firefighters
Pacific Compensation Insurance Company
Rural County Representatives of California
Salud Para La Gente
The California Applicant Attorneys Association
Watsonville Law Center
Worksafe
OPPOSITION
None on file.
Hearing Date: June 11, 2013 AB 1746
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations