California Legislature—2013–14 Regular Session

Assembly BillNo. 2733


Introduced by Committee on Insurance (Assembly Members Perea (Chair), Hagman (Vice Chair), Bradford, Ian Calderon, Cooley, Dababneh, Frazier, Gonzalez, Nestande, V. Manuel Pérez, and Wieckowski)

February 25, 2014


An act to amend Section 3254.1 of the Unemployment Insurance Code, relating to disability compensation, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 2733, as introduced, Committee on Insurance. Disability compensation: voluntary plans.

Existing law authorizes an employer, a majority of the employees employed in this state of an employer, or both, to apply to the Director of Employment Development for approval of a voluntary plan for the payment of disability benefits to the employees electing to be in a voluntary plan. Existing law, until January 1, 2015, authorizes the Director of Employment Development to approve a single voluntary plan for all of the small-business-third-party administrator’s clients and their employees if specified criteria are met.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 3254.1 of the Unemployment Insurance
2Code
is amended to read:

3

3254.1.  

(a) For the purposes of this section,
4“small-business-third-party administrator” (hereafter SBTPA),
5means an applicant that the director finds meets all of the following
6criteria at the time of application:

7(1) The SBTPA administers voluntary disability plans on behalf
8of its clients pursuant to a written agreement in a form and manner
9approved by the director.

10(2) The SBTPA has at least 1,000 California domiciled clients,
1180 percent of whom have fewer than 20 employees.

12(3) The SBTPA processes payroll for its California domiciled
13clients.

14(4) The SBTPA offers workers’ compensation insurance to its
15California domiciled clients through an affiliated California
16domiciled insurance company.

17(b) Except as modified by this section, “voluntary plan” shall
18be defined as, and shall be subject to the same provisions as, a
19“voluntary plan,” as set forth inbegin delete Chapter 6 (commencing with
20Section 3251) of Part 2 of Division 1end delete
begin insert this chapterend insert.

21(c) The director may approve a single voluntary plan for all of
22an SBTPA’s clients and their employees where all of the following
23criteria are met:

24(1) The plan is administered by the SBTPA.

25(2) The plan establishes a master trust account that is
26administered by the SBTPA, but requires each individual employer
27that is a client of the SBTPA to have a subtrust account that reflects
28that client’s employees’ specific plan contributions and is not
29commingled with any other funds. The master trust account shall
30be held in a federally insured bank.

31(3) (A) If a voluntary plan does not provide for the assumption
32by an admitted disability insurer of the liability of the employer
33to pay the benefits afforded by the plan, the director shall not
34approve it unless the employer meets the financial security
35requirements of Section 3258.

36(B) In addition to the security required by subparagraph (A),
37the director may require additional security from the SBTPA,
38consisting of the same types of financial instruments, and deposited
P3    1in the same manner as in Section 3258, in an amount determined
2by the director to be adequate to pay disability claims of the
3SBTPA’s clients’ employees should the client’s subaccount or the
4financial security provided in subparagraph (A) be inadequate.

5(4) (A) The single voluntary plan will be in effect for a period
6of not less than one year and, thereafter, continuously, unless the
7Director of Employment Development finds that the SBTPA has
8given notice of withdrawal of the plan. The notice filed by the
9SBTPA shall be filed in writing with the Director of Employment
10Development and shall be effective on the anniversary of the
11effective date of the plan next following the filing of the notice,
12but in any event shall not be less than 30 days from the time of the
13filing of the notice; except that the plan may be withdrawn on the
14operative date of any law increasing the benefit amounts provided
15by Sectionsbegin delete 2563end deletebegin insert 2653end insert and 2655 or the operative date of any
16change in the rate of worker contributions as determined by Section
17984, if notice of the withdrawal from the plan is transmitted to the
18Director of Employment Development not less than 30 days prior
19to the operative date of that law or change. If the plan is not
20withdrawn on the 30 days’ notice because of the enactment of a
21law increasing benefits or because of a change in the rate of worker
22contributions as determined by Section 984, the plan shall be
23amended to conform to that increase or change on the operative
24date of the increase or change.

25(B) Any individual employer who is a client of the SBTPA, or
26a majority of that client’s employees employed in this state covered
27by the plan, may also terminate their participation in the plan by
28giving written notice of withdrawal from the plan to the SBTPA
29and to the Director of Employment Development not less than 30
30 days prior to the date of withdrawal.

31(5) The rights afforded to the covered employees are greater
32than those provided for in Chapter 2 (commencing with Section
332625), including those provided for in Chapter 7 (commencing
34with Section 3300).

35(6) The plan has been made available to all of the employees
36of the employer employed in this state or to all employees at any
37one distinct, separate establishment maintained by the employer
38in this state. “Employees” as used in this paragraph includes those
39individuals in partial or other forms of short-time employment and
P4    1employees not in employment as the director shall prescribe by
2authorized regulations.

3(7) A majority of the employees of the client employed in this
4state or a majority of the employees employed at any one distinct,
5separate establishment maintained by the client in this state have
6consented to the plan.

7(8) If the plan provides for insurance, the form of the insurance
8policies to be issued has been approved by the Insurance
9Commissioner and is to be issued by an admitted disability insurer.

10(9) The client has consented to the plan and has authorized the
11SBTPA to make the payroll deductions required, if any, and deposit
12the proceeds in each client’s subtrust account.

13(10) The plan provides for the inclusion of future employees.

14(11) The amount of deductions from the wages of an employee
15of any client in effect for the plan shall not be increased on other
16than an anniversary of the effective date of the plan except to the
17extent that any increase in the deductions from the wages of an
18employee allowed by Section 3260 permits that amount to exceed
19the amount of deductions in effect.

20(12) The approval of the plan or plans will not result in a
21substantial selection of risks adverse to the Disability Fund.

22(d) The department may adopt application forms and procedures
23as deemed necessary to ensure compliance with this section, and
24shall adopt any application forms and procedures within 60 days
25of the enactment of this section.

26(e) It is the intent of the Legislature in enacting paragraph (3)
27of subdivision (c) that, in the event of the insolvency of an
28employer-client of the SBTPA, or of the SBTPA, the disability
29claims against the subaccount of any employer-client arising prior
30to the date of the insolvency shall be satisfied by first accessing
31the security of the SBTPA, as described in subparagraph (B) of
32paragraph (3) of subdivision (c), rather than satisfying the claims
33from the Disability Fund.

begin delete

34(f) This section shall remain in effect through December 31,
35 2014, and as of that date is repealed.

end delete
36

SEC. 2.  

This act is an urgency statute necessary for the
37immediate preservation of the public peace, health, or safety within
38the meaning of Article IV of the Constitution and shall go into
39immediate effect. The facts constituting the necessity are:

P5    1In order to amend Section 3254.1 of the Unemployment
2Insurance Code before it is repealed, it is necessary that this bill
3go into immediate effect.



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