BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 2883


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          2883 (Committee on Insurance)


          As Amended  August 2, 2016


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  | 80-0 |June 1, 2016   |SENATE: | 37-0 |(August 11,      |
          |           |      |               |        |      |2016)            |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  INS.


          SUMMARY:  Clarifies the rules that govern when owners or  
          officers of businesses may exclude themselves from workers'  
          compensation coverage, and deletes a duplicative Labor Code  
          Section.


          The Senate amendments delete a mandate for the Commission on  
          Health and Safety and Workers' Compensation to conduct a study,  
          and add provisions that specify how officers and owners of  
          employers can declare that they are not "employees" of the  
          company for purposes of workers' compensation insurance.


          EXISTING LAW:  


          1)Contains two nearly identical Labor Code Sections numbered  
            6354.7 that establish a Workers' Occupational Safety and  








                                                                    AB 2883


                                                                    Page  2


            Health Education Fund, delineates the purposes of the Fund,  
            and provides that the funds may be expended by the CHSWC.


          2)Provides that officers and owners of employers may opt out of  
            workers' compensation coverage otherwise mandated for all  
            employees of the company, but does not establish a clear  
            procedure for how the opt out is to be accomplished.


          FISCAL EFFECT:  The bill was referred from the Senate  
          Appropriations Committee pursuant to Senate Rule 28.8.


          COMMENTS:  


          1)Repeal of Labor Code Section 6354.7.  Legislative Counsel  
            engages annually in a "Code clean-up" review, and recently  
            noted that there are two Sections with the same number that  
            are virtually identical.  Both were adopted in 2002 in  
            separate bills by the same author.  One bill was apparently  
            aimed at workers' compensation administration, and the other  
            aimed at benefits, but this provision managed to appear in  
            both bills.


          2)Officers and owners.  The law allows officers and owners to  
            opt out of workers' compensation coverage.  The premise is  
            that as key personnel of the company, these people who meet  
            the definition of employee are not necessarily in the class of  
            employee who need the protection of the coverage mandate.  If  
            it makes more sense for these employees to opt out, then they  
            should have that discretion.  However, current law has  
            resulted in abuses.  For example, after a policy period where  
            no losses have occurred, some companies have claimed that  
            numerous employees were not supposed to be covered, and  
            thereby retroactively reduced the premium owed.  More  
            perniciously, some employers were describing janitors as  
            "vice-president of sanitation services" or similar  
            designations, thereby denying legitimate employees of workers'  
            compensation protection.  This bill cures these issues.








                                                                    AB 2883


                                                                    Page  3




          Analysis Prepared by:                                             
          Mark Rakich / INS. / (916) 319-2086  FN: 0004134