BILL ANALYSIS Ó
AB 2883
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CONCURRENCE IN SENATE AMENDMENTS
AB
2883 (Committee on Insurance)
As Amended August 2, 2016
Majority vote
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|ASSEMBLY: | 80-0 |June 1, 2016 |SENATE: | 37-0 |(August 11, |
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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
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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.
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Analysis Prepared by:
Mark Rakich / INS. / (916) 319-2086 FN: 0004134