BILL ANALYSIS
AB 3037
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Date of Hearing: May 5, 2004
ASSEMBLY COMMITTEE ON INSURANCE
Juan Vargas, Chair
AB 3037 (Yee) - As Amended: April 29, 2004
SUBJECT : Employment: occupational safety and health programs.
SUMMARY : Establishes new requirements related to an employer's
establishment of an injury and illness prevention program (IIPP)
in the workplace, and provides for up to a five percent
discount, depending on an evaluation by the Department of
Industrial Relations (DIR), on workers' compensation premiums
when an employer's program meets certain criteria.
Specifically, this bill :
1)Requires employers with 50 or more employees to include a
joint employer-employee
occupational safety and health committee ("committee") as
part of their IIPP.
2)Requires employers with fewer than 50 employees to have at
least one employee and one
employer representative as a safety liaison team
("liaison") as part of their IIPP.
3)Provides an exemption to these requirements for an employer
where:
a) The employer has a workers' compensation experience
modification rating of less
than 1.25; and
b) The employer is not in a high-hazard industry.
4)Provides an exemption to these requirements for small
employers who do not have sufficient
workers' compensation premiums to generate an experience
modification rate where:
a) The employer has not had a work-related "serious
injury or illness" or an injury or illness
which resulted in "serious physical harm," as defined,
within two years; and
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b) The employer is not in a high-hazard industry.
5)Provides that no exemption will apply where an employer has
been cited for a work-related
fatality within the last four years.
6)Requires the committee or liaison to fulfill various duties to
fulfill the requirements of the IIPP.
7)Establishes requirements for the structure of the committee or
liaison that include, among
other requirements, an equal number of employer and
employee representatives.
8)Establishes requirements for the selection of committee or
liaison members.
9)Requires the Department of Industrial Relations to establish a
certificate of merit based on whether an employer has an
effective IIPP, including an effective committee or liaison.
10)Authorizes an employer to apply for a certificate of merit
that shall entitle the employer to a
discount beyond any experience modification rate or other
discount from the employer's
insurance carrier or group self-insurance fund.
11) Establishes that the discount shall not exceed percent,
depending on an evaluation by the
DIR of the committee or liaison team.
12) Implements requirements related to bidders on public
contracts.
13) Requires every workers compensation insurer to conduct a
review, including a written
report as specified, of the IIPP of each of its insureds
with an experience modification of 2.0
or greater.
14) Establishes a definition for "serious physical harm."
15) Makes related legislative findings and declarations.
EXISTING LAW
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1)Requires every employer to establish, implement and maintain
an effective injury prevention program.
2)Requires employers, as part of the program to train all
employees when the program is first established, train new
employees and those receiving new job assignments, and train
employees whenever a new hazard is introduced to the
workplace.
3)Permits, but does not require, an employer's injury prevention
program to include an employer and employee occupational
safety and health committee.
4)Establishes an alternative standard program, with fewer
reporting requirements, for the following:
a) Employers with fewer than 20 employees who are in
industries that are not on a
designated list of high hazard industries and who have a
workers' compensation
experience modification rate of 1.1 or less.
b) Employers with fewer than 20 employees who are in
industries that are on a designated
list of low hazard industries.
1)Requires the Division of Occupational Safety and Health to
prepare a Model Injury and
Illness Prevention Program for Non-High-Hazard Employment
that, if adopted, prevents a civil penalty for an initial
workplace safety violation from being assessed against an
employer.
2)Requires the Division of Occupational Safety and Health to
prepare a Model Injury and
Illness Prevention Program for Employers with Industries with
Intermittent Employment that, if adopted, satisfies the
requirements of existing law.
7) Requires workers' compensation insurers to review the injury
and illness prevention programs
of employer insureds within four months of the policy's
implementation. The review must include a written report
specifying the findings and any recommended changes.
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FISCAL EFFECT : Unknown.
COMMENTS :
According to the author, this bill is modeled after the State of
Oregon's program for worker safety, which reduced Oregon's
workers' compensation costs from the fourth highest in the
nation to thirty-fifth. The author notes that "after the first
full year of implementation, the State of Oregon saved
businesses over $10 billion and workplace injures and fatalities
declined 43 to 45 percent, respectively" and that reduction have
been sustained over the past thirteen years. The author
believes that AB 3037 will increase occupational safety and
health protection through the labor-management safety and health
committees or liaison teams required by the bill.
Background on Injury Illness and Prevention Programs
In California, every employer is required to provide a safe and
healthful workplace for his or her employees. Since 1991,
California law also has required every employer to have a
written and effective injury and illness prevention program.
For a further discussion of the background of IIPP, consult the
Assembly Labor Committee's March 31, 2004 analysis.
SB 228 (Alarcon, Chapter 639, Statutes of 2003) includes a
provision that requires an insurer's review of an insured's
IIPP within four months of the commencement of the initial
policy term.
Changes to Existing Law
This bill makes substantial changes to existing law. However,
these changes can generally be classified into three main
categories: (1) the requirement of joint committees or liaison
teams; (2) the corresponding certificate of merit and the
mandated five percent workers' compensation premium reduction;
and (3) new requirements related to bidding on public contracts.
The provisions pertaining to insurance are summarized below.
Workers' Compensation Premium Discount
The workers' compensation premium discount is intended by the
author and the sponsor to constitute a reward system for
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employers who have effective IIPPs that incorporate joint
committees or liaison teams. Even employers who are not
required by law to use committees or teams may voluntarily do so
in order to take advantage of the reward system.
The bill requires the Department of Industrial Relations to
establish criteria for a certificate of merit based on whether
an employer has an effective IIPP. The criteria for the
certificate must include the following:
a) The employer must have in place an effective committee
or team.
b) The employer is not eligible until the committee or
team has been operating effectively for at least six
months.
c) A taking into account of the size of the employer,
whether or not the employer is in a high or low hazard
industry, the lost workday case incident rate, and the
employer's experience modification rating, if any.
The employer must apply, under penalty of perjury, for the
initial certificate and biannual renewal certificates.
Arguments in Opposition
The Association of California Insurance Companies (ACIC)
believes that the insurance provisions of this bill duplicate
safety activities that insurers or the public sector are already
providing by requiring insurers to assist employers in
developing Cal-OSHA injury and illness prevention programs.
ACIC believes this bill requires insurers to perform safety
activities that are "ineffective and costly." ACIC states that
they have little to reason to believe that insureds will use
services such as reviewing and preparing a report about the
insured's IIPP and requiring an on-site review.
ACIC argues that this bill fails to assign safety tasks to the
parties best able to achieve objectives at the lowest social
costs. They believe that the public sector is empowered to
enforce safety laws, not insurers.
ACIC argues that requiring insurers to reduce premiums when
policyholders comply with safety laws is imprudent, if the
premium discounts exceed the amount by which losses are reduced.
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They believe that the requirement would subsidize lower workers
compensation costs for those employers who previously complied
with IIPP requirements without a premium incentive and for those
employers who qualify for a premium credit but fail to
effectively reduce their losses.
Similar Legislation:
Section 11 of SB 16 4x (Alarcon) is substantially similar to
this bill. Section 11 allows an employer to obtain a
certificate of merit based upon the employer's effective safety
program that would make the employer eligible for a mandatory
premium discount and requires a premium discount for employers
that pay for health insurance for their employees. This bill is
scheduled to be heard in Senate Appropriations Committee on
April 19, 2004. According to Assembly Member Yee's office, the
author wishes to continue to carry AB 3037 as a separate measure
should SB 4x 16 fail to pass.
Section 45(l) of SB 899 (Poochigian, Chapter 34, Statutes of
2004) requires workers' compensation insurers to conduct a
review of, and prepare a written report on, the IIPP of each of
its insureds with an experience modification of 2.0 or greater
within six months of the commencement of the initial insurance
policy term. The reviewer shall be or work under the direction
of a licensed California professional engineer, certified safety
professional, or a certified industrial hygienist.
SB 9 4x (Alarcon) specifies that IIPP requirements only apply to
high experience employers and that insurer reviews may be done
by in-house personnel.
Technical Amendment
This bill amends Section 6401.7 of the Labor Code. This bill
should be conformed with the amendments to this section
contained in SB 899 (Poochigian, Chapter 34, Statutes of 2004).
REGISTERED SUPPORT / OPPOSITION :
Support
Asbestos Workers Local 5
California Applicants' Attorneys Association
Communications Workers of America
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Consumer Attorneys of California
Department of Consumer and Business Services, State of Oregon
Environment California
Hoffman Corporation
Hotel Employees & Restaurant Employees, Local 2850
Hotel Employees & Restaurant Employees, Local 309
Hotel Employees & Restaurant Employees, Local 49
International Brotherhood of Electrical Workers
International Brotherhood of Electrical Workers, Local 1245
La Raza Centro Legal, Inc.
Los Angeles County District Attorney's Office
Mendocino County Coalition of Union Members
National Environmental Trust
North Bay Labor Council
Orange County Labor Management Cooperative Trust
Painters & Allied Trades District Council, 36
The Breast Cancer Fund
The Relational Culture Institute
Union of Health Care Professionals
United Nurses Associations of California
Utility Workers Union of America
WORKSAFE!
Several Individual Letters
Opposition
Associated Builders and Contractors of California
Association of California Insurance Companies
California Chamber of Commerce
Analysis Prepared by : James Anderson / INS. / (916) 319-2086