BILL ANALYSIS
SB 313
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Date of Hearing: August 19, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 313 (DeSaulnier) - As Amended: June 29, 2009
Policy Committee: Insurance
Vote:10-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill increases penalties levied against employers who fail
to carry workers' compensation insurance, modifies the method
used to calculate an alternative penalty, and resolves a
conflict in current law between different Labor Code sections
addressing employer penalties. Specifically, this bill:
1)Increases the penalty from $1,000 per employee to $1,500 per
employee for employers who fail to provide workers'
compensation coverage.
2)Requires funds collected from penalty assessments to be
deposited in the existing Uninsured Employers Benefits Trust
Fund.
3)Modifies the penalty calculation to account for three years of
premiums that would have been paid, the total amount of
premiums during all time periods, and data regarding
classification from the Workers' Compensation Rating Bureau
(WCIRB) or additional information about the employer.
FISCAL EFFECT
1)Under current law $4.5 million in penalty assessments were
collected in 2008. Therefore, this bill increases the
collection of these penalties by more than $2.2 million
special fund attributable to the 50% increase in the per
employee penalty from $1,000 to $1,500.
2)This bill results in additional, unknown special fund revenues
to the extent the alternative penalty calculation modified in
SB 313
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this bill is levied. A core component of the alternative
penalty is twice the amount the employer would have paid to
have been insured during the prior three-year period.
COMMENTS
1) Rationale . This bill is sponsored by Small Business
California and supported by a range of labor and business
groups. According to the author and sponsor, current law
penalties are too weak to discourage uninsured employers to
provide employee coverage for workers' compensation. Under
current law, employers facing a penalty often pay less than
what workers' compensation coverage would have cost. This bill
changes the incentives to make these penalties stronger,
thereby increasing enforcement tools. In addition, this bill
simplifies calculations that under current law require an
estimate of how many employees were on payroll over a long
period of time as well as a tabulation of work classifications
according to WCIRB.
2) Background . California employers are required to provide
workers' compensation benefits according to state labor laws.
Employers must purchase workers' compensation insurance from
either a licensed insurance company or through the State
Compensation Insurance Fund (SCIF). Employers may also choose
to self-insure, which means they use a pay-as-you go model,
paying benefits to and on behalf of workers as costs are
incurred. About 30% of workers' compensation fraud is
perpetrated by employers failing to provide coverage to
employees.
Analysis Prepared by : Mary Ader / APPR. / (916) 319-2081