BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 313|
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UNFINISHED BUSINESS
Bill No: SB 313
Author: DeSaulnier (D)
Amended: 9/2/09
Vote: 27
SENATE LAB. & INDUS. RELAT. COMMITTEE : 6-0, 4/29/09
AYES: DeSaulnier, Wyland, Ducheny, Hollingsworth, Leno, Yee
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SENATE FLOOR : 39-0, 5/26/09 (Consent)
AYES: Aanestad, Alquist, Ashburn, Benoit, Calderon,
Cedillo, Cogdill, Corbett, Correa, Cox, Denham,
DeSaulnier, Ducheny, Dutton, Florez, Hancock, Harman,
Hollingsworth, Huff, Kehoe, Leno, Liu, Lowenthal,
Maldonado, Negrete McLeod, Oropeza, Padilla, Pavley,
Romero, Runner, Simitian, Steinberg, Strickland, Walters,
Wiggins, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Vacancy
ASSEMBLY FLOOR : 78-1, 09/08/09 - See last page for vote
SUBJECT : Workers compensation: penalty assessments
SOURCE : Small Business California
DIGEST : This bill increases the per-employee penalty for
the lack of workers' compensation coverage from $1000 to
$1500. This bill requires the Director of the Department
of Industrial Relations to issue a penalty assessment
CONTINUED
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order, as specified. This bill restructures the laws
governing penalties to be assessed on employers that do not
comply with the law mandating that every employer provide,
either through insurance or an approved self-insurance
program, workers' compensation benefits for its employees.
Assembly Amendments deleted the provision which specify
that any additional monies collected from violators as a
result of the changes to the penalty structure made by this
bill shall be deposited into the Uninsured Employers
Benefits Trust Fund.
ANALYSIS :
Existing law:
1. Requires every employer, except the state, to secure the
payment of workers' compensation for employees for
injuries arising out of, or in the course of,
employment.
2. Specifies that the director of the Department of
Industrial Relation shall issue and serve a penalty
assessment order of $1000 per employee on an employer
who is found to be without workers' compensation
insurance and on whom a stop-work order has been imposed
due to the lack of such coverage. The collected monies
are deposited in the Uninsured Employers Benefit Trust
Fund (Fund). The monies in the Fund are collected
through a basic charge on all employers, supplemented by
the fines and penalties.
3. Provides that at any time that the director determines
that an employer has been uninsured for a period in
excess of one week during the calendar year preceding
the director's determination, the director may issue and
serve a penalty assessment order that requires the
uninsured employer to pay to the director, for deposit
into the State Treasury to the credit of the Uninsured
Employers Fund, the greater of: (a) twice the amount the
employer would have paid in workers' compensation
premiums during the period the employer was uninsured or
(b) the sum of one thousand dollars per employee
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employed during the period the employer was uninsured.
This penalty shall be in lieu of, and not in addition to
any other penalty imposed under the section of law
described in #2, above.
4. Provides that if the employer is currently insured, or
becomes insured during the period during which the above
penalty is being determined, the amount an employer
would have paid in workers' compensation premiums shall
be calculated by prorating the current premium for the
number of weeks the employer was uninsured.
5. Provides that if the employer is uninsured at the time
the above penalty is being determined, the amount an
employer would have paid in workers' compensation
premiums shall be calculated by applying the rating for
that type/class of worker as determined by the Workers'
Compensation Insurance Rating Bureau (WCIRB) and the
Insurance Commissioner to the number of weeks the
employer was uninsured.
This bill:
1. Increases from $1,000 to $1,500 per employee the penalty
amount that shall be assessed against an employer that
is violating the mandate to provide workers'
compensation coverage, and clarifies that the penalty
formula, alternative to this potential penalty.
2. Provides that instead of the current formula, the
penalty to be imposed on an employer for failing to
provide workers' compensation coverage for its employees
shall be the product of the employer's payroll for the
three years prior to the date the penalty assessment is
issued and a rate to be adopted by the Labor
Commissioner, or, if no rate is adopted, the manual rate
or rates used by the State Compensation Insurance Fund
for the employers governing classification as defined by
the standard classification system approved by the
Insurance Commissioner (IC).
3. Specifies that the classification shall be determined by
the inspector at the time the assessment is issued based
on the information available at the time, and presumes
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subject to subsequent rebuttal by the employer that the
wage level for the uninsured employees was equal to the
state average weekly wage.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee, (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 percent increase in the
per employee penalty from $1,000 to $1,500; and (2) this
bill results in additional, unknown special fund revenues
to the extent the alternative penalty calculation modified
in 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.
SUPPORT : (Verified 9/9/09)
Small Business California (source)
American Federation of State, County and Municipal
Employees, AFL-CIO
CAL Insurance and Associates, Inc.
California Applicants' Attorneys Association
California Association of Psychiatric Technicians
California Chamber of Commerce
California Labor Federation, AFL-CIO
California School Employees Association, AFL-CIO
Central City Association of Los Angeles
Efficiency Data & Development
Glendale City Employees Association
Organization of SMUD Employees
Safeway Inc.
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
ARGUMENTS IN SUPPORT : According to the author's office,
modernizing the penalty structure will have a deterrent
effect on uninsured employers. Currently, it is very
difficult to calculate the property penalty for an
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uninsured employer because it is difficult to determine how
many, and what kind of, employees were working for the
employer over the three-year period. In addition, there is
a conflict between the two provisions detailing penalties
that the bill clarifies by making the more detailed penalty
formula an alternative to the flat "per employee" penalty.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong,
Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick,
Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,
Huber, Huffman, Jeffries, Jones, Knight, Krekorian, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, John A. Perez, V. Manuel
Perez, Portantino, Ruskin, Salas, Saldana, Silva,
Skinner, Smyth, Solorio, Audra Strickland, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, Bass
NOES: Duvall
NO VOTE RECORDED: Vacancy
AGB:do 9/9/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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