BILL NUMBER: SB 777 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 4, 2012
AMENDED IN SENATE APRIL 25, 2011
AMENDED IN SENATE MARCH 24, 2011
INTRODUCED BY Senator Lieu
FEBRUARY 18, 2011
An act to add Section 8546.9 to the Government
amend Section 90.3 of the Labor Code, relating to
state government workers' compensation .
LEGISLATIVE COUNSEL'S DIGEST
SB 777, as amended, Lieu. State Auditor: financial and
performance audits. Workers' compensation insurance:
coverage program.
Existing law requires the Labor Commissioner to establish and
maintain a program that systematically identifies unlawfully
uninsured employers. Existing law requires all state departments and
agencies and any rating organization, as specified, to cooperate with
the Labor Commissioner and on reasonable request provide information
and data in their possession reasonably necessary to carry out the
program.
This bill would require the Director of Industrial Relations, in
consultation with the state department or agency, or rating
organization, in possession of the information or data, to determine
the reasonableness of any request to provide the information and
data.
Existing law establishes the Bureau of State Audits, which is
headed by the State Auditor and has specified statutory duties,
including the performance of statutorily mandated audits. Existing
law also provides that the Bureau of State Audits, in order to be
free of organizational impairments to independence, is independent of
the executive branch and legislative control.
This bill would authorize the State Auditor to establish a
corrections audit program for the purpose of conducting, reporting
on, and tracking the resolution of, financial and performance audits
of the programs and functions of the Department of Corrections and
Rehabilitation, as prescribed. The bill would require the State
Auditor, upon the completion of these audits, to prepare a written
report which would be disclosed to specified entities and posted on
the State Auditor's Internet Web site, as specified.
Vote: majority. Appropriation: no. Fiscal committee: yes
no . State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Sect ion 90.3 of the
Labor Code is amended to read:
90.3. (a) It is the policy of this state to vigorously enforce
the laws requiring employers to secure the payment of compensation as
required by Section 3700 and to protect employers who comply with
the law from those who attempt to gain a competitive advantage at the
expense of their workers by failing to secure the payment of
compensation.
(b) In order to ensure that the laws requiring employers to secure
the payment of compensation are adequately enforced, the Labor
Commissioner shall establish and maintain a program that
systematically identifies unlawfully uninsured employers. The Labor
Commissioner, in consultation with the Administrative Director of the
Division of Workers' Compensation and the director, may prioritize
targets for the program in consideration of available resources. The
employers shall be identified from data from the Uninsured Employers'
Fund, the Employment Development Department, the rating
organizations licensed by the Insurance Commissioner pursuant to
Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of
Division 2 of the Insurance Code, and any other sources deemed likely
to lead to the identification of unlawfully uninsured employers. All
state departments and agencies and any rating organization licensed
by the Insurance Commissioner pursuant to Article 3 (commencing with
Section 11750) of Chapter 3 of Part 3 of Division 2 of the Insurance
Code shall cooperate with the Labor Commissioner and on reasonable
request provide information and data in their possession reasonably
necessary to carry out the program. For the purpose of this
subdivision, the director, in consultation with the state department
or agency, or rating organization, in possession of the
information or data, shall determine the reasonableness of any
request to provide information and data.
(c) As part of the program, the Labor Commissioner shall establish
procedures for ensuring that employers with payroll but with no
record of workers' compensation coverage are contacted and, if no
valid reason for the lack of record of coverage is shown, inspected
on a priority basis.
(d) The Labor Commissioner shall annually, not later than March 1,
prepare a report concerning the effectiveness of the program,
publish it on the Labor Commissioner's Web site, as well as notify
the Legislature, the Governor, the Insurance Commissioner, and the
Administrative Director of the Division of Workers' Compensation of
the report's availability. The report shall include, but not be
limited to, all of the following:
(1) The number of employers identified from records of the
Employment Development Department who were screened for matching
records of insurance coverage or self-insurance.
(2) The number of employers identified from records of the
Employment Development Department that were matched to records of
insurance coverage or self-insurance.
(3) The number of employers identified from records of the
Employment Development Department that were notified that there was
no record of their insurance coverage.
(4) The number of employers responding to the notices, and the
nature of the responses, including the number of employers who failed
to provide satisfactory proof of workers' compensation coverage and
including information about the reasons that employers who provided
satisfactory proof of coverage were not appropriately recognized in
the comparison performed under subdivision (b). The report may
include recommendations to improve the accuracy and efficiency of the
program in screening for unlawfully uninsured employers.
(5) The number of employers identified as unlawfully uninsured
from records of the Uninsured Employers' Benefits Trust Fund or from
records of the Division of Workers' Compensation, and the number of
those employers that are also identifiable from the records of the
Employment Development Department. These statistics shall be reported
in a manner to permit analysis and estimation of the percentage of
unlawfully uninsured employers that do not report wages to the
Employment Development Department.
(6) The number of employers inspected.
(7) The number and amount of penalties assessed pursuant to
Section 3722 as a result of the program.
(8) The number and amount of penalties collected pursuant to
Section 3722 as a result of the program.
(e) The allocation of funds from the Workers' Compensation
Administration Revolving Fund pursuant to subdivision (a) of Section
62.5 shall not increase the total amount of surcharges pursuant to
subdivision (e) of Section 62.5. Startup costs for this program shall
be allocated from the fiscal year 2007-08 surcharges collected. The
total amount allocated for this program under subdivision (a) of
Section 62.5 in subsequent years shall not exceed the amount of
penalties collected pursuant to Section 3722 as a result of the
program.
SECTION 1. Section 8546.9 is added to the
Government Code, to read:
8546.9. (a) The State Auditor may establish a corrections audit
program for the purpose of conducting, reporting on, and tracking the
resolution of, financial and performance audits of the programs and
functions of the Department of Corrections and Rehabilitation.
Financial audits shall examine financial statements and financially
related activities and monitor expenditures made under the department'
s contracts, grants, and other agreements. Performance audits shall
review the practices and programs of the department to determine
whether the department is managing its resources in an effective,
economical, and efficient manner consistent with the evidence-based
correctional practices and public safety. Financial and performance
audits conducted pursuant to this section shall be conducted in
accordance with professional auditing standards and shall include
recommended actions to correct deficiencies.
(b) (1) Notwithstanding Section 10231.5, upon the completion of
any audit conducted pursuant to this section, the State Auditor shall
prepare a written report which shall be disclosed, along with any
underlying materials that the State Auditor deems appropriate, to the
Governor, the Legislature, the Secretary of the Department of
Corrections and Rehabilitation, and the appropriate director, chair,
or law enforcement agency. Copies of all written reports shall be
posted on the State Auditor's Internet Web site within 10 days of
being disclosed as described in this subdivision.
(2) A report submitted to the Legislature pursuant to this
subdivision shall be submitted in compliance with the Section 9795.