BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Ted W. Lieu, Chair
Date of Hearing: April 11, 2012 2011-2012 Regular
Session
Consultant: Gideon L. Baum Fiscal:No
Urgency: No
Bill No: SB 1177
Author: Leno
As Introduced/Amended: February 22, 2012
SUBJECT
Restitution for crime victims.
KEY ISSUE
Should the Legislature require that, in the event of a crime by
an employer against an employee payments by a workers'
compensation insurer to an injured worker or his or her
dependents only be allowed as an offset against victim
restitution fines if the employer has fully and lawfully secured
workers' compensation coverage?
PURPOSE
To ensure that an employer convicted of a crime against an
employee may only utilize workers' compensation awards as an
offset against victim restitution fines if the employer is not
engaged in workers' compensation fraud.
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
Existing law provides that, upon a person being convicted of any
crime in the State of
California, the court, in addition to any other penalty provided
or imposed under the law, must order the defendant to pay
restitution fines, depending on the nature and impact of the
crime. (Penal Code �1202.4)
Existing law provides that, in the event of a compensable
industrial injury, the right to recover compensation through the
workers' compensation is the sole and exclusive remedy of the
employee or his or her dependents against the employer and, with
certain exceptions, the employee or his or her dependents may
not bring an action at law for damages against the employer.
(Labor Code �3602)
Exceptions include:
a) Where the employee's injury or death is proximately
caused by a willful physical assault by the employer;
(Labor Code �3602)
b) Where the employee's injury is aggravated by the
employer's fraudulent concealment of the existence of the
injury and its connection with the employment; (Labor Code
�3602)
c) Where the employer fails to secure workers' compensation
coverage for his or her employees; (Labor Code �3706)
d) Where the employee's injury or death is proximately
caused by the employer's knowing removal of, or knowing
failure to install, a point of operation guard on a power
press. (Labor Code �4558)
This bill would provide that, in cases where an employer is
convicted of a crime against an employee, a payment to the
employee or the employee's kin that is made by the employer's
workers' compensation insurance carrier shall not be used to
offset the amount of a court's restitution order unless the
court finds substantial evidence that all premiums for that
insurance coverage have been made in full accordance with the
law as of the date of the crime.
Hearing Date: April 11, 2012 SB 1177
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
COMMENTS
1. Need for this bill?
This bill seeks to remedy a specific issue that came up in the
restitution phase of a recent court case, People v. Shim, Kim,
and California C&R, Inc. (2011). In that case, Sam Shim and
his company California C&R, Inc., pled guilty to multiple
felony counts in the death of Antonio Martinez, an employee of
California C&R. Mr. Martinez had fallen off of a four-story
apartment building in 2008.
As was discussed in the prosecution's brief, the details of
Mr. Martinez's working conditions, which directly contributed
to his death, were particularly horrendous. Mr. Martinez had
been employed by California C&R, Inc. for over a decade, but
his employer failed to report his employment to either the
Employment Development Department (EDD) or the State
Compensation Insurance Fund (SCIF), instead paying Mr.
Martinez in cash. On the day of Mr. Martinez's death, none of
the roofers were wearing any form of fall protection, there
were no railings, scaffolds or other physical barriers
preventing a fall to the sidewalk, and there was no
supervision of work along the roof's edge. All of this was in
violation of Cal/OSHA regulations.
In 2011, Sam Shim pled guilty to four felonies (involuntary
manslaughter, willful violation of Cal/OSHA regulations
resulting in a death, workers' compensation fraud, and tax
fraud), California C&R pled guilty to one felony (willful
violation of Cal/OSHA regulations resulting in a death), and
the foreman at the time of the industrial death, Jwa Kim, was
convicted of a misdemeanor.
Despite these convictions, defendants were entitled to offset
their restitution obligations by the amount that SCIF had paid
the family in the workers' compensation proceeding, which was
$320,000. As a result, neither Shim nor California C&R was
required to pay restitution to Mr. Martinez's family.
This is due to a court case, People v. Bernal (2002) 101 Cal.
Hearing Date: April 11, 2012 SB 1177
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
App.4th 155, which dealt with the ability of the payments by a
defendant's insurance company to offset debts to a victim.
That case, however, dealt with an intoxicated driver and a car
insurance policy. The workers' compensation system, with its
constitutional guarantees for the "health and safety and
general welfare of any and all workers and those dependent
upon them for support to the extent of relieving from the
consequences of any injury or death incurred or sustained by
workers in the course of their employment" does not fit well
into that case law.
SB 1177 seeks to address the specific example of this case by
requiring that, in cases where an employer is convicted of a
crime against an employee, it would only be appropriate for
the court to offset a court's restitution order unless the
court finds substantial evidence that all premiums for that
insurance coverage have been made in full accordance with the
law as of the date of the crime. This requirement would apply
both in the event of an injury or death from an industrial
injury.
2. Double-referred to Public Safety:
If SB 1177 is approved by this Committee, the bill will be
referred to the Senate Committee on Public Safety.
3. Possible Technical Amendments:
Currently, SB 1177 only amends Penal Code. While sufficient
for the purposes of the goals of the legislation, the vast
majority of the statutes that govern the workers' compensation
system are located in the Labor Code. In order to ensure that
the stakeholders in the workers' compensation system are aware
of the changes to the law, the Committee may wish to consider
the addition of two cross references of the new Penal Code
language in Labor Code, specifically in Labor Code Section
3602 and in Labor Code Section 3754.
Additionally, SB 1177 makes a reference to "kin" on page 8,
line 26 and that workers' compensation insurance premiums have
been "made" on page 8, line 31. These terms aren't generally
used in the workers' compensation system; "dependents" and
Hearing Date: April 11, 2012 SB 1177
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
"paid", respectively, may better fit the current statutory
framework of the workers' compensation system.
Due to the legislative timelines, however, these amendments
would need to be taken in the Senate Committee on Public
Safety, rather than in this Committee.
4. Proponent Arguments :
The California Labor Federation, which supports SB 1177, notes
that, in some cases, an employer convicted in a workplace
death has also been engaging in workers' compensation fraud.
Noting that current law allows an employer to reduce
restitution to a victim's family by any workers' compensation
awards, the California Labor Federation argues that this is
completely unacceptable and does not believe that there is a
legitimate policy reason to allow employers engaged in workers
compensation fraud to avoid paying full restitution to injured
or killed workers.
SUPPORT
San Francisco Office of the District Attorney (Sponsor)
California District Attorneys Association
California Labor Federation
OPPOSITION
None on file.
Hearing Date: April 11, 2012 SB 1177
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations