|
By Greg Griggs, Editor
greg@workcompcentral.com
With little fanfare, Gov. Arnold Schwarzenegger
signed a bill into law Monday that will
significantly increase fines against the tens of
thousands of California businesses that do not
carry mandatory workers' compensation coverage.
Senate Bill 313 by Mark DeSaulnier, D-Concord,
hikes the penalty against employers who fail to
provide workers' compensation coverage to $1,500
per uncovered worker from $1,000 and simplifies
a process that labor law enforcers may use to
further increase penalties based on the amount
of premiums that the employer avoided.
"The penalties for failing to comply with the
law are so low there's little financial
incentive to follow the rules," DeSaulnier said
in a written statement after the governor signed
the legislation. "This bill should stop
unscrupulous business owners who have worked out
the cost-benefit analysis and realized it's
financially beneficial to break the law."
The new formula contained in SB 313 should make
it easier for regulators to estimate and levy
heftier fines. The bill allows regulators to
assess violators for twice as much money as they
would have paid for workers' compensation
insurance premiums during the previous
three-year period.
Under current law, $4.5 million in penalty
assessments were collected in 2008 against
employers cited for failing to provide workers'
compensation coverage. A legislative analysis
said that if only the 50% hike in the standard
fee is taken into consideration, SB 313 will
mean collections of more than $2.2 million
additionally each year.
"We want a heavy penalty. We don't want you to
be able to say 'I'm only going to be hit with a
$1,000 penalty, so it's OK,'" said Scott Hauge,
president of Small Business California, which
sponsored the DeSaulnier bill. Hauge is also
president of Cal Insurance and Associates, a San
Francisco brokerage.
Hauge said SB 313 is a natural extension of an
earlier bill SBC sponsored that requires the
Department of Industrial Relations to cross
check information from the Employment
Development Department to determine how many
companies operating in the state fail to carry
workers' comp insurance.
Department of Industrial Relations Director John
Duncan, whose department includes the Division
of Workers' Compensation, said 50% of the
citations issued by the Labor Commissioner are
for a lack of workers' compensation coverage.
Based on the matching records program, "we found
that across the state we're using this data to
enhance our targeting programs and we found that
12% of California employers are uninsured. This
is really frightening and contributes to an
increase in workers' comp costs for everyone,"
Duncan said. "Fighting the underground economy
crosses all that the department does. It bears
repeating: Legitimate businesses want a level
playing field."
Among those who favored the bill were CAL
Insurance and Associates Inc., the American
Federation of State, County and Municipal
Employees and the AFL-CIO.
"We supported this bill because it makes common
sense changes to the penalty structure for
employers going without workers' comp coverage,"
said Angie Wei, a lobbyist for the California
Labor Federation and a member of the state's
Commission on Health and Safety and Workers'
Compensation. "The bill is a good step to adding
meaningful enforcement to the requirement that
all employers have workers' comp coverage."
To read the bill, go here:
http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0301-0350/sb_313_bill_20091102_chaptered.html |
