Four bills that could raise costs for California employers, administrators and carriers passed key votes in the California Legislature with an upcoming gubernatorial election pending in the background.

John P. Kamin

May 31 marked the deadline for lawmakers to move bills out of the house where they originated. For example, if a bill was introduced by a state senator, then the state Senate needed to approve the bill by the May 31 deadline. Our friends at WorkCompCentral published a nice wrap-up of many of the bills.

Earlier this year, we wrote about four such bills, all of which were approved by the house where they originated. Those bills are:

• Senate Bill 1127 would reduce the standard 90-day decision time frame to accept or deny most claims, down to 60 days, and reduce the decision time frame for first responder presumption claims down to 30 days.
• Senate Bill 213 would create a presumption for hospital employees including COVID-19, cancer, musculoskeletal injuries, post-traumatic stress disorder and respiratory diseases.
• Assembly Bill 1751 would extend the COVID-19 outbreak and first responder presumptions to Jan. 1, 2025.
• Assembly Bill 2614 would call for the Commission on Health and Safety and Workers’ Compensation (CHSWC) to create a report for the Legislature on the topic of labor contractors attempting to shift responsibility away from job site employers. The deadline for the report would be Jan. 1, 2024.

Now all four bills are headed to their opposing chambers. For instance, the Senate bills are now in the Assembly, and the Assembly bills are now being considered by the state Senate.

In order for all of these bills to become law, there’s still quite a bit of work left to be done; they would have to be approved by the second chamber, then finalized by both the state Senate and Assembly if there are different versions of the bill, then signed by Gov. Gavin Newsom into law. All of that could happen before the end of the legislative session, which ends on Aug. 31, but it’s definitely not a slam dunk that all of these bills will make it to the finish line.

The most unpopular bill

Of all four bills, SB 1127 is the one we’ve heard the most from clients about. Carriers and administrators are concerned about the tighter deadline. As I wrote in March, all reducing the decision time frames is going to do is result in more claim denials. Is that really what lawmakers want? I doubt it.

My take: This bill likely dies in the Assembly or is vetoed by Newsom this fall. He has previously nixed similar bills.

Hospital presumption bill

The second most unpopular bill we’ve heard about is SB 213. Many insurers were concerned about whether SB 213 might impact some of their insureds that are smaller health care providers. However, that is not the case. This bill applies only to hospital employees in an acute care hospital, who provide direct patient care.

Generally speaking, acute care hospitals are what the general public thinks of as larger regional hospitals where people stay overnight. So if you are a carrier or third-party administrator and you want to double-check, take a look at Health and Safety Code Section 1250, which can be found here.

My take: Like SB 1127, this bill dies in the Assembly or gets vetoed. Part of the problem with this bill is that similar presumptions already exist, and Newsom could use those as a reason to veto this bill.

COVID-19 presumption extension

Third on the list of unpopular bills is AB 1751, which would extend the current COVID-19 presumptions to Jan. 1, 2025. Currently, those presumptions will expire on Jan. 1, 2023, if they aren’t extended.

It seems like much of the workers’ compensation community was generally accepting of the idea that if COVID rates stayed relatively high, the presumptions could be renewed.

Well, here we are in June 2022 and COVID rates are ticking up again, so it’s not a surprise to see interest in the presumptions being extended. That said, employers and administrators would most certainly celebrate a break from the presumptions’ laborious “outbreak reporting” requirements.

My take: I predict this bill will make it to the finish line and that the COVID-19 presumptions will be extended.

Labor contractors, staffing agencies and PEOs

Regarding labor contractors, temporary staffing agencies and professional employer organizations (PEOs), it’s worth noting that the original version of AB 2614 was written to change how insurance policies are drafted for on-site employers (the employer that controls the job site). In summary, the first version of the bill would have mandated that the company that controls the job site would have to list the temps on its insurance policy. In order for that to happen, the temps would have had to have been doing work within the hiring company’s “usual course of business.” This arguably would increase the premiums of the on-site employers and could lead them to question whether to use contractors, agencies and PEOs.

However, all that problematic language got axed by lawmakers, and the latest version of the bill is simply calling for CHSWC to issue a report on labor contractors and shifting of responsibility for workers’ compensation injuries.

Depending on how it’s written, that could be an interesting study. However, it is an arcane topic to tackle, and while I have done my own research into those issues, it is such a complex topic that the research can be never-ending and lead to long explanations on difficult topics. Also, staffing agencies, labor contractors and PEOs all are different entities, so the practices of one do not necessarily apply to the others.

In summary, it could be a really boring, complicated read.

My take: I predict this bill will be signed into law, as it’s easy for lawmakers to ask CHSWC to do a study that could provide meaningful data.

Conclusion

A lot is going to happen in the next three months as we race toward the end of the legislative session and head to September, when Newsom will decide whether to sign or veto the bills that made it to his desk. Then about one month later, Newsom will undergo his second election in two years.

While Newsom appears to be the betting favorite to retain his office, this recent trend of what investors call “volatility” in all walks of life could shake up the race and make it difficult for any incumbent to stay in office, in any state. Should that happen, it’s foreseeable that Newsom could show a sudden aversion to signing any bill that could hurt his popularity among voters.

A former editor of mine used to love the irony in the old saying, “May you live in interesting times.” Well, folks, we are most certainly living in interesting times.

John P. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location. He is WorkCompCentral's former legal editor. This entry from Bradford & Barthel's blog appears with permission.