Opinion: Legislation simplifies workers' comp for California's employers

California has topped Chief Executive Magazine’s Worst States for Business list for two years running. Our state has lost 1.2 million jobs in the last three years, and while the unemployment rate dipped slightly in May to 11.7 percent, it remains unacceptably high. Any legislation that will reduce red tape and make it easier for California companies to prosper should be welcomed enthusiastically and passed quickly. And that’s exactly what AB 228, sponsored by Assemblymember Felipe Fuentes, D-Sylmar, will do.  

Right now a California employer that’s insured with State Fund has to obtain at least one, maybe more, separate policies to cover their employees who work outside California because California’s insurance code does not explicitly give State Fund the authority to provide that coverage.   AB 228 would simply clarify the California insurance code to allow State Fund to provide workers’ comp insurance for ALL of a California company’s employees – including any who work out-of-state.

Why is this important? Because of State Fund’s unique mission, and the role it plays in California’s economy. State Fund was created by the California Legislature in 1914 after the “no-fault” workers’ compensation system was enacted.  It is charged with two roles:  1) to be an available market for all employers seeking workers’ comp coverage; and, 2) to compete fairly with other insurers. State Fund is charged with the mission to compete fairly in the private market so that it can remain a viable and affordable option when market conditions worsen and private insurance companies scale back their product offerings.  We saw this happen in 2000-02: when 28 private carriers claimed insolvency and left the California market, State Fund stepped up to fulfill its role as a critical safety net for California by providing coverage for most of those policyholders.  State Fund’s strong presence was a key factor in preventing a workers’ comp market collapse and resulting drain on the state’s economy.

Understanding Retail and Wholesale Businesses Workers Compensation ...

New York State is famous for some of the best and most diverse retail and wholesale stores in the country. If you cant find it in NY, it probably cant be found. New York State is also famous for its mandatory workers compensation insurance laws. Any business with one or more employees must purchase and maintain proper levels of workers comp.

Since workers comp coverage is mandatory, no business can be denied coverage, but that doesnt mean coverage is cheap. The New York State Insurance Fund, NYSIF, is mandated by the state to provide coverage to everyone and accept all risks. This allows new companies and businesses with a record of work injuries or work related illnesses to be insured, however the workers comp rates can be high. Businesses can also seek out insurance through private or mutual insurance companies and some self-insured options. Finding coverage outside of NYSIF can often result in significant premium savings.

Insurance rates are determined by the type of work and the amount of risk involved in any industry and for any given job. The New York Compensation Insurance Rating Board, NYCIRB, created a complex set of codes for different jobs in different industries. Each job is assessed a level of risk. The codes are listed in a 35 page document.

The code book is divided in to five groups and retail is one of the five groups. This covers many different types of businesses, everything from paint stores to bakeries to collections of container garbage to wholesale construction material. Many businesses must assign different codes to different workers. If a worker did various categories of work in a given time frame, assigning different codes can result in significant savings.

If a retail business in New York State does not purchase workers compensation insurance for their work force they may face heavy fines and if an injury occurs they will have no legal protection against civil lawsuits. The codes and regulations can be tedious and confusing. Many businesses are now seeking the assistance of experts in decoding the complicated system and finding the best rates available for their individual businesses. Two similar businesses, with similar histories can pay very different premium rates and receive the same coverage if the incorrect codes and information is used.

Proper coverage keeps businesses safe and provides important financial benefits for employees in case of work related injuries, however over paying premiums doesnt accomplish anything.

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