3710. (a) The Director of Industrial Relations shall enforce the
provisions of this article. The director may employ necessary
investigators, clerks, and other employees, and make use of the
services of any employee of the department whom he may assign to
assist him in the enforcement of this article. Prosecutions for
criminal violations of this division may be conducted by the
appropriate public official of the county in which the offense is
committed, by the Attorney General, or by any attorney in the civil
service of the Department of Industrial Relations designated by the
director for such purpose.
(b) The director, in accordance with the provisions of Chapter 4
(commencing at Section 11370) of Part 1 of Division 3 of Title 2 of
the Government Code, may adopt, amend and repeal such rules and
regulations as are reasonably necessary for the purpose of enforcing
and administering this article and as are not inconsistent with law.
(c) As used in this article, "director" means the Director of
Industrial Relations or the director's designated agents.
3710.1. Where an employer has failed to secure the payment of
compensation as required by Section 3700, the director shall issue
and serve on such employer a stop order prohibiting the use of
employee labor by such employer until the employer's compliance with
the provisions of Section 3700. Such stop order shall become
effective immediately upon service. Any employee so affected by such
work stoppage shall be paid by the employer for such time lost, not
exceeding 10 days, pending compliance by the employer. Such employer
may protest the stop order by making and filing with the director a
written request for a hearing within 20 days after service of such
stop order. Such hearing shall be held within 5 days from the date of
filing such request. The director shall notify the employer of the
time and place of the hearing by mail. At the conclusion of the
hearing the stop order shall be immediately affirmed or dismissed,
and within 24 hours thereafter the director shall issue and serve on
all parties to the hearing by registered or certified mail a written
notice of findings and findings. A writ of mandate may be taken from
the findings to the appropriate superior court. Such writ must be
taken within 45 days after the mailing of the notice of findings and
findings.
3710.2. Failure of an employer, officer, or anyone having
direction, management, or control of any place of employment or of
employees to observe a stop order issued and served upon him or her
pursuant to Section 3710.1 is a misdemeanor punishable by
imprisonment in the county jail not exceeding 60 days or by a fine
not exceeding ten thousand dollars ($10,000), or both. Fines shall be
paid into the State Treasury to the credit of the Uninsured
Employers Fund. The director may also obtain injunctive and other
relief from the courts to carry out the purposes of Section 3710.1.
The failure to obtain a policy of workers' compensation insurance or
a certificate of consent to self-insure as required by Section 3700
is a misdemeanor in accordance with Section 3700.5.
3710.3. Whenever a stop order has been issued pursuant to Section
3710.1 to a motor carrier of property subject to the jurisdiction and
control of the Department of Motor Vehicles or to a household goods
carrier, passenger stage corporation, or charter-party carrier of
passengers subject to the jurisdiction and control of the Public
Utilities Commission, the director shall transmit the stop order to
the Public Utilities Commission or the Department of Motor Vehicles,
whichever has jurisdiction over the affected carrier, within 30 days.
3711. The director, an investigator for the Department of Insurance
Fraud Bureau or its successor, or a district attorney investigator
assigned to investigate workers' compensation fraud may, at any time,
require an employer to furnish a written statement showing the name
of his or her insurer or the manner in which the employer has
complied with Section 3700. Failure of the employer for a period of
10 days to furnish the written statement is prima facie evidence that
he or she has failed or neglected in respect to the matters so
required. The 10-day period may not be construed to allow an
uninsured employer, so found by the director, any extension of time
from the application of the provisions of Section 3710.1. An insured
employer who fails to respond to an inquiry respecting his or her
status as to his or her workers' compensation security shall be
assessed and required to pay a penalty of five hundred dollars ($500)
to the director for deposit in the State Treasury to the credit of
the Uninsured Employers Fund. In any prosecution under this article,
the burden of proof is upon the defendant to show that he or she has
secured the payment of compensation in one of the two ways set forth
in Section 3700.
3712. (a) The securing of the payment of compensation in a way
provided in this division is essential to the functioning of the
expressly declared social public policy of this state in the matter
of workers' compensation. The conduct or operation of any business or
undertaking without full compensation security, in continuing
violation of social policy, shall be subject to imposition of
business strictures and monetary penalties by the director,
including, but not limited to, resort to the superior court of any
county in which all or some part of the business is being thus
unlawfully conducted or operated, for carrying out the intent of this
article.
(b) In a proceeding before the superior court in matters concerned
with this article, no filing fee shall be charged to the plaintiff;
nor may any charge or cost be imposed for any act or service required
of or done by any state or county officer or employee in connection
with the proceeding. If the court or the judge before whom the order
to show cause in the proceeding is made returnable, finds that the
defendant is conducting or operating a business or undertaking
without the full compensation security required, the court or judge
shall forthwith, and without continuance, issue an order restraining
the future or further conduct and operation of the business or
undertaking so long as the violation of social public policy
continues. The action shall be prosecuted by the Attorney General of
California, the district attorney of the county in which suit is
brought, the city attorney of any city in which such a business or
undertaking is being operated or conducted without full compensation
security, or any attorney possessing civil service status who is an
employee of the Department of Industrial Relations who may be
designated by the director for that purpose. No finding made in the
course of any such action is binding on the appeals board in any
subsequent proceeding before it for benefits under this division.
3714. (a) All cases involving the Uninsured Employers Fund or the
Subsequent Injuries Fund as a party or involving death without
dependents shall only be heard for conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar at the district Workers' Compensation
Appeals Board located in San Francisco, Los Angeles, Van Nuys,
Anaheim, Sacramento, or San Diego, except for good cause shown and
with the consent of the director. This subdivision shall not apply to
trials or hearings pursuant to Section 5309 or to expedited hearings
pursuant to subdivision (b) of Section 5502.
(b) For the cases specified in subdivision (a), the presiding
judge of the Workers' Compensation Appeals Board located in San
Francisco, Los Angeles, Van Nuys, Anaheim, Sacramento, or San Diego
shall have the authority, either by standing order or on a
case-by-case basis, to order a conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar in which no testimony will be taken to
be conducted by telephone conference call among the parties and
their attorneys of record who do not reside in the county in which
that appeals board is located. The cost of the scheduling of the
conference call shall be charged against the appropriate fund of the
department.
(c) Any filings of documents necessary for the proceedings
specified in subdivisions (a) and (b) may be served on the appeals
board and the parties by facsimile machine, but if so served, within
five workings days service shall be made on the appeals board and the
parties as required by regulation.
(d) This section shall remain in effect for two years commencing
on the date that the administrative director certifies and publishes
that the rearrangement of judicial resources required by this
section, and conference call facilities required for this section are
in place. The certification shall be published in the California
Notice Register, but shall be required to have been posted in the
office of each appeals board at least 30 days prior to that
publication. Notwithstanding this section, with the permission of the
presiding judge and under standards set by the administrative
director, parties may be permitted to conclude existing cases where
they were filed. This section shall cease to be operative at the end
of that two-year period, and shall be repealed on January 1 following
that date.
3715. (a) Any employee, except an employee as defined in
subdivision (d) of Section 3351, whose employer has failed to secure
the payment of compensation as required by this division, or his or
her dependents in case death has ensued, may, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, file his or her application with the
appeals board for compensation and the appeals board shall hear and
determine the application for compensation in like manner as in other
claims and shall make the award to the claimant as he or she would
be entitled to receive if the employer had secured the payment of
compensation as required, and the employer shall pay the award in the
manner and amount fixed thereby or shall furnish to the appeals
board a bond, in any amount and with any sureties as the appeals
board requires, to pay the employee the award in the manner and
amount fixed thereby.
(b) Notwithstanding this section or any other provision of this
chapter except Section 3708, any person described in subdivision (d)
of Section 3351 who is (1) engaged in household domestic service who
is employed by one employer for over 52 hours per week, (2) engaged
as a part-time gardener in connection with a private dwelling, if the
number of hours devoted to the gardening work for any individual
regularly exceeds 44 hours per month, or (3) engaged in casual
employment where the work contemplated is to be completed in not less
than 10 working days, without regard to the number of persons
employed, and where the total labor cost of the work is not less than
one hundred dollars ($100) (which amount shall not include charges
other than for personal services), shall be entitled, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, to file his or her application with the
appeals board for compensation. The appeals board shall hear and
determine the application for compensation in like manner as in other
claims, and shall make the award to the claimant as he or she would
be entitled to receive if the person's employer had secured the
payment of compensation as required, and the employer shall pay the
award in the manner and amount fixed thereby, or shall furnish to the
appeals board a bond, in any amount and with any sureties as the
appeals board requires, to pay the employee the award in the manner
and amount fixed thereby.
It is the intent of the Legislature that the amendments to this
section by Chapter 17 of the Statutes of 1977, make no change in the
law as it applied to those types of employees covered by this
subdivision prior to the effective date of Chapter 1263 of the 1975
Regular Session.
(c) In any claim in which it is alleged that the employer has
failed to secure the payment of compensation, the director, only for
purposes of this section and Section 3720, shall determine, on the
basis of the evidence available to him or her, whether the employer
was prima facie illegally uninsured. A finding that the employer was
prima facie illegally uninsured shall be made when the director
determines that there is sufficient evidence to constitute a prima
facie case that the employer employed an employee on the date of the
alleged injury and had failed to secure the payment of compensation,
and that the employee was injured arising out of, and occurring in
the course of, the employment.
Failure of the employer to furnish within 10 days the written
statement in response to a written demand for a written statement
prescribed in Section 3711, addressed to the employer at its address
as shown on the official address record of the appeals board, shall
constitute in itself sufficient evidence for a prima facie case that
the employer failed to secure the payment of compensation.
A written denial by the insurer named in the statement furnished
by the employer as prescribed in Section 3711, that the employer was
so insured as claimed, or the nonexistence of a valid certificate of
consent to self-insure for the time of the claimed injury, if the
statement furnished by the employer claims the employer was
self-insured, shall constitute in itself sufficient evidence for a
prima facie case that the employer had failed to secure the payment
of compensation.
The nonexistence of a record of the employer's insurance with the
Workers' Compensation Insurance Rating Bureau shall constitute in
itself sufficient evidence for a prima facie case that the employer
failed to secure the payment of compensation.
The unrebutted written declaration under penalty of perjury by the
injured employee, or applicant other than the employee, that the
employee was employed by the employer at the time of the injury, and
that he or she was injured in the course of his or her employment,
shall constitute, in itself, sufficient evidence for a prima facie
case that the employer employed the employee at the time of the
injury, and that the employee was injured arising out of, and
occurring in the course of, the employment.
(d) When the director determines that an employer was prima facie
illegally uninsured, the director shall mail a written notice of the
determination to the employer at his or her address as shown on the
official address record of the appeals board, and to any other more
recent address the director may possess. The notice shall advise the
employer of its right to appeal the finding, and that a lien may be
placed against the employer's and any parent corporation's property,
or the property of substantial shareholders of a corporate employer
as defined by Section 3717.
Any employer aggrieved by a finding of the director that it was
prima facie illegally uninsured may appeal the finding by filing a
petition before the appeals board. The petition shall be filed within
20 days after the finding is issued. The appeals board shall hold a
hearing on the petition within 20 days after the petition is filed
with the appeals board. The appeals board shall have exclusive
jurisdiction to determine appeals of the findings by the director,
and no court of this state has jurisdiction to review, annul, or
suspend the findings or the liens created thereunder, except as
provided by Article 2 (commencing with Section 5950) of Chapter 7 of
Part 4 of Division 4.
(e) Any claim brought against an employer under this section may
be resolved by the director by compromise and release or stipulated
findings and award as long as the appeals board has acquired
jurisdiction over the employer and the employer has been given notice
and an opportunity to object.
Notice may be given by service on the employer of an appeals board
notice of intention to approve the compromise and release or
stipulated findings and award. The employer shall have 20 days after
service of the notice of intention to file an objection with the
appeals board and show good cause therefor.
If the employer objects, the appeals board shall determine if
there is good cause for the objection.
If the appeals board finds good cause for the objection, the
director may proceed with the compromise and release or stipulated
findings and award if doing so best serves the interest of the
Uninsured Employers Fund, but shall have no cause of action against
the employer under Section 3717 unless the appeals board case is
tried to its conclusion and the employer is found liable.
If the appeals board does not find good cause for the objection,
and the compromise and release or stipulated findings and award is
approved, the Uninsured Employers Fund shall have a cause of action
against the employer pursuant to Section 3717.
(f) The director may adopt regulations to implement and interpret
the procedures provided for in this section.
3716. (a) If the employer fails to pay the compensation required by
Section 3715 to the person entitled thereto, or fails to furnish the
bond required by Section 3715 within a period of 10 days after
notification of the award, the award, upon application by the person
entitled thereto, shall be paid by the director from the Uninsured
Employers Benefits Trust Fund. The expenses of the director in
administering these provisions, directly or by contract pursuant to
Section 3716.1, shall be paid from the Workers' Compensation
Administration Revolving Fund. Refunds may be paid from the Uninsured
Employers Benefits Trust Fund for amounts remitted erroneously to
the fund, or the director may authorize offsetting subsequent
remittances to the fund.
(b) It is the intent of the Legislature that the Uninsured
Employers Benefits Trust Fund is created to ensure that workers who
happen to be employed by illegally uninsured employers are not
deprived of workers' compensation benefits, and is not created as a
source of contribution to insurance carriers, or self-insured, or
legally insured employers. The Uninsured Employers Benefits Trust
Fund has no liability for claims of occupational disease or
cumulative injury unless no employer during the period of the
occupational disease or cumulative injury during which liability is
imposed under Section 5500.5 was insured for workers' compensation,
was permissibly self-insured, or was legally uninsured. No employer
has a right of contribution against the Uninsured Employers Benefits
Trust Fund for the liability of an illegally uninsured employer under
an award of benefits for occupational disease or cumulative injury,
nor may an employee in a claim of occupational disease or cumulative
injury elect to proceed against an illegally uninsured employer.
(c) The Uninsured Employers Benefits Trust Fund has no liability
to pay for medical, surgical, chiropractic, hospital, or other
treatment, the liability for which treatment is imposed upon the
employer pursuant to Section 4600, and which treatment has been
provided or paid for by the State Department of Health Services
pursuant to the California Medical Assistance Program.
(d) The Uninsured Employers Benefits Trust Fund shall have no
liability to pay compensation, nor shall it be joined in any appeals
board proceeding, unless the employer alleged to be illegally
uninsured shall first either have made a general appearance or have
been served with the application specified in Section 3715 and with a
special notice of lawsuit issued by the appeals board. The special
notice of lawsuit shall be in a form to be prescribed by the appeals
board, and it shall contain at least the information and warnings
required by the Code of Civil Procedure to be contained in the
summons issued in a civil action. The special notice of lawsuit shall
also contain a notice that if the appeals board makes an award
against the defendant that his or her house or other dwelling and
other property may be taken to satisfy the award in a nonjudicial
sale, with no exemptions from execution. The special notice of
lawsuit shall, in addition, contain a notice that a lien may be
imposed upon the defendant's property without further hearing and
before the issuance of an award. The applicant shall identify a legal
person or entity as the employer named in the special notice of
lawsuit. The reasonable expense of serving the application and
special notice of lawsuit, when incurred by the employee, shall be
awarded as a cost. Proof of service of the special notice of lawsuit
and application shall be filed with the appeals board.
(1) The application and special notice of lawsuit may be served,
within or without this state, in the manner provided for service of
summons in the Code of Civil Procedure. Thereafter, an employer,
alleged to be illegally uninsured, shall notify the appeals board of
the address at which it may be served with official notices and
papers, and shall notify the appeals board of any changes in the
address. No findings, order, decision, award, or other notice or
paper need be served in this manner on an employer, alleged to be
illegally uninsured, who has been served as provided in this section,
and who has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address. The
findings, orders, decisions, awards, or other notice or paper may be
mailed to the employer as the board, by regulation, may provide.
(2) Notwithstanding paragraph (1), if the employer alleged to be
illegally uninsured has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address, the
appeals board shall serve any findings, order, decision, award, or
other notice or paper on the employer by mail at the address the
appeals board has for the employer. The failure of delivery at that
address or the lack of personal service on an employer who has been
served as provided in this section, of these findings, order,
decision, award, or other notice or paper, shall not constitute
grounds for reopening or invalidating any appeals board action
pursuant to Section 5506, or for contesting the validity of any
judgment obtained under Section 3716 or 5806, a lien under Section
3720, or a settlement under subdivision (e) of Section 3715.
(3) The board, by regulation, may provide for service procedures
in cases where a request for new and further benefits is made after
the issuance of any findings and award and a substantial period of
time has passed since the first service or attempted service.
(4) The director, on behalf of the Uninsured Employers Benefits
Trust Fund, shall furnish information as to the identities, legal
capacities, and addresses of uninsured employers known to the
director upon request of the board or upon a showing of good cause by
the employee or the employee's representative. Good cause shall
include a declaration by the employee's representative, filed under
penalty of perjury, that the information is necessary to represent
the employee in proceedings under this division.
3716.1. (a) In any hearing, investigation, or proceeding, the
Attorney General, or attorneys of the Department of Industrial
Relations, shall represent the director and the state. Expenses
incident to representation of the director and the state, before the
appeals board and in civil court, by the Attorney General or
Department of Industrial Relations attorneys, shall be reimbursed
from the Workers' Compensation Administration Revolving Fund.
Expenses incident to representation by the Attorney General or
attorneys of the Department of Industrial Relations incurred in
attempts to recover moneys pursuant to Section 3717 of the Labor Code
shall not exceed the total amounts recovered by the director on
behalf of the Uninsured Employers Benefits Trust Fund pursuant to
this chapter.
(b) The director shall assign investigative and claims' adjustment
services respecting matters concerning uninsured employers injury
cases. The director or his or her representative may make these
service assignments within the department, or he or she may contract
for these services with the State Compensation Insurance Fund, except
insofar as these matters might conflict with the interests of the
State Compensation Insurance Fund. The administrative costs
associated with these services shall be reimbursed from the Workers'
Compensation Administration Revolving Fund and the nonadministrative
costs from the Uninsured Employers Benefits Trust Fund, except when a
budget impasse requires advances as described in subdivision (c) of
Section 62.5. To the extent permitted by state law, the director may
contract for audits or reports of services under this section.
(c) Commencing November 1, 2004, the State Compensation Insurance
Fund and the director shall report annually to the fiscal committees
of both houses of the Legislature and the Director of Finance,
regarding any of the following:
(1) The number of uninsured employers claims paid in the previous
fiscal year, the total cost of those claims, and levels of reserves
for incurred claims.
(2) The administrative costs associated with claims payment
activities.
(3) Annual revenues to the Uninsured Employers Benefits Trust Fund
from all of the following:
(A) Assessments collected pursuant to subdivision (c) of Section
62.5.
(B) Fines and penalties collected by the department.
(C) Revenues collected pursuant to Section 3717.
(4) Projected annual program and claims costs for the current and
upcoming fiscal years.
3716.2. Notwithstanding the precise elements of an award of
compensation benefits, and notwithstanding the claim and demand for
payment being made therefor to the director, the director, as
administrator of the Uninsured Employers Fund, shall pay the claimant
only such benefits allowed, recognizing proper liens thereon, that
would have accrued against an employer properly insured for workers'
compensation liability. The Uninsured Employers Fund shall not be
liable for any penalties or for the payment of interest on any
awards. However, in civil suits by the director to enforce payment of
an award, including procedures pursuant to Section 3717, the total
amount of the award, including interest, other penalties, and
attorney's fees granted by the award, shall be sought. Recovery by
the director, in a civil suit or by other means, of awarded benefits
in excess of amounts paid to the claimant by the Uninsured Employers
Fund shall be paid over to the injured employee or his
representative, as the case may be.
3716.3. (a) Notwithstanding any other provision of law to the
contrary, when the director obtains a judgment against an uninsured
employer, the director may, in addition to any other remedies
provided by law, enforce the judgment by nonjudicial foreclosure.
This enforcement shall not be subject to Chapter 4 (commencing with
Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of
Civil Procedure relating to claiming exemptions after levy.
(b) To enforce the judgment by nonjudicial foreclosure, the
director shall record with the county recorder of any county in which
real property of the parties against whom the judgment is taken is
located, a certified copy of the judgment together with the director'
s notice of intent to foreclose. The notice of intent to foreclose
shall set forth all of the following:
(1) The name, address, and telephone number of the trustee
authorized by the director to enforce the lien by sale.
(2) The legal description of the real property to be foreclosed
upon.
(3) Proof of service by registered or certified mail on the
following:
(A) The parties against whom the foreclosure is sought at their
last known address as shown on the official records of the appeals
board and as shown on the latest recorded deed, deed of trust, or
mortgage affecting the real property which is the subject of the
foreclosure.
(B) All of the owners of the real property which is subject to the
foreclosure at their last address as shown on the latest equalized
assessment roll.
(c) Upon the expiration of 20 days following recording of the
judgment and notice of intent to foreclose, the trustee may proceed
to sell the real property. Any sale by the trustee shall be conducted
in accordance with Article 1 (commencing with Section 2920) of
Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code
applicable to the exercise of powers of sale of property under powers
created by mortgages and deeds of trust.
(d) The director may authorize any person, including an attorney,
corporation, or other business entity, to act as trustee pursuant to
subdivision (b).
(e) Except as provided in subdivision (f), this section shall
apply to all judgments which the director has obtained or may obtain
pursuant to Section 3717, 3726, or 5806.
(f) This section shall not apply to the principal residence of an
employer if the appeals board finds that the employer, on the date of
injury, employed 10 or fewer employees. An employer seeking this
exemption shall provide proof of payment of tax withholding required
pursuant to Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code, to assist in determining the number of
employees on the date of injury.
3716.4. Whenever a final judgment has been entered against a motor
carrier of property subject to the jurisdiction and control of the
Department of Motor Vehicles or a passenger stage corporation,
charter-party carrier of passengers, or a household goods carrier
subject to the jurisdiction and control of the Public Utilities
Commission as a result of an award having been made pursuant to
Section 3716.2, the director may transmit to the Public Utilities
Commission or the Department of Motor Vehicles, whichever has
jurisdiction over the affected carrier, a copy of the judgment along
with the name and address of the regulated entity and any other
persons, corporations, or entities named in the judgment which are
jointly and severally liable for the debt to the State Treasury with
a complaint requesting that the Public Utilities Commission or the
Department of Motor Vehicles immediately revoke the carrier's Public
Utilities Commission certificate of public convenience and necessity
or Department of Motor Vehicles motor carrier permit.
3716.5. In the payment of workers' compensation benefits from the
Uninsured Employers Fund, the director shall do the following:
(a) Designate the job classifications of employees who are paid
compensation from the fund.
(b) Compile data on the job classifications of employees paid
compensation from the fund and report this data to the Legislature by
November 1, 1990, and annually thereafter.
3717. (a) A findings and award that is the subject of a demand on
the Uninsured Employers Fund or an approved compromise and release or
stipulated findings and award entered into by the director pursuant
to subdivision (e) of Section 3715, or a decision and order of the
rehabilitation unit of the Division of Workers' Compensation, that
has become final, shall constitute a liquidated claim for damages
against an employer in the amount so ascertained and fixed by the
appeals board, and the appeals board shall certify the same to the
director who may institute a civil action against the employer in the
name of the director, as administrator of the Uninsured Employers
Fund, for the collection of the award, or may obtain a judgment
against the employer pursuant to Section 5806. In the event that the
appeals board finds that a corporation is the employer of an injured
employee, and that the corporation has not secured the payment of
compensation as required by this chapter, the following persons shall
be jointly and severally liable with the corporation to the director
in the action:
(1) All persons who are a parent, as defined in Section 175 of the
Corporations Code, of the corporation.
(2) All persons who are substantial shareholders, as defined in
subdivision (b), of the corporation or its parent. In the action it
shall be sufficient for plaintiff to set forth a copy of the findings
and award of the appeals board relative to the claims as certified
by the appeals board to the director and to state that there is due
to plaintiff on account of the finding and award of the appeals board
a specified sum which plaintiff claims with interest. The director
shall be further entitled to costs and reasonable attorney fees, and
to his or her investigation and litigation expenses for the appeals
board proceedings, and a reasonable attorney fee for litigating the
appeals board proceedings. A certified copy of the findings and award
in the claim shall be attached to the complaint. The contents of the
findings and award shall be deemed proved. The answer or demurrer to
the complaint shall be filed within 10 days, the reply or demurrer
to the answer within 20 days, and the demurrer to the reply within 30
days after the return day of the summons or service by publication.
All motions and demurrers shall be submitted to the court within 10
days after they are filed. At the time the civil action filed
pursuant to this section is at issue, it shall be placed at the head
of the trial docket and shall be first in order for trial.
Nothing in this chapter shall be construed to preclude informal
adjustment by the director of a claim for compensation benefits
before the issuance of findings and award wherever it appears to the
director that the employer is uninsured and that informal adjustment
will facilitate the expeditious delivery of compensation benefits to
the injured employee.
(b) As used in this section, "substantial shareholder" means a
shareholder who owns at least 15 percent of the total value of all
classes of stock, or, if no stock has been issued, who owns at least
15 percent of the beneficial interests in the corporation.
(c) For purposes of this section, in determining the ownership of
stock or beneficial interest in the corporation, in the determination
of whether a person is a substantial shareholder of the corporation,
the rules of attribution of ownership of Section 17384 of the
Revenue and Taxation Code shall be applied.
(d) For purposes of this section, "corporation" shall not include:
(1) Any corporation which is the issuer of any security which is
exempted by Section 25101 of the Corporations Code from Section 25130
of the Corporations Code.
(2) Any corporation which is the issuer of any security exempted
by subdivision (c), (d), or (i) of Section 25100 of the Corporations
Code from Sections 25110, 25120, and 25130 of the Corporations Code.
(3) Any corporation which is the issuer of any security which has
qualified either by coordination, as provided by Section 25111 of the
Corporations Code, or by notification, as provided by Section 25112
of the Corporations Code.
3717.1. In any claim in which an alleged uninsured employer is a
corporation, the director may cause substantial shareholders and
parents, as defined by Section 3717, to be joined as parties.
Substantial shareholders may be served as provided in this division
for service on adverse parties, or if they cannot be found with
reasonable diligence, by serving the corporation. The corporation,
upon this service, shall notify the shareholder of the service, and
mail the served document to him or her at the shareholder's last
address known to the corporation.
3717.2. Upon request of the director, the appeals board shall make
findings of whether persons are substantial shareholders or parents,
as defined in Section 3717. The director may in his or her discretion
proceed against substantial shareholders and parents pursuant to
Section 3717 without those findings of the appeals board.
3718. The cause of action provided in Section 3717 and any cause of
action arising out of Section 3722 may be joined in one action
against an employer. The amount recovered in such action from such
employer shall be paid into the State Treasury to the credit of the
Uninsured Employers Fund.
3719. Any suit, action, proceeding, or award brought or made
against any employer under Section 3717 may be compromised by the
director, or such suit, action, or proceeding may be prosecuted to
final judgment as in the discretion of the director may best subserve
the interests of the Uninsured Employers Fund.
3720. (a) When the appeals board or the director determines under
Section 3715 or 3716 that an employer has not secured the payment of
compensation as required by this division or when the director has
determined that the employer is prima facie illegally uninsured, the
director may file for record in the office of the county recorder in
the counties where the employer's property is possibly located, a
certificate of lien showing the date that the employer was determined
to be illegally uninsured or the date that the director has
determined that the employer was prima facie illegally uninsured. The
certificate shall show the name and address of the employer against
whom it was filed, and the fact that the employer has not secured the
payment of compensation as required by this division. Upon the
recordation, the certificate shall constitute a valid lien in favor
of the director, and shall have the same force, effect and priority
as a judgment lien and shall continue for 10 years from the time of
the recording of the certificate unless sooner released or otherwise
discharged. A copy of the certificate shall be served upon the
employer by mail, by the director. A facsimile signature of the
director accompanied by the seal imprint of the department shall be
sufficient for recording purposes of liens and releases or
cancellations thereof considered herein. Certificates of liens may be
filed in any or all counties of the state, depending upon the
information the director obtains concerning the employer's assets.
(b) For purposes of this section, in the event the employer is a
corporation, those persons whom either the appeals board finds are
the parent or the substantial shareholders of the corporation or its
parent, or whom the director finds pursuant to Section 3720.1 to be
prima facie the parent or the substantial shareholders of the
corporation or its parent, as defined in Section 3717, shall be
deemed to be the employer, and the director may file the certificates
against those persons.
(c) A person who claims to be aggrieved by the filing of a lien
against the property of an uninsured employer because he or she has
the same or a similar name, may apply to the director to have filed
an amended certificate of lien which shows that the aggrieved
applicant is not the uninsured employer which is the subject of the
lien. If the director finds that the aggrieved applicant is not the
same as the uninsured employer, the director shall file an amended
certificate of lien with the county recorder of the county in which
the aggrieved applicant has property, which shall show, by reasonably
identifying information furnished by the aggrieved applicant, that
the uninsured employer and the aggrieved applicant are not the same.
If the director does not file the amended certificate of lien within
60 days of application therefor, the applicant may appeal the
director's failure to so find by filing a petition with the appeals
board, which shall make a finding as to whether the applicant and the
uninsured employer are the same.
(d) Liens filed under this section have continued existence
independent of, and may be foreclosed upon independently of, any
right of action arising out of Section 3717 or 5806.
3720.1. (a) In any claim in which the alleged uninsured employer is
a corporation, for purposes of filing certificates of lien pursuant
to Section 3720, the director may determine, according to the
evidence available to him or her, whether a person is prima facie a
parent or substantial shareholder, as defined in Section 3717. A
finding that a person was prima facie a parent or substantial
shareholder shall be made when the director determines that there is
sufficient evidence to constitute a prima facie case that the person
was a parent or substantial shareholder.
(b) Any person aggrieved by a finding of the director that he or
she was prima facie a parent or substantial shareholder may request a
hearing on the finding by filing a written request for hearing with
the director. The director shall hold a hearing on the matter within
20 days of the receipt of the request for hearing, and shall mail a
notice of time and place of hearing to the person requesting hearing
at least 10 days prior to the hearing. The hearing officer shall hear
and receive evidence, and within 10 days of the hearing, file his or
her findings on whether there is sufficient evidence to constitute a
prima facie case that the person was a substantial shareholder or
parent. The hearing officer shall serve with his or her findings a
summary of evidence received and relied upon, and the reasons for the
findings. A party may at his or her own expense require that the
hearing proceedings be recorded and transcribed.
(c) A party aggrieved by the findings of the hearing officer may
within 20 days apply for a writ of mandate to the superior court.
Venue shall lie in the county in which is located the office of the
director which issued the findings after the hearing.
3721. The director shall provide the employer with a certificate of
cancellation of lien after the employer has paid to the claimant or
to the Uninsured Employers Fund the amount of the compensation or
benefits which has been ordered paid to the claimant, or when the
application has finally been denied after the claimant has exhausted
the remedies provided by law in those cases, or when the employer has
filed a bond in the amount and with such surety as the appeals board
approves conditioned on the payment of all sums ordered paid to the
claimant, or when, after a finding that the employer was prima facie
illegally uninsured, it is finally determined that the finding was in
error. The recorder shall make no charge for filing the certificates
of lien, for filing amended certificates of lien, or for
cancellation when liens are filed in error. Cancellation of lien
certificates provided to the employer may be filed for recordation by
the employer at his or her expense.
3722. (a) At the time the stop order is issued and served pursuant
to Section 3710.1, the director shall also issue and serve a penalty
assessment order requiring the uninsured employer to pay to the
director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the sum of one thousand five hundred
dollars ($1,500) per employee employed at the time the order is
issued and served, as an additional penalty for being uninsured at
that time or issue and serve a penalty assessment order pursuant to
subdivision (b).
(b) At any time that the director determines that an employer has
been uninsured for a period in excess of one week during the calendar
year preceding the determination, the director shall issue and serve
a penalty assessment order requiring the uninsured employer to pay
to the director, for deposit in the State Treasury to the credit of
the Uninsured Employers Fund, the greater of (1) twice the amount the
employer would have paid in workers' compensation premiums during
the period the employer was uninsured, determined according to
subdivision (c), or (2) the sum of one thousand five hundred dollars
($1,500) per employee employed during the period the employer was
uninsured. A penalty assessment issued and served by the director
pursuant to this subdivision shall be in lieu of, and not in addition
to, any other penalty issued and served by the director pursuant to
subdivision (a).
(c) If the employer is currently insured, or becomes insured
during the period during which the penalty under subdivision (b) is
being determined, the amount an employer would have paid in workers'
compensation premiums shall be calculated by prorating the current
premium for the number of weeks the employer was uninsured within the
three-year period immediately prior to the date the penalty
assessment is issued. If the employer is uninsured at the time the
penalty under subdivision (b) is being determined, the amount an
employer would have paid in workers' compensation premiums shall be
the product of the employer's payroll for all periods of time the
employer was uninsured within the three-year period immediately prior
to the date the penalty assessment is issued multiplied by a rate
determined in accordance with regulations that may be adopted by the
director or, if none has been adopted, the manual rate or rates of
the State Compensation Insurance Fund for the employer's governing
classification pursuant to the standard classification system
approved by the Insurance Commissioner. The classification shall be
determined by the director or the director's designee at the time the
penalty assessment is issued on the basis of any information
available to the director regarding the employer's operations. Unless
the amount of the employer's payroll for all periods during which
the employer was uninsured within the three-year period is otherwise
proven by a preponderance of evidence, the employer's payroll for
each week the employer was uninsured shall be presumed to be the
state average weekly wage multiplied by the number of persons
employed by the employer at the time the penalty assessment is
issued. For purposes of this subdivision, "state average weekly wage"
means the average weekly wage paid by employers to employees covered
by unemployment insurance as reported by the United States
Department of Labor for California for the 12-month period ending
March 31 of the calendar year preceding the year in which the penalty
assessment order is issued.
(d) If upon the filing of a claim for compensation under this
division the Workers' Compensation Appeals Board finds that any
employer has not secured the payment of compensation as required by
this division and finds the claim either noncompensable or
compensable, the appeals board shall mail a copy of their findings to
the uninsured employer and the director, together with a direction
to the uninsured employer to file a verified statement pursuant to
subdivision (e).
After the time for any appeal has expired and the adjudication of
the claim has become final, the uninsured employer shall be assessed
and pay as a penalty either of the following:
(1) In noncompensable cases, two thousand dollars ($2,000) per
each employee employed at the time of the claimed injury.
(2) In compensable cases, ten thousand dollars ($10,000) per each
employee employed on the date of the injury.
(e) In order to establish the number of employees the uninsured
employer had on the date of the claimed injury in noncompensable
cases and on the date of injury in compensable cases, the employer
shall submit to the director within 10 days after service of
findings, awards, and orders of the Workers' Compensation Appeals
Board a verified statement of the number of employees in his or her
employ on the date of injury. If the employer fails to submit to the
director this verified statement or if the director disputes the
accuracy of the number of employees reported by the employer, the
director shall use any information regarding the number of employees
as the director may have or otherwise obtains.
(f) Except for penalties assessed under subdivision (b), the
maximum amount of penalties which may be assessed pursuant to this
section is one hundred thousand dollars ($100,000). Payment shall be
transmitted to the director for deposit in the State Treasury to the
credit of the Uninsured Employers Fund.
(g) (1) The Workers' Compensation Appeals Board may provide for a
summary hearing on the sole issue of compensation coverage to effect
the provisions of this section.
(2) In the event a claim is settled by the director pursuant to
subdivision (e) of Section 3715 by means of a compromise and release
or stipulations with request for award, the appeals board may also
provide for a summary hearing on the issue of compensability.
3725. If an employer desires to contest a penalty assessment order,
the employer shall file with the director a written request for a
hearing within 15 days after service of the order. Upon receipt of
the request, the director shall set the matter for a hearing within
30 days thereafter and shall notify the employer of the time and
place of the hearing by mail at least 10 days prior to the date of
the hearing. The decision of the director shall consist of a notice
of findings and findings which shall be served on all parties to the
hearing by registered or certified mail within 15 days after the
hearing. Any amount found due by the director as a result of a
hearing shall become due and payable 45 days after notice of the
findings and written findings have been mailed by registered or
certified mail to the party assessed. A writ of mandate may be taken
from these findings to the appropriate superior court upon the
execution by the party assessed of a bond to the state in double the
amount found due and ordered paid by the director, as long as the
party agrees to pay any judgment and costs rendered against the party
for the assessment. The writ shall be taken within 45 days after
mailing the notice of findings and findings.
3726. (a) When no petition objecting to a penalty assessment order
is filed, a certified copy of the order may be filed by the director
in the office of the clerk of the superior court in any county in
which the employer has property or in which the employer has or had a
place of business. The clerk, immediately upon such filing, shall
enter judgment for the state against the employer in the amount shown
on the penalty assessment order.
(b) When findings are made affirming or modifying a penalty
assessment order after hearing, a certified copy of such order and a
certified copy of such findings may be filed by the director in the
office of the clerk of the superior court in any county in which the
employer has property or in which the employer has or had a place of
business. The clerk, immediately upon such filing, shall enter
judgment for the state against the employer in the amount shown on
the penalty assessment order or in the amount shown in the findings
if the order has been modified.
(c) A judgment entered pursuant to the provisions of this section
may be filed by the clerk in a looseleaf book entitled "Special
Judgments for State Uninsured Employers Fund." Such judgment shall
bear the same rate of interest and shall have the same effect as
other judgments and be given the same preference allowed by law on
other judgments rendered for claims for taxes. The clerk shall make
no charge for the service provided by this section to be performed by
him.
3727. If the director determines pursuant to Section 3722 that an
employer has failed to secure the payment of compensation as required
by this division, the director may file with the county recorder of
any counties in which such employer's property may be located his
certificate of the amount of penalty due from such employer and such
amount shall be a lien in favor of the director from the date of such
filing against the real property and personal property of the
employer within the county in which such certificate is filed. The
recorder shall accept and file such certificate and record the same
as a mortgage on real estate and shall file the same as a security
interest and he shall index the same as mortgage on real estate and
as a security interest. Certificates of liens may be filed in any and
all counties of the state, depending upon the information the
director obtains concerning the employer's assets. The recorder shall
make no charge for the services provided by this section to be
performed by him. Upon payment of the penalty assessment, the
director shall issue a certificate of cancellation of penalty
assessment, which may be recorded by the employer at his expense.
3727.1. The director may withdraw a stop order or a penalty
assessment order where investigation reveals the employer had secured
the payment of compensation as required by Section 3700 on the date
and at the time of service of such order. The director also may
withdraw a penalty assessment order where investigation discloses
that the employer was insured on the date and at the time of an
injury or claimed injury, or where an insured employer responded in
writing to a request to furnish the status of his workers'
compensation coverage within the time prescribed.
3728. (a) The director may draw from the State Treasury out of the
Uninsured Employers Benefits Trust Fund for the purposes of Sections
3716 and 3716.1, without at the time presenting vouchers and itemized
statements, a sum not to exceed in the aggregate the level provided
for pursuant to Section 16400 of the Government Code, to be used as a
cash revolving fund. The revolving fund shall be deposited in any
banks and under any conditions as the Department of General Services
determines. The Controller shall draw his or her warrants in favor of
the Director of Industrial Relations for the amounts so withdrawn
and the Treasurer shall pay these warrants.
(b) Expenditures made from the revolving fund in payment of claims
for compensation due from the Uninsured Employers Benefits Trust
Fund and from the Workers' Compensation Administration Revolving Fund
for administrative and adjusting services rendered are exempted from
the operation of Section 925.6 of the Government Code. Reimbursement
of the revolving fund from the Uninsured Employers Benefits Trust
Fund or the Workers' Compensation Administration Revolving Fund for
expenditures shall be made upon presentation to the Controller of an
abstract or statement of the expenditures. The abstract or statement
shall be in any form as the Controller requires.
3730. When the last day for filing any instrument or other document
pursuant to this chapter falls upon a Saturday, Sunday or other
holiday, such act may be performed upon the next business day with
the same effect as if it had been performed upon the day appointed.
3731. Any stop order or penalty assessment order may be personally
served upon the employer either by (1) manual delivery of the order
to the employer personally or by (2) leaving signed copies of the
order during usual office hours with the person who is apparently in
charge of the office and by thereafter mailing copies of the order by
first class mail, postage prepaid to the employer at the place where
signed copies of the order were left.
3732. (a) If compensation is paid or becomes payable from the
Uninsured Employers Fund, whether as a result of a findings and
award, award based upon stipulations, compromise and release executed
on behalf of the director, or payments voluntarily furnished by the
director pursuant to Section 4903.3, the director may recover damages
from any person or entity, other than the employer, whose tortious
act or omission proximately caused the injury or death of the
employee. The damages shall include any compensation, including
additional compensation by way of interest or penalty, paid or
payable by the director, plus the expense incurred by the director in
investigating and litigating the workers' compensation claim and a
reasonable attorney fee for litigating the workers' compensation
claim. The director may compromise, or settle and release any claim,
and may waive any claim, including the lien allowed by this section,
in whole or in part, for the convenience of the director.
(b) Except as otherwise provided in this section, Chapter 5
(commencing with Section 3850) of Part 1 of Division 4 shall be
applicable to these actions, the director being treated as an
employer within the meaning of Chapter 5 to the extent not
inconsistent with this section.
(c) Actions brought under this section shall be commenced within
one year after the later of either the time the director pays or the
time the director becomes obligated to pay any compensation from the
Uninsured Employers Fund.
(d) In the trial of these actions, any negligence attributable to
the employer shall not be imputed to the director or to the Uninsured
Employers Fund, and the damages recoverable by the director shall
not be reduced by any percentage of fault or negligence attributable
to the employer or to the employee.
(e) In determining the credit to the Uninsured Employers Fund
provided by Section 3861, the appeals board shall not take into
consideration any negligence of the employer, but shall allow a
credit for the entire amount of the employee's recovery either by
settlement or after judgment, as has not theretofore been applied to
the payment of expenses or attorney's fees.
(f) When an action or claim is brought by an employee, his or her
guardian, conservator, personal representative, estate, survivors, or
heirs against a third party who may be liable for causing the injury
or death of the employee, any settlement or judgment obtained is
subject to the director's claim for damages recoverable by the
director pursuant to subdivision (a), and the director shall have a
lien against any settlement in the amount of the damages.
(g) No judgment or settlement in any action or claim by an
employee, his or her guardian, conservator, personal representative,
survivors, or heirs to recover damages for injuries, where the
director has an interest, shall be satisfied without first giving the
director notice and a reasonable opportunity to perfect and satisfy
his or her lien. The director shall be mailed a copy of the complaint
in the third-party action as soon as reasonable after it is filed
with the court.
(h) When the director has perfected a lien upon a judgment or
settlement in favor of an employee, his or her guardian, conservator,
personal representative, survivors or heirs against any third party,
the director shall be entitled to a writ of execution as a lien
claimant to enforce payment of the lien against the third party with
interest and other accruing costs as in the case of other executions.
In the event the amount of the judgment or settlement so recovered
has been paid to the employee, his or her guardian, conservator,
personal representative, survivors, or heirs, the director shall be
entitled to a writ of execution against the employee, his or her
guardian, conservator, personal representative, survivors, or heirs
to the extent of the director's lien, with interest and other
accruing costs as in the cost of other executions.
(i) Except as otherwise provided in this section, notwithstanding
any other provision of law, the entire amount of any settlement of
the action or claim of the employee, his or her guardian,
conservator, personal representative, survivors, or heirs, with or
without suit, is subject to the director's lien claim for the damages
recoverable by the director pursuant to subdivision (a).
(j) Where the action or claim is brought by the employee, his or
her guardian, conservator, personal representative, estate,
survivors, or heirs, and the director has not joined in the action,
and the employee, his or her guardian, conservator, personal
representative, estate, survivors, or heirs incur a personal
liability to pay attorney's fees and costs of litigation, the
director's claim for damages shall be limited to the amount of the
director's claim for damages less that portion of the costs of
litigation expenses determined by multiplying the total cost of
litigation expenses by the ratio of the full amount of the director's
claim for damages to the full amount of the judgment, award, or
settlement, and less 25 percent of the balance after subtracting the
director's share of litigation expenses, which represents the
director's reasonable share of attorney's fees incurred.
(k) In the trial of the director's action for damages, and in the
allowance of his or her lien in an action by the employee, guardian,
executor, personal representative, survivors, or heirs, the
compensation paid from the Uninsured Employers Fund pursuant to an
award as provided in Section 3716 is conclusively presumed to be
reasonable in amount and to be proximately caused by the event or
events which caused the employee's injury or death.
(l) In the action for damages the director shall be entitled to
recover, if he or she prevails, the entire amount of the damages
recoverable by the director pursuant to subdivision (a), regardless
of whether the damages recoverable by the employee, guardian,
conservator, personal representative, survivors, or heirs are of
lesser amount.
3710. (a) The Director of Industrial Relations shall enforce the
provisions of this article. The director may employ necessary
investigators, clerks, and other employees, and make use of the
services of any employee of the department whom he may assign to
assist him in the enforcement of this article. Prosecutions for
criminal violations of this division may be conducted by the
appropriate public official of the county in which the offense is
committed, by the Attorney General, or by any attorney in the civil
service of the Department of Industrial Relations designated by the
director for such purpose.
(b) The director, in accordance with the provisions of Chapter 4
(commencing at Section 11370) of Part 1 of Division 3 of Title 2 of
the Government Code, may adopt, amend and repeal such rules and
regulations as are reasonably necessary for the purpose of enforcing
and administering this article and as are not inconsistent with law.
(c) As used in this article, "director" means the Director of
Industrial Relations or the director's designated agents.
3710.1. Where an employer has failed to secure the payment of
compensation as required by Section 3700, the director shall issue
and serve on such employer a stop order prohibiting the use of
employee labor by such employer until the employer's compliance with
the provisions of Section 3700. Such stop order shall become
effective immediately upon service. Any employee so affected by such
work stoppage shall be paid by the employer for such time lost, not
exceeding 10 days, pending compliance by the employer. Such employer
may protest the stop order by making and filing with the director a
written request for a hearing within 20 days after service of such
stop order. Such hearing shall be held within 5 days from the date of
filing such request. The director shall notify the employer of the
time and place of the hearing by mail. At the conclusion of the
hearing the stop order shall be immediately affirmed or dismissed,
and within 24 hours thereafter the director shall issue and serve on
all parties to the hearing by registered or certified mail a written
notice of findings and findings. A writ of mandate may be taken from
the findings to the appropriate superior court. Such writ must be
taken within 45 days after the mailing of the notice of findings and
findings.
3710.2. Failure of an employer, officer, or anyone having
direction, management, or control of any place of employment or of
employees to observe a stop order issued and served upon him or her
pursuant to Section 3710.1 is a misdemeanor punishable by
imprisonment in the county jail not exceeding 60 days or by a fine
not exceeding ten thousand dollars ($10,000), or both. Fines shall be
paid into the State Treasury to the credit of the Uninsured
Employers Fund. The director may also obtain injunctive and other
relief from the courts to carry out the purposes of Section 3710.1.
The failure to obtain a policy of workers' compensation insurance or
a certificate of consent to self-insure as required by Section 3700
is a misdemeanor in accordance with Section 3700.5.
3710.3. Whenever a stop order has been issued pursuant to Section
3710.1 to a motor carrier of property subject to the jurisdiction and
control of the Department of Motor Vehicles or to a household goods
carrier, passenger stage corporation, or charter-party carrier of
passengers subject to the jurisdiction and control of the Public
Utilities Commission, the director shall transmit the stop order to
the Public Utilities Commission or the Department of Motor Vehicles,
whichever has jurisdiction over the affected carrier, within 30 days.
3711. The director, an investigator for the Department of Insurance
Fraud Bureau or its successor, or a district attorney investigator
assigned to investigate workers' compensation fraud may, at any time,
require an employer to furnish a written statement showing the name
of his or her insurer or the manner in which the employer has
complied with Section 3700. Failure of the employer for a period of
10 days to furnish the written statement is prima facie evidence that
he or she has failed or neglected in respect to the matters so
required. The 10-day period may not be construed to allow an
uninsured employer, so found by the director, any extension of time
from the application of the provisions of Section 3710.1. An insured
employer who fails to respond to an inquiry respecting his or her
status as to his or her workers' compensation security shall be
assessed and required to pay a penalty of five hundred dollars ($500)
to the director for deposit in the State Treasury to the credit of
the Uninsured Employers Fund. In any prosecution under this article,
the burden of proof is upon the defendant to show that he or she has
secured the payment of compensation in one of the two ways set forth
in Section 3700.
3712. (a) The securing of the payment of compensation in a way
provided in this division is essential to the functioning of the
expressly declared social public policy of this state in the matter
of workers' compensation. The conduct or operation of any business or
undertaking without full compensation security, in continuing
violation of social policy, shall be subject to imposition of
business strictures and monetary penalties by the director,
including, but not limited to, resort to the superior court of any
county in which all or some part of the business is being thus
unlawfully conducted or operated, for carrying out the intent of this
article.
(b) In a proceeding before the superior court in matters concerned
with this article, no filing fee shall be charged to the plaintiff;
nor may any charge or cost be imposed for any act or service required
of or done by any state or county officer or employee in connection
with the proceeding. If the court or the judge before whom the order
to show cause in the proceeding is made returnable, finds that the
defendant is conducting or operating a business or undertaking
without the full compensation security required, the court or judge
shall forthwith, and without continuance, issue an order restraining
the future or further conduct and operation of the business or
undertaking so long as the violation of social public policy
continues. The action shall be prosecuted by the Attorney General of
California, the district attorney of the county in which suit is
brought, the city attorney of any city in which such a business or
undertaking is being operated or conducted without full compensation
security, or any attorney possessing civil service status who is an
employee of the Department of Industrial Relations who may be
designated by the director for that purpose. No finding made in the
course of any such action is binding on the appeals board in any
subsequent proceeding before it for benefits under this division.
3714. (a) All cases involving the Uninsured Employers Fund or the
Subsequent Injuries Fund as a party or involving death without
dependents shall only be heard for conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar at the district Workers' Compensation
Appeals Board located in San Francisco, Los Angeles, Van Nuys,
Anaheim, Sacramento, or San Diego, except for good cause shown and
with the consent of the director. This subdivision shall not apply to
trials or hearings pursuant to Section 5309 or to expedited hearings
pursuant to subdivision (b) of Section 5502.
(b) For the cases specified in subdivision (a), the presiding
judge of the Workers' Compensation Appeals Board located in San
Francisco, Los Angeles, Van Nuys, Anaheim, Sacramento, or San Diego
shall have the authority, either by standing order or on a
case-by-case basis, to order a conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar in which no testimony will be taken to
be conducted by telephone conference call among the parties and
their attorneys of record who do not reside in the county in which
that appeals board is located. The cost of the scheduling of the
conference call shall be charged against the appropriate fund of the
department.
(c) Any filings of documents necessary for the proceedings
specified in subdivisions (a) and (b) may be served on the appeals
board and the parties by facsimile machine, but if so served, within
five workings days service shall be made on the appeals board and the
parties as required by regulation.
(d) This section shall remain in effect for two years commencing
on the date that the administrative director certifies and publishes
that the rearrangement of judicial resources required by this
section, and conference call facilities required for this section are
in place. The certification shall be published in the California
Notice Register, but shall be required to have been posted in the
office of each appeals board at least 30 days prior to that
publication. Notwithstanding this section, with the permission of the
presiding judge and under standards set by the administrative
director, parties may be permitted to conclude existing cases where
they were filed. This section shall cease to be operative at the end
of that two-year period, and shall be repealed on January 1 following
that date.
3715. (a) Any employee, except an employee as defined in
subdivision (d) of Section 3351, whose employer has failed to secure
the payment of compensation as required by this division, or his or
her dependents in case death has ensued, may, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, file his or her application with the
appeals board for compensation and the appeals board shall hear and
determine the application for compensation in like manner as in other
claims and shall make the award to the claimant as he or she would
be entitled to receive if the employer had secured the payment of
compensation as required, and the employer shall pay the award in the
manner and amount fixed thereby or shall furnish to the appeals
board a bond, in any amount and with any sureties as the appeals
board requires, to pay the employee the award in the manner and
amount fixed thereby.
(b) Notwithstanding this section or any other provision of this
chapter except Section 3708, any person described in subdivision (d)
of Section 3351 who is (1) engaged in household domestic service who
is employed by one employer for over 52 hours per week, (2) engaged
as a part-time gardener in connection with a private dwelling, if the
number of hours devoted to the gardening work for any individual
regularly exceeds 44 hours per month, or (3) engaged in casual
employment where the work contemplated is to be completed in not less
than 10 working days, without regard to the number of persons
employed, and where the total labor cost of the work is not less than
one hundred dollars ($100) (which amount shall not include charges
other than for personal services), shall be entitled, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, to file his or her application with the
appeals board for compensation. The appeals board shall hear and
determine the application for compensation in like manner as in other
claims, and shall make the award to the claimant as he or she would
be entitled to receive if the person's employer had secured the
payment of compensation as required, and the employer shall pay the
award in the manner and amount fixed thereby, or shall furnish to the
appeals board a bond, in any amount and with any sureties as the
appeals board requires, to pay the employee the award in the manner
and amount fixed thereby.
It is the intent of the Legislature that the amendments to this
section by Chapter 17 of the Statutes of 1977, make no change in the
law as it applied to those types of employees covered by this
subdivision prior to the effective date of Chapter 1263 of the 1975
Regular Session.
(c) In any claim in which it is alleged that the employer has
failed to secure the payment of compensation, the director, only for
purposes of this section and Section 3720, shall determine, on the
basis of the evidence available to him or her, whether the employer
was prima facie illegally uninsured. A finding that the employer was
prima facie illegally uninsured shall be made when the director
determines that there is sufficient evidence to constitute a prima
facie case that the employer employed an employee on the date of the
alleged injury and had failed to secure the payment of compensation,
and that the employee was injured arising out of, and occurring in
the course of, the employment.
Failure of the employer to furnish within 10 days the written
statement in response to a written demand for a written statement
prescribed in Section 3711, addressed to the employer at its address
as shown on the official address record of the appeals board, shall
constitute in itself sufficient evidence for a prima facie case that
the employer failed to secure the payment of compensation.
A written denial by the insurer named in the statement furnished
by the employer as prescribed in Section 3711, that the employer was
so insured as claimed, or the nonexistence of a valid certificate of
consent to self-insure for the time of the claimed injury, if the
statement furnished by the employer claims the employer was
self-insured, shall constitute in itself sufficient evidence for a
prima facie case that the employer had failed to secure the payment
of compensation.
The nonexistence of a record of the employer's insurance with the
Workers' Compensation Insurance Rating Bureau shall constitute in
itself sufficient evidence for a prima facie case that the employer
failed to secure the payment of compensation.
The unrebutted written declaration under penalty of perjury by the
injured employee, or applicant other than the employee, that the
employee was employed by the employer at the time of the injury, and
that he or she was injured in the course of his or her employment,
shall constitute, in itself, sufficient evidence for a prima facie
case that the employer employed the employee at the time of the
injury, and that the employee was injured arising out of, and
occurring in the course of, the employment.
(d) When the director determines that an employer was prima facie
illegally uninsured, the director shall mail a written notice of the
determination to the employer at his or her address as shown on the
official address record of the appeals board, and to any other more
recent address the director may possess. The notice shall advise the
employer of its right to appeal the finding, and that a lien may be
placed against the employer's and any parent corporation's property,
or the property of substantial shareholders of a corporate employer
as defined by Section 3717.
Any employer aggrieved by a finding of the director that it was
prima facie illegally uninsured may appeal the finding by filing a
petition before the appeals board. The petition shall be filed within
20 days after the finding is issued. The appeals board shall hold a
hearing on the petition within 20 days after the petition is filed
with the appeals board. The appeals board shall have exclusive
jurisdiction to determine appeals of the findings by the director,
and no court of this state has jurisdiction to review, annul, or
suspend the findings or the liens created thereunder, except as
provided by Article 2 (commencing with Section 5950) of Chapter 7 of
Part 4 of Division 4.
(e) Any claim brought against an employer under this section may
be resolved by the director by compromise and release or stipulated
findings and award as long as the appeals board has acquired
jurisdiction over the employer and the employer has been given notice
and an opportunity to object.
Notice may be given by service on the employer of an appeals board
notice of intention to approve the compromise and release or
stipulated findings and award. The employer shall have 20 days after
service of the notice of intention to file an objection with the
appeals board and show good cause therefor.
If the employer objects, the appeals board shall determine if
there is good cause for the objection.
If the appeals board finds good cause for the objection, the
director may proceed with the compromise and release or stipulated
findings and award if doing so best serves the interest of the
Uninsured Employers Fund, but shall have no cause of action against
the employer under Section 3717 unless the appeals board case is
tried to its conclusion and the employer is found liable.
If the appeals board does not find good cause for the objection,
and the compromise and release or stipulated findings and award is
approved, the Uninsured Employers Fund shall have a cause of action
against the employer pursuant to Section 3717.
(f) The director may adopt regulations to implement and interpret
the procedures provided for in this section.
3716. (a) If the employer fails to pay the compensation required by
Section 3715 to the person entitled thereto, or fails to furnish the
bond required by Section 3715 within a period of 10 days after
notification of the award, the award, upon application by the person
entitled thereto, shall be paid by the director from the Uninsured
Employers Benefits Trust Fund. The expenses of the director in
administering these provisions, directly or by contract pursuant to
Section 3716.1, shall be paid from the Workers' Compensation
Administration Revolving Fund. Refunds may be paid from the Uninsured
Employers Benefits Trust Fund for amounts remitted erroneously to
the fund, or the director may authorize offsetting subsequent
remittances to the fund.
(b) It is the intent of the Legislature that the Uninsured
Employers Benefits Trust Fund is created to ensure that workers who
happen to be employed by illegally uninsured employers are not
deprived of workers' compensation benefits, and is not created as a
source of contribution to insurance carriers, or self-insured, or
legally insured employers. The Uninsured Employers Benefits Trust
Fund has no liability for claims of occupational disease or
cumulative injury unless no employer during the period of the
occupational disease or cumulative injury during which liability is
imposed under Section 5500.5 was insured for workers' compensation,
was permissibly self-insured, or was legally uninsured. No employer
has a right of contribution against the Uninsured Employers Benefits
Trust Fund for the liability of an illegally uninsured employer under
an award of benefits for occupational disease or cumulative injury,
nor may an employee in a claim of occupational disease or cumulative
injury elect to proceed against an illegally uninsured employer.
(c) The Uninsured Employers Benefits Trust Fund has no liability
to pay for medical, surgical, chiropractic, hospital, or other
treatment, the liability for which treatment is imposed upon the
employer pursuant to Section 4600, and which treatment has been
provided or paid for by the State Department of Health Services
pursuant to the California Medical Assistance Program.
(d) The Uninsured Employers Benefits Trust Fund shall have no
liability to pay compensation, nor shall it be joined in any appeals
board proceeding, unless the employer alleged to be illegally
uninsured shall first either have made a general appearance or have
been served with the application specified in Section 3715 and with a
special notice of lawsuit issued by the appeals board. The special
notice of lawsuit shall be in a form to be prescribed by the appeals
board, and it shall contain at least the information and warnings
required by the Code of Civil Procedure to be contained in the
summons issued in a civil action. The special notice of lawsuit shall
also contain a notice that if the appeals board makes an award
against the defendant that his or her house or other dwelling and
other property may be taken to satisfy the award in a nonjudicial
sale, with no exemptions from execution. The special notice of
lawsuit shall, in addition, contain a notice that a lien may be
imposed upon the defendant's property without further hearing and
before the issuance of an award. The applicant shall identify a legal
person or entity as the employer named in the special notice of
lawsuit. The reasonable expense of serving the application and
special notice of lawsuit, when incurred by the employee, shall be
awarded as a cost. Proof of service of the special notice of lawsuit
and application shall be filed with the appeals board.
(1) The application and special notice of lawsuit may be served,
within or without this state, in the manner provided for service of
summons in the Code of Civil Procedure. Thereafter, an employer,
alleged to be illegally uninsured, shall notify the appeals board of
the address at which it may be served with official notices and
papers, and shall notify the appeals board of any changes in the
address. No findings, order, decision, award, or other notice or
paper need be served in this manner on an employer, alleged to be
illegally uninsured, who has been served as provided in this section,
and who has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address. The
findings, orders, decisions, awards, or other notice or paper may be
mailed to the employer as the board, by regulation, may provide.
(2) Notwithstanding paragraph (1), if the employer alleged to be
illegally uninsured has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address, the
appeals board shall serve any findings, order, decision, award, or
other notice or paper on the employer by mail at the address the
appeals board has for the employer. The failure of delivery at that
address or the lack of personal service on an employer who has been
served as provided in this section, of these findings, order,
decision, award, or other notice or paper, shall not constitute
grounds for reopening or invalidating any appeals board action
pursuant to Section 5506, or for contesting the validity of any
judgment obtained under Section 3716 or 5806, a lien under Section
3720, or a settlement under subdivision (e) of Section 3715.
(3) The board, by regulation, may provide for service procedures
in cases where a request for new and further benefits is made after
the issuance of any findings and award and a substantial period of
time has passed since the first service or attempted service.
(4) The director, on behalf of the Uninsured Employers Benefits
Trust Fund, shall furnish information as to the identities, legal
capacities, and addresses of uninsured employers known to the
director upon request of the board or upon a showing of good cause by
the employee or the employee's representative. Good cause shall
include a declaration by the employee's representative, filed under
penalty of perjury, that the information is necessary to represent
the employee in proceedings under this division.
3716.1. (a) In any hearing, investigation, or proceeding, the
Attorney General, or attorneys of the Department of Industrial
Relations, shall represent the director and the state. Expenses
incident to representation of the director and the state, before the
appeals board and in civil court, by the Attorney General or
Department of Industrial Relations attorneys, shall be reimbursed
from the Workers' Compensation Administration Revolving Fund.
Expenses incident to representation by the Attorney General or
attorneys of the Department of Industrial Relations incurred in
attempts to recover moneys pursuant to Section 3717 of the Labor Code
shall not exceed the total amounts recovered by the director on
behalf of the Uninsured Employers Benefits Trust Fund pursuant to
this chapter.
(b) The director shall assign investigative and claims' adjustment
services respecting matters concerning uninsured employers injury
cases. The director or his or her representative may make these
service assignments within the department, or he or she may contract
for these services with the State Compensation Insurance Fund, except
insofar as these matters might conflict with the interests of the
State Compensation Insurance Fund. The administrative costs
associated with these services shall be reimbursed from the Workers'
Compensation Administration Revolving Fund and the nonadministrative
costs from the Uninsured Employers Benefits Trust Fund, except when a
budget impasse requires advances as described in subdivision (c) of
Section 62.5. To the extent permitted by state law, the director may
contract for audits or reports of services under this section.
(c) Commencing November 1, 2004, the State Compensation Insurance
Fund and the director shall report annually to the fiscal committees
of both houses of the Legislature and the Director of Finance,
regarding any of the following:
(1) The number of uninsured employers claims paid in the previous
fiscal year, the total cost of those claims, and levels of reserves
for incurred claims.
(2) The administrative costs associated with claims payment
activities.
(3) Annual revenues to the Uninsured Employers Benefits Trust Fund
from all of the following:
(A) Assessments collected pursuant to subdivision (c) of Section
62.5.
(B) Fines and penalties collected by the department.
(C) Revenues collected pursuant to Section 3717.
(4) Projected annual program and claims costs for the current and
upcoming fiscal years.
3716.2. Notwithstanding the precise elements of an award of
compensation benefits, and notwithstanding the claim and demand for
payment being made therefor to the director, the director, as
administrator of the Uninsured Employers Fund, shall pay the claimant
only such benefits allowed, recognizing proper liens thereon, that
would have accrued against an employer properly insured for workers'
compensation liability. The Uninsured Employers Fund shall not be
liable for any penalties or for the payment of interest on any
awards. However, in civil suits by the director to enforce payment of
an award, including procedures pursuant to Section 3717, the total
amount of the award, including interest, other penalties, and
attorney's fees granted by the award, shall be sought. Recovery by
the director, in a civil suit or by other means, of awarded benefits
in excess of amounts paid to the claimant by the Uninsured Employers
Fund shall be paid over to the injured employee or his
representative, as the case may be.
3716.3. (a) Notwithstanding any other provision of law to the
contrary, when the director obtains a judgment against an uninsured
employer, the director may, in addition to any other remedies
provided by law, enforce the judgment by nonjudicial foreclosure.
This enforcement shall not be subject to Chapter 4 (commencing with
Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of
Civil Procedure relating to claiming exemptions after levy.
(b) To enforce the judgment by nonjudicial foreclosure, the
director shall record with the county recorder of any county in which
real property of the parties against whom the judgment is taken is
located, a certified copy of the judgment together with the director'
s notice of intent to foreclose. The notice of intent to foreclose
shall set forth all of the following:
(1) The name, address, and telephone number of the trustee
authorized by the director to enforce the lien by sale.
(2) The legal description of the real property to be foreclosed
upon.
(3) Proof of service by registered or certified mail on the
following:
(A) The parties against whom the foreclosure is sought at their
last known address as shown on the official records of the appeals
board and as shown on the latest recorded deed, deed of trust, or
mortgage affecting the real property which is the subject of the
foreclosure.
(B) All of the owners of the real property which is subject to the
foreclosure at their last address as shown on the latest equalized
assessment roll.
(c) Upon the expiration of 20 days following recording of the
judgment and notice of intent to foreclose, the trustee may proceed
to sell the real property. Any sale by the trustee shall be conducted
in accordance with Article 1 (commencing with Section 2920) of
Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code
applicable to the exercise of powers of sale of property under powers
created by mortgages and deeds of trust.
(d) The director may authorize any person, including an attorney,
corporation, or other business entity, to act as trustee pursuant to
subdivision (b).
(e) Except as provided in subdivision (f), this section shall
apply to all judgments which the director has obtained or may obtain
pursuant to Section 3717, 3726, or 5806.
(f) This section shall not apply to the principal residence of an
employer if the appeals board finds that the employer, on the date of
injury, employed 10 or fewer employees. An employer seeking this
exemption shall provide proof of payment of tax withholding required
pursuant to Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code, to assist in determining the number of
employees on the date of injury.
3716.4. Whenever a final judgment has been entered against a motor
carrier of property subject to the jurisdiction and control of the
Department of Motor Vehicles or a passenger stage corporation,
charter-party carrier of passengers, or a household goods carrier
subject to the jurisdiction and control of the Public Utilities
Commission as a result of an award having been made pursuant to
Section 3716.2, the director may transmit to the Public Utilities
Commission or the Department of Motor Vehicles, whichever has
jurisdiction over the affected carrier, a copy of the judgment along
with the name and address of the regulated entity and any other
persons, corporations, or entities named in the judgment which are
jointly and severally liable for the debt to the State Treasury with
a complaint requesting that the Public Utilities Commission or the
Department of Motor Vehicles immediately revoke the carrier's Public
Utilities Commission certificate of public convenience and necessity
or Department of Motor Vehicles motor carrier permit.
3716.5. In the payment of workers' compensation benefits from the
Uninsured Employers Fund, the director shall do the following:
(a) Designate the job classifications of employees who are paid
compensation from the fund.
(b) Compile data on the job classifications of employees paid
compensation from the fund and report this data to the Legislature by
November 1, 1990, and annually thereafter.
3717. (a) A findings and award that is the subject of a demand on
the Uninsured Employers Fund or an approved compromise and release or
stipulated findings and award entered into by the director pursuant
to subdivision (e) of Section 3715, or a decision and order of the
rehabilitation unit of the Division of Workers' Compensation, that
has become final, shall constitute a liquidated claim for damages
against an employer in the amount so ascertained and fixed by the
appeals board, and the appeals board shall certify the same to the
director who may institute a civil action against the employer in the
name of the director, as administrator of the Uninsured Employers
Fund, for the collection of the award, or may obtain a judgment
against the employer pursuant to Section 5806. In the event that the
appeals board finds that a corporation is the employer of an injured
employee, and that the corporation has not secured the payment of
compensation as required by this chapter, the following persons shall
be jointly and severally liable with the corporation to the director
in the action:
(1) All persons who are a parent, as defined in Section 175 of the
Corporations Code, of the corporation.
(2) All persons who are substantial shareholders, as defined in
subdivision (b), of the corporation or its parent. In the action it
shall be sufficient for plaintiff to set forth a copy of the findings
and award of the appeals board relative to the claims as certified
by the appeals board to the director and to state that there is due
to plaintiff on account of the finding and award of the appeals board
a specified sum which plaintiff claims with interest. The director
shall be further entitled to costs and reasonable attorney fees, and
to his or her investigation and litigation expenses for the appeals
board proceedings, and a reasonable attorney fee for litigating the
appeals board proceedings. A certified copy of the findings and award
in the claim shall be attached to the complaint. The contents of the
findings and award shall be deemed proved. The answer or demurrer to
the complaint shall be filed within 10 days, the reply or demurrer
to the answer within 20 days, and the demurrer to the reply within 30
days after the return day of the summons or service by publication.
All motions and demurrers shall be submitted to the court within 10
days after they are filed. At the time the civil action filed
pursuant to this section is at issue, it shall be placed at the head
of the trial docket and shall be first in order for trial.
Nothing in this chapter shall be construed to preclude informal
adjustment by the director of a claim for compensation benefits
before the issuance of findings and award wherever it appears to the
director that the employer is uninsured and that informal adjustment
will facilitate the expeditious delivery of compensation benefits to
the injured employee.
(b) As used in this section, "substantial shareholder" means a
shareholder who owns at least 15 percent of the total value of all
classes of stock, or, if no stock has been issued, who owns at least
15 percent of the beneficial interests in the corporation.
(c) For purposes of this section, in determining the ownership of
stock or beneficial interest in the corporation, in the determination
of whether a person is a substantial shareholder of the corporation,
the rules of attribution of ownership of Section 17384 of the
Revenue and Taxation Code shall be applied.
(d) For purposes of this section, "corporation" shall not include:
(1) Any corporation which is the issuer of any security which is
exempted by Section 25101 of the Corporations Code from Section 25130
of the Corporations Code.
(2) Any corporation which is the issuer of any security exempted
by subdivision (c), (d), or (i) of Section 25100 of the Corporations
Code from Sections 25110, 25120, and 25130 of the Corporations Code.
(3) Any corporation which is the issuer of any security which has
qualified either by coordination, as provided by Section 25111 of the
Corporations Code, or by notification, as provided by Section 25112
of the Corporations Code.
3717.1. In any claim in which an alleged uninsured employer is a
corporation, the director may cause substantial shareholders and
parents, as defined by Section 3717, to be joined as parties.
Substantial shareholders may be served as provided in this division
for service on adverse parties, or if they cannot be found with
reasonable diligence, by serving the corporation. The corporation,
upon this service, shall notify the shareholder of the service, and
mail the served document to him or her at the shareholder's last
address known to the corporation.
3717.2. Upon request of the director, the appeals board shall make
findings of whether persons are substantial shareholders or parents,
as defined in Section 3717. The director may in his or her discretion
proceed against substantial shareholders and parents pursuant to
Section 3717 without those findings of the appeals board.
3718. The cause of action provided in Section 3717 and any cause of
action arising out of Section 3722 may be joined in one action
against an employer. The amount recovered in such action from such
employer shall be paid into the State Treasury to the credit of the
Uninsured Employers Fund.
3719. Any suit, action, proceeding, or award brought or made
against any employer under Section 3717 may be compromised by the
director, or such suit, action, or proceeding may be prosecuted to
final judgment as in the discretion of the director may best subserve
the interests of the Uninsured Employers Fund.
3720. (a) When the appeals board or the director determines under
Section 3715 or 3716 that an employer has not secured the payment of
compensation as required by this division or when the director has
determined that the employer is prima facie illegally uninsured, the
director may file for record in the office of the county recorder in
the counties where the employer's property is possibly located, a
certificate of lien showing the date that the employer was determined
to be illegally uninsured or the date that the director has
determined that the employer was prima facie illegally uninsured. The
certificate shall show the name and address of the employer against
whom it was filed, and the fact that the employer has not secured the
payment of compensation as required by this division. Upon the
recordation, the certificate shall constitute a valid lien in favor
of the director, and shall have the same force, effect and priority
as a judgment lien and shall continue for 10 years from the time of
the recording of the certificate unless sooner released or otherwise
discharged. A copy of the certificate shall be served upon the
employer by mail, by the director. A facsimile signature of the
director accompanied by the seal imprint of the department shall be
sufficient for recording purposes of liens and releases or
cancellations thereof considered herein. Certificates of liens may be
filed in any or all counties of the state, depending upon the
information the director obtains concerning the employer's assets.
(b) For purposes of this section, in the event the employer is a
corporation, those persons whom either the appeals board finds are
the parent or the substantial shareholders of the corporation or its
parent, or whom the director finds pursuant to Section 3720.1 to be
prima facie the parent or the substantial shareholders of the
corporation or its parent, as defined in Section 3717, shall be
deemed to be the employer, and the director may file the certificates
against those persons.
(c) A person who claims to be aggrieved by the filing of a lien
against the property of an uninsured employer because he or she has
the same or a similar name, may apply to the director to have filed
an amended certificate of lien which shows that the aggrieved
applicant is not the uninsured employer which is the subject of the
lien. If the director finds that the aggrieved applicant is not the
same as the uninsured employer, the director shall file an amended
certificate of lien with the county recorder of the county in which
the aggrieved applicant has property, which shall show, by reasonably
identifying information furnished by the aggrieved applicant, that
the uninsured employer and the aggrieved applicant are not the same.
If the director does not file the amended certificate of lien within
60 days of application therefor, the applicant may appeal the
director's failure to so find by filing a petition with the appeals
board, which shall make a finding as to whether the applicant and the
uninsured employer are the same.
(d) Liens filed under this section have continued existence
independent of, and may be foreclosed upon independently of, any
right of action arising out of Section 3717 or 5806.
3720.1. (a) In any claim in which the alleged uninsured employer is
a corporation, for purposes of filing certificates of lien pursuant
to Section 3720, the director may determine, according to the
evidence available to him or her, whether a person is prima facie a
parent or substantial shareholder, as defined in Section 3717. A
finding that a person was prima facie a parent or substantial
shareholder shall be made when the director determines that there is
sufficient evidence to constitute a prima facie case that the person
was a parent or substantial shareholder.
(b) Any person aggrieved by a finding of the director that he or
she was prima facie a parent or substantial shareholder may request a
hearing on the finding by filing a written request for hearing with
the director. The director shall hold a hearing on the matter within
20 days of the receipt of the request for hearing, and shall mail a
notice of time and place of hearing to the person requesting hearing
at least 10 days prior to the hearing. The hearing officer shall hear
and receive evidence, and within 10 days of the hearing, file his or
her findings on whether there is sufficient evidence to constitute a
prima facie case that the person was a substantial shareholder or
parent. The hearing officer shall serve with his or her findings a
summary of evidence received and relied upon, and the reasons for the
findings. A party may at his or her own expense require that the
hearing proceedings be recorded and transcribed.
(c) A party aggrieved by the findings of the hearing officer may
within 20 days apply for a writ of mandate to the superior court.
Venue shall lie in the county in which is located the office of the
director which issued the findings after the hearing.
3721. The director shall provide the employer with a certificate of
cancellation of lien after the employer has paid to the claimant or
to the Uninsured Employers Fund the amount of the compensation or
benefits which has been ordered paid to the claimant, or when the
application has finally been denied after the claimant has exhausted
the remedies provided by law in those cases, or when the employer has
filed a bond in the amount and with such surety as the appeals board
approves conditioned on the payment of all sums ordered paid to the
claimant, or when, after a finding that the employer was prima facie
illegally uninsured, it is finally determined that the finding was in
error. The recorder shall make no charge for filing the certificates
of lien, for filing amended certificates of lien, or for
cancellation when liens are filed in error. Cancellation of lien
certificates provided to the employer may be filed for recordation by
the employer at his or her expense.
3722. (a) At the time the stop order is issued and served pursuant
to Section 3710.1, the director shall also issue and serve a penalty
assessment order requiring the uninsured employer to pay to the
director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the sum of one thousand five hundred
dollars ($1,500) per employee employed at the time the order is
issued and served, as an additional penalty for being uninsured at
that time or issue and serve a penalty assessment order pursuant to
subdivision (b).
(b) At any time that the director determines that an employer has
been uninsured for a period in excess of one week during the calendar
year preceding the determination, the director shall issue and serve
a penalty assessment order requiring the uninsured employer to pay
to the director, for deposit in the State Treasury to the credit of
the Uninsured Employers Fund, the greater of (1) twice the amount the
employer would have paid in workers' compensation premiums during
the period the employer was uninsured, determined according to
subdivision (c), or (2) the sum of one thousand five hundred dollars
($1,500) per employee employed during the period the employer was
uninsured. A penalty assessment issued and served by the director
pursuant to this subdivision shall be in lieu of, and not in addition
to, any other penalty issued and served by the director pursuant to
subdivision (a).
(c) If the employer is currently insured, or becomes insured
during the period during which the penalty under subdivision (b) is
being determined, the amount an employer would have paid in workers'
compensation premiums shall be calculated by prorating the current
premium for the number of weeks the employer was uninsured within the
three-year period immediately prior to the date the penalty
assessment is issued. If the employer is uninsured at the time the
penalty under subdivision (b) is being determined, the amount an
employer would have paid in workers' compensation premiums shall be
the product of the employer's payroll for all periods of time the
employer was uninsured within the three-year period immediately prior
to the date the penalty assessment is issued multiplied by a rate
determined in accordance with regulations that may be adopted by the
director or, if none has been adopted, the manual rate or rates of
the State Compensation Insurance Fund for the employer's governing
classification pursuant to the standard classification system
approved by the Insurance Commissioner. The classification shall be
determined by the director or the director's designee at the time the
penalty assessment is issued on the basis of any information
available to the director regarding the employer's operations. Unless
the amount of the employer's payroll for all periods during which
the employer was uninsured within the three-year period is otherwise
proven by a preponderance of evidence, the employer's payroll for
each week the employer was uninsured shall be presumed to be the
state average weekly wage multiplied by the number of persons
employed by the employer at the time the penalty assessment is
issued. For purposes of this subdivision, "state average weekly wage"
means the average weekly wage paid by employers to employees covered
by unemployment insurance as reported by the United States
Department of Labor for California for the 12-month period ending
March 31 of the calendar year preceding the year in which the penalty
assessment order is issued.
(d) If upon the filing of a claim for compensation under this
division the Workers' Compensation Appeals Board finds that any
employer has not secured the payment of compensation as required by
this division and finds the claim either noncompensable or
compensable, the appeals board shall mail a copy of their findings to
the uninsured employer and the director, together with a direction
to the uninsured employer to file a verified statement pursuant to
subdivision (e).
After the time for any appeal has expired and the adjudication of
the claim has become final, the uninsured employer shall be assessed
and pay as a penalty either of the following:
(1) In noncompensable cases, two thousand dollars ($2,000) per
each employee employed at the time of the claimed injury.
(2) In compensable cases, ten thousand dollars ($10,000) per each
employee employed on the date of the injury.
(e) In order to establish the number of employees the uninsured
employer had on the date of the claimed injury in noncompensable
cases and on the date of injury in compensable cases, the employer
shall submit to the director within 10 days after service of
findings, awards, and orders of the Workers' Compensation Appeals
Board a verified statement of the number of employees in his or her
employ on the date of injury. If the employer fails to submit to the
director this verified statement or if the director disputes the
accuracy of the number of employees reported by the employer, the
director shall use any information regarding the number of employees
as the director may have or otherwise obtains.
(f) Except for penalties assessed under subdivision (b), the
maximum amount of penalties which may be assessed pursuant to this
section is one hundred thousand dollars ($100,000). Payment shall be
transmitted to the director for deposit in the State Treasury to the
credit of the Uninsured Employers Fund.
(g) (1) The Workers' Compensation Appeals Board may provide for a
summary hearing on the sole issue of compensation coverage to effect
the provisions of this section.
(2) In the event a claim is settled by the director pursuant to
subdivision (e) of Section 3715 by means of a compromise and release
or stipulations with request for award, the appeals board may also
provide for a summary hearing on the issue of compensability.
3725. If an employer desires to contest a penalty assessment order,
the employer shall file with the director a written request for a
hearing within 15 days after service of the order. Upon receipt of
the request, the director shall set the matter for a hearing within
30 days thereafter and shall notify the employer of the time and
place of the hearing by mail at least 10 days prior to the date of
the hearing. The decision of the director shall consist of a notice
of findings and findings which shall be served on all parties to the
hearing by registered or certified mail within 15 days after the
hearing. Any amount found due by the director as a result of a
hearing shall become due and payable 45 days after notice of the
findings and written findings have been mailed by registered or
certified mail to the party assessed. A writ of mandate may be taken
from these findings to the appropriate superior court upon the
execution by the party assessed of a bond to the state in double the
amount found due and ordered paid by the director, as long as the
party agrees to pay any judgment and costs rendered against the party
for the assessment. The writ shall be taken within 45 days after
mailing the notice of findings and findings.
3726. (a) When no petition objecting to a penalty assessment order
is filed, a certified copy of the order may be filed by the director
in the office of the clerk of the superior court in any county in
which the employer has property or in which the employer has or had a
place of business. The clerk, immediately upon such filing, shall
enter judgment for the state against the employer in the amount shown
on the penalty assessment order.
(b) When findings are made affirming or modifying a penalty
assessment order after hearing, a certified copy of such order and a
certified copy of such findings may be filed by the director in the
office of the clerk of the superior court in any county in which the
employer has property or in which the employer has or had a place of
business. The clerk, immediately upon such filing, shall enter
judgment for the state against the employer in the amount shown on
the penalty assessment order or in the amount shown in the findings
if the order has been modified.
(c) A judgment entered pursuant to the provisions of this section
may be filed by the clerk in a looseleaf book entitled "Special
Judgments for State Uninsured Employers Fund." Such judgment shall
bear the same rate of interest and shall have the same effect as
other judgments and be given the same preference allowed by law on
other judgments rendered for claims for taxes. The clerk shall make
no charge for the service provided by this section to be performed by
him.
3727. If the director determines pursuant to Section 3722 that an
employer has failed to secure the payment of compensation as required
by this division, the director may file with the county recorder of
any counties in which such employer's property may be located his
certificate of the amount of penalty due from such employer and such
amount shall be a lien in favor of the director from the date of such
filing against the real property and personal property of the
employer within the county in which such certificate is filed. The
recorder shall accept and file such certificate and record the same
as a mortgage on real estate and shall file the same as a security
interest and he shall index the same as mortgage on real estate and
as a security interest. Certificates of liens may be filed in any and
all counties of the state, depending upon the information the
director obtains concerning the employer's assets. The recorder shall
make no charge for the services provided by this section to be
performed by him. Upon payment of the penalty assessment, the
director shall issue a certificate of cancellation of penalty
assessment, which may be recorded by the employer at his expense.
3727.1. The director may withdraw a stop order or a penalty
assessment order where investigation reveals the employer had secured
the payment of compensation as required by Section 3700 on the date
and at the time of service of such order. The director also may
withdraw a penalty assessment order where investigation discloses
that the employer was insured on the date and at the time of an
injury or claimed injury, or where an insured employer responded in
writing to a request to furnish the status of his workers'
compensation coverage within the time prescribed.
3728. (a) The director may draw from the State Treasury out of the
Uninsured Employers Benefits Trust Fund for the purposes of Sections
3716 and 3716.1, without at the time presenting vouchers and itemized
statements, a sum not to exceed in the aggregate the level provided
for pursuant to Section 16400 of the Government Code, to be used as a
cash revolving fund. The revolving fund shall be deposited in any
banks and under any conditions as the Department of General Services
determines. The Controller shall draw his or her warrants in favor of
the Director of Industrial Relations for the amounts so withdrawn
and the Treasurer shall pay these warrants.
(b) Expenditures made from the revolving fund in payment of claims
for compensation due from the Uninsured Employers Benefits Trust
Fund and from the Workers' Compensation Administration Revolving Fund
for administrative and adjusting services rendered are exempted from
the operation of Section 925.6 of the Government Code. Reimbursement
of the revolving fund from the Uninsured Employers Benefits Trust
Fund or the Workers' Compensation Administration Revolving Fund for
expenditures shall be made upon presentation to the Controller of an
abstract or statement of the expenditures. The abstract or statement
shall be in any form as the Controller requires.
3730. When the last day for filing any instrument or other document
pursuant to this chapter falls upon a Saturday, Sunday or other
holiday, such act may be performed upon the next business day with
the same effect as if it had been performed upon the day appointed.
3731. Any stop order or penalty assessment order may be personally
served upon the employer either by (1) manual delivery of the order
to the employer personally or by (2) leaving signed copies of the
order during usual office hours with the person who is apparently in
charge of the office and by thereafter mailing copies of the order by
first class mail, postage prepaid to the employer at the place where
signed copies of the order were left.
3732. (a) If compensation is paid or becomes payable from the
Uninsured Employers Fund, whether as a result of a findings and
award, award based upon stipulations, compromise and release executed
on behalf of the director, or payments voluntarily furnished by the
director pursuant to Section 4903.3, the director may recover damages
from any person or entity, other than the employer, whose tortious
act or omission proximately caused the injury or death of the
employee. The damages shall include any compensation, including
additional compensation by way of interest or penalty, paid or
payable by the director, plus the expense incurred by the director in
investigating and litigating the workers' compensation claim and a
reasonable attorney fee for litigating the workers' compensation
claim. The director may compromise, or settle and release any claim,
and may waive any claim, including the lien allowed by this section,
in whole or in part, for the convenience of the director.
(b) Except as otherwise provided in this section, Chapter 5
(commencing with Section 3850) of Part 1 of Division 4 shall be
applicable to these actions, the director being treated as an
employer within the meaning of Chapter 5 to the extent not
inconsistent with this section.
(c) Actions brought under this section shall be commenced within
one year after the later of either the time the director pays or the
time the director becomes obligated to pay any compensation from the
Uninsured Employers Fund.
(d) In the trial of these actions, any negligence attributable to
the employer shall not be imputed to the director or to the Uninsured
Employers Fund, and the damages recoverable by the director shall
not be reduced by any percentage of fault or negligence attributable
to the employer or to the employee.
(e) In determining the credit to the Uninsured Employers Fund
provided by Section 3861, the appeals board shall not take into
consideration any negligence of the employer, but shall allow a
credit for the entire amount of the employee's recovery either by
settlement or after judgment, as has not theretofore been applied to
the payment of expenses or attorney's fees.
(f) When an action or claim is brought by an employee, his or her
guardian, conservator, personal representative, estate, survivors, or
heirs against a third party who may be liable for causing the injury
or death of the employee, any settlement or judgment obtained is
subject to the director's claim for damages recoverable by the
director pursuant to subdivision (a), and the director shall have a
lien against any settlement in the amount of the damages.
(g) No judgment or settlement in any action or claim by an
employee, his or her guardian, conservator, personal representative,
survivors, or heirs to recover damages for injuries, where the
director has an interest, shall be satisfied without first giving the
director notice and a reasonable opportunity to perfect and satisfy
his or her lien. The director shall be mailed a copy of the complaint
in the third-party action as soon as reasonable after it is filed
with the court.
(h) When the director has perfected a lien upon a judgment or
settlement in favor of an employee, his or her guardian, conservator,
personal representative, survivors or heirs against any third party,
the director shall be entitled to a writ of execution as a lien
claimant to enforce payment of the lien against the third party with
interest and other accruing costs as in the case of other executions.
In the event the amount of the judgment or settlement so recovered
has been paid to the employee, his or her guardian, conservator,
personal representative, survivors, or heirs, the director shall be
entitled to a writ of execution against the employee, his or her
guardian, conservator, personal representative, survivors, or heirs
to the extent of the director's lien, with interest and other
accruing costs as in the cost of other executions.
(i) Except as otherwise provided in this section, notwithstanding
any other provision of law, the entire amount of any settlement of
the action or claim of the employee, his or her guardian,
conservator, personal representative, survivors, or heirs, with or
without suit, is subject to the director's lien claim for the damages
recoverable by the director pursuant to subdivision (a).
(j) Where the action or claim is brought by the employee, his or
her guardian, conservator, personal representative, estate,
survivors, or heirs, and the director has not joined in the action,
and the employee, his or her guardian, conservator, personal
representative, estate, survivors, or heirs incur a personal
liability to pay attorney's fees and costs of litigation, the
director's claim for damages shall be limited to the amount of the
director's claim for damages less that portion of the costs of
litigation expenses determined by multiplying the total cost of
litigation expenses by the ratio of the full amount of the director's
claim for damages to the full amount of the judgment, award, or
settlement, and less 25 percent of the balance after subtracting the
director's share of litigation expenses, which represents the
director's reasonable share of attorney's fees incurred.
(k) In the trial of the director's action for damages, and in the
allowance of his or her lien in an action by the employee, guardian,
executor, personal representative, survivors, or heirs, the
compensation paid from the Uninsured Employers Fund pursuant to an
award as provided in Section 3716 is conclusively presumed to be
reasonable in amount and to be proximately caused by the event or
events which caused the employee's injury or death.
(l) In the action for damages the director shall be entitled to
recover, if he or she prevails, the entire amount of the damages
recoverable by the director pursuant to subdivision (a), regardless
of whether the damages recoverable by the employee, guardian,
conservator, personal representative, survivors, or heirs are of
lesser amount.
3710. (a) The Director of Industrial Relations shall enforce the
provisions of this article. The director may employ necessary
investigators, clerks, and other employees, and make use of the
services of any employee of the department whom he may assign to
assist him in the enforcement of this article. Prosecutions for
criminal violations of this division may be conducted by the
appropriate public official of the county in which the offense is
committed, by the Attorney General, or by any attorney in the civil
service of the Department of Industrial Relations designated by the
director for such purpose.
(b) The director, in accordance with the provisions of Chapter 4
(commencing at Section 11370) of Part 1 of Division 3 of Title 2 of
the Government Code, may adopt, amend and repeal such rules and
regulations as are reasonably necessary for the purpose of enforcing
and administering this article and as are not inconsistent with law.
(c) As used in this article, "director" means the Director of
Industrial Relations or the director's designated agents.
3710.1. Where an employer has failed to secure the payment of
compensation as required by Section 3700, the director shall issue
and serve on such employer a stop order prohibiting the use of
employee labor by such employer until the employer's compliance with
the provisions of Section 3700. Such stop order shall become
effective immediately upon service. Any employee so affected by such
work stoppage shall be paid by the employer for such time lost, not
exceeding 10 days, pending compliance by the employer. Such employer
may protest the stop order by making and filing with the director a
written request for a hearing within 20 days after service of such
stop order. Such hearing shall be held within 5 days from the date of
filing such request. The director shall notify the employer of the
time and place of the hearing by mail. At the conclusion of the
hearing the stop order shall be immediately affirmed or dismissed,
and within 24 hours thereafter the director shall issue and serve on
all parties to the hearing by registered or certified mail a written
notice of findings and findings. A writ of mandate may be taken from
the findings to the appropriate superior court. Such writ must be
taken within 45 days after the mailing of the notice of findings and
findings.
3710.2. Failure of an employer, officer, or anyone having
direction, management, or control of any place of employment or of
employees to observe a stop order issued and served upon him or her
pursuant to Section 3710.1 is a misdemeanor punishable by
imprisonment in the county jail not exceeding 60 days or by a fine
not exceeding ten thousand dollars ($10,000), or both. Fines shall be
paid into the State Treasury to the credit of the Uninsured
Employers Fund. The director may also obtain injunctive and other
relief from the courts to carry out the purposes of Section 3710.1.
The failure to obtain a policy of workers' compensation insurance or
a certificate of consent to self-insure as required by Section 3700
is a misdemeanor in accordance with Section 3700.5.
3710.3. Whenever a stop order has been issued pursuant to Section
3710.1 to a motor carrier of property subject to the jurisdiction and
control of the Department of Motor Vehicles or to a household goods
carrier, passenger stage corporation, or charter-party carrier of
passengers subject to the jurisdiction and control of the Public
Utilities Commission, the director shall transmit the stop order to
the Public Utilities Commission or the Department of Motor Vehicles,
whichever has jurisdiction over the affected carrier, within 30 days.
3711. The director, an investigator for the Department of Insurance
Fraud Bureau or its successor, or a district attorney investigator
assigned to investigate workers' compensation fraud may, at any time,
require an employer to furnish a written statement showing the name
of his or her insurer or the manner in which the employer has
complied with Section 3700. Failure of the employer for a period of
10 days to furnish the written statement is prima facie evidence that
he or she has failed or neglected in respect to the matters so
required. The 10-day period may not be construed to allow an
uninsured employer, so found by the director, any extension of time
from the application of the provisions of Section 3710.1. An insured
employer who fails to respond to an inquiry respecting his or her
status as to his or her workers' compensation security shall be
assessed and required to pay a penalty of five hundred dollars ($500)
to the director for deposit in the State Treasury to the credit of
the Uninsured Employers Fund. In any prosecution under this article,
the burden of proof is upon the defendant to show that he or she has
secured the payment of compensation in one of the two ways set forth
in Section 3700.
3712. (a) The securing of the payment of compensation in a way
provided in this division is essential to the functioning of the
expressly declared social public policy of this state in the matter
of workers' compensation. The conduct or operation of any business or
undertaking without full compensation security, in continuing
violation of social policy, shall be subject to imposition of
business strictures and monetary penalties by the director,
including, but not limited to, resort to the superior court of any
county in which all or some part of the business is being thus
unlawfully conducted or operated, for carrying out the intent of this
article.
(b) In a proceeding before the superior court in matters concerned
with this article, no filing fee shall be charged to the plaintiff;
nor may any charge or cost be imposed for any act or service required
of or done by any state or county officer or employee in connection
with the proceeding. If the court or the judge before whom the order
to show cause in the proceeding is made returnable, finds that the
defendant is conducting or operating a business or undertaking
without the full compensation security required, the court or judge
shall forthwith, and without continuance, issue an order restraining
the future or further conduct and operation of the business or
undertaking so long as the violation of social public policy
continues. The action shall be prosecuted by the Attorney General of
California, the district attorney of the county in which suit is
brought, the city attorney of any city in which such a business or
undertaking is being operated or conducted without full compensation
security, or any attorney possessing civil service status who is an
employee of the Department of Industrial Relations who may be
designated by the director for that purpose. No finding made in the
course of any such action is binding on the appeals board in any
subsequent proceeding before it for benefits under this division.
3714. (a) All cases involving the Uninsured Employers Fund or the
Subsequent Injuries Fund as a party or involving death without
dependents shall only be heard for conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar at the district Workers' Compensation
Appeals Board located in San Francisco, Los Angeles, Van Nuys,
Anaheim, Sacramento, or San Diego, except for good cause shown and
with the consent of the director. This subdivision shall not apply to
trials or hearings pursuant to Section 5309 or to expedited hearings
pursuant to subdivision (b) of Section 5502.
(b) For the cases specified in subdivision (a), the presiding
judge of the Workers' Compensation Appeals Board located in San
Francisco, Los Angeles, Van Nuys, Anaheim, Sacramento, or San Diego
shall have the authority, either by standing order or on a
case-by-case basis, to order a conference, mandatory settlement
conference pursuant to subdivision (d) of Section 5502, standby
conference, or rating calendar in which no testimony will be taken to
be conducted by telephone conference call among the parties and
their attorneys of record who do not reside in the county in which
that appeals board is located. The cost of the scheduling of the
conference call shall be charged against the appropriate fund of the
department.
(c) Any filings of documents necessary for the proceedings
specified in subdivisions (a) and (b) may be served on the appeals
board and the parties by facsimile machine, but if so served, within
five workings days service shall be made on the appeals board and the
parties as required by regulation.
(d) This section shall remain in effect for two years commencing
on the date that the administrative director certifies and publishes
that the rearrangement of judicial resources required by this
section, and conference call facilities required for this section are
in place. The certification shall be published in the California
Notice Register, but shall be required to have been posted in the
office of each appeals board at least 30 days prior to that
publication. Notwithstanding this section, with the permission of the
presiding judge and under standards set by the administrative
director, parties may be permitted to conclude existing cases where
they were filed. This section shall cease to be operative at the end
of that two-year period, and shall be repealed on January 1 following
that date.
3715. (a) Any employee, except an employee as defined in
subdivision (d) of Section 3351, whose employer has failed to secure
the payment of compensation as required by this division, or his or
her dependents in case death has ensued, may, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, file his or her application with the
appeals board for compensation and the appeals board shall hear and
determine the application for compensation in like manner as in other
claims and shall make the award to the claimant as he or she would
be entitled to receive if the employer had secured the payment of
compensation as required, and the employer shall pay the award in the
manner and amount fixed thereby or shall furnish to the appeals
board a bond, in any amount and with any sureties as the appeals
board requires, to pay the employee the award in the manner and
amount fixed thereby.
(b) Notwithstanding this section or any other provision of this
chapter except Section 3708, any person described in subdivision (d)
of Section 3351 who is (1) engaged in household domestic service who
is employed by one employer for over 52 hours per week, (2) engaged
as a part-time gardener in connection with a private dwelling, if the
number of hours devoted to the gardening work for any individual
regularly exceeds 44 hours per month, or (3) engaged in casual
employment where the work contemplated is to be completed in not less
than 10 working days, without regard to the number of persons
employed, and where the total labor cost of the work is not less than
one hundred dollars ($100) (which amount shall not include charges
other than for personal services), shall be entitled, in addition to
proceeding against his or her employer by civil action in the courts
as provided in Section 3706, to file his or her application with the
appeals board for compensation. The appeals board shall hear and
determine the application for compensation in like manner as in other
claims, and shall make the award to the claimant as he or she would
be entitled to receive if the person's employer had secured the
payment of compensation as required, and the employer shall pay the
award in the manner and amount fixed thereby, or shall furnish to the
appeals board a bond, in any amount and with any sureties as the
appeals board requires, to pay the employee the award in the manner
and amount fixed thereby.
It is the intent of the Legislature that the amendments to this
section by Chapter 17 of the Statutes of 1977, make no change in the
law as it applied to those types of employees covered by this
subdivision prior to the effective date of Chapter 1263 of the 1975
Regular Session.
(c) In any claim in which it is alleged that the employer has
failed to secure the payment of compensation, the director, only for
purposes of this section and Section 3720, shall determine, on the
basis of the evidence available to him or her, whether the employer
was prima facie illegally uninsured. A finding that the employer was
prima facie illegally uninsured shall be made when the director
determines that there is sufficient evidence to constitute a prima
facie case that the employer employed an employee on the date of the
alleged injury and had failed to secure the payment of compensation,
and that the employee was injured arising out of, and occurring in
the course of, the employment.
Failure of the employer to furnish within 10 days the written
statement in response to a written demand for a written statement
prescribed in Section 3711, addressed to the employer at its address
as shown on the official address record of the appeals board, shall
constitute in itself sufficient evidence for a prima facie case that
the employer failed to secure the payment of compensation.
A written denial by the insurer named in the statement furnished
by the employer as prescribed in Section 3711, that the employer was
so insured as claimed, or the nonexistence of a valid certificate of
consent to self-insure for the time of the claimed injury, if the
statement furnished by the employer claims the employer was
self-insured, shall constitute in itself sufficient evidence for a
prima facie case that the employer had failed to secure the payment
of compensation.
The nonexistence of a record of the employer's insurance with the
Workers' Compensation Insurance Rating Bureau shall constitute in
itself sufficient evidence for a prima facie case that the employer
failed to secure the payment of compensation.
The unrebutted written declaration under penalty of perjury by the
injured employee, or applicant other than the employee, that the
employee was employed by the employer at the time of the injury, and
that he or she was injured in the course of his or her employment,
shall constitute, in itself, sufficient evidence for a prima facie
case that the employer employed the employee at the time of the
injury, and that the employee was injured arising out of, and
occurring in the course of, the employment.
(d) When the director determines that an employer was prima facie
illegally uninsured, the director shall mail a written notice of the
determination to the employer at his or her address as shown on the
official address record of the appeals board, and to any other more
recent address the director may possess. The notice shall advise the
employer of its right to appeal the finding, and that a lien may be
placed against the employer's and any parent corporation's property,
or the property of substantial shareholders of a corporate employer
as defined by Section 3717.
Any employer aggrieved by a finding of the director that it was
prima facie illegally uninsured may appeal the finding by filing a
petition before the appeals board. The petition shall be filed within
20 days after the finding is issued. The appeals board shall hold a
hearing on the petition within 20 days after the petition is filed
with the appeals board. The appeals board shall have exclusive
jurisdiction to determine appeals of the findings by the director,
and no court of this state has jurisdiction to review, annul, or
suspend the findings or the liens created thereunder, except as
provided by Article 2 (commencing with Section 5950) of Chapter 7 of
Part 4 of Division 4.
(e) Any claim brought against an employer under this section may
be resolved by the director by compromise and release or stipulated
findings and award as long as the appeals board has acquired
jurisdiction over the employer and the employer has been given notice
and an opportunity to object.
Notice may be given by service on the employer of an appeals board
notice of intention to approve the compromise and release or
stipulated findings and award. The employer shall have 20 days after
service of the notice of intention to file an objection with the
appeals board and show good cause therefor.
If the employer objects, the appeals board shall determine if
there is good cause for the objection.
If the appeals board finds good cause for the objection, the
director may proceed with the compromise and release or stipulated
findings and award if doing so best serves the interest of the
Uninsured Employers Fund, but shall have no cause of action against
the employer under Section 3717 unless the appeals board case is
tried to its conclusion and the employer is found liable.
If the appeals board does not find good cause for the objection,
and the compromise and release or stipulated findings and award is
approved, the Uninsured Employers Fund shall have a cause of action
against the employer pursuant to Section 3717.
(f) The director may adopt regulations to implement and interpret
the procedures provided for in this section.
3716. (a) If the employer fails to pay the compensation required by
Section 3715 to the person entitled thereto, or fails to furnish the
bond required by Section 3715 within a period of 10 days after
notification of the award, the award, upon application by the person
entitled thereto, shall be paid by the director from the Uninsured
Employers Benefits Trust Fund. The expenses of the director in
administering these provisions, directly or by contract pursuant to
Section 3716.1, shall be paid from the Workers' Compensation
Administration Revolving Fund. Refunds may be paid from the Uninsured
Employers Benefits Trust Fund for amounts remitted erroneously to
the fund, or the director may authorize offsetting subsequent
remittances to the fund.
(b) It is the intent of the Legislature that the Uninsured
Employers Benefits Trust Fund is created to ensure that workers who
happen to be employed by illegally uninsured employers are not
deprived of workers' compensation benefits, and is not created as a
source of contribution to insurance carriers, or self-insured, or
legally insured employers. The Uninsured Employers Benefits Trust
Fund has no liability for claims of occupational disease or
cumulative injury unless no employer during the period of the
occupational disease or cumulative injury during which liability is
imposed under Section 5500.5 was insured for workers' compensation,
was permissibly self-insured, or was legally uninsured. No employer
has a right of contribution against the Uninsured Employers Benefits
Trust Fund for the liability of an illegally uninsured employer under
an award of benefits for occupational disease or cumulative injury,
nor may an employee in a claim of occupational disease or cumulative
injury elect to proceed against an illegally uninsured employer.
(c) The Uninsured Employers Benefits Trust Fund has no liability
to pay for medical, surgical, chiropractic, hospital, or other
treatment, the liability for which treatment is imposed upon the
employer pursuant to Section 4600, and which treatment has been
provided or paid for by the State Department of Health Services
pursuant to the California Medical Assistance Program.
(d) The Uninsured Employers Benefits Trust Fund shall have no
liability to pay compensation, nor shall it be joined in any appeals
board proceeding, unless the employer alleged to be illegally
uninsured shall first either have made a general appearance or have
been served with the application specified in Section 3715 and with a
special notice of lawsuit issued by the appeals board. The special
notice of lawsuit shall be in a form to be prescribed by the appeals
board, and it shall contain at least the information and warnings
required by the Code of Civil Procedure to be contained in the
summons issued in a civil action. The special notice of lawsuit shall
also contain a notice that if the appeals board makes an award
against the defendant that his or her house or other dwelling and
other property may be taken to satisfy the award in a nonjudicial
sale, with no exemptions from execution. The special notice of
lawsuit shall, in addition, contain a notice that a lien may be
imposed upon the defendant's property without further hearing and
before the issuance of an award. The applicant shall identify a legal
person or entity as the employer named in the special notice of
lawsuit. The reasonable expense of serving the application and
special notice of lawsuit, when incurred by the employee, shall be
awarded as a cost. Proof of service of the special notice of lawsuit
and application shall be filed with the appeals board.
(1) The application and special notice of lawsuit may be served,
within or without this state, in the manner provided for service of
summons in the Code of Civil Procedure. Thereafter, an employer,
alleged to be illegally uninsured, shall notify the appeals board of
the address at which it may be served with official notices and
papers, and shall notify the appeals board of any changes in the
address. No findings, order, decision, award, or other notice or
paper need be served in this manner on an employer, alleged to be
illegally uninsured, who has been served as provided in this section,
and who has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address. The
findings, orders, decisions, awards, or other notice or paper may be
mailed to the employer as the board, by regulation, may provide.
(2) Notwithstanding paragraph (1), if the employer alleged to be
illegally uninsured has not filed an answer, otherwise made a general
appearance, or furnished the appeals board with its address, the
appeals board shall serve any findings, order, decision, award, or
other notice or paper on the employer by mail at the address the
appeals board has for the employer. The failure of delivery at that
address or the lack of personal service on an employer who has been
served as provided in this section, of these findings, order,
decision, award, or other notice or paper, shall not constitute
grounds for reopening or invalidating any appeals board action
pursuant to Section 5506, or for contesting the validity of any
judgment obtained under Section 3716 or 5806, a lien under Section
3720, or a settlement under subdivision (e) of Section 3715.
(3) The board, by regulation, may provide for service procedures
in cases where a request for new and further benefits is made after
the issuance of any findings and award and a substantial period of
time has passed since the first service or attempted service.
(4) The director, on behalf of the Uninsured Employers Benefits
Trust Fund, shall furnish information as to the identities, legal
capacities, and addresses of uninsured employers known to the
director upon request of the board or upon a showing of good cause by
the employee or the employee's representative. Good cause shall
include a declaration by the employee's representative, filed under
penalty of perjury, that the information is necessary to represent
the employee in proceedings under this division.
3716.1. (a) In any hearing, investigation, or proceeding, the
Attorney General, or attorneys of the Department of Industrial
Relations, shall represent the director and the state. Expenses
incident to representation of the director and the state, before the
appeals board and in civil court, by the Attorney General or
Department of Industrial Relations attorneys, shall be reimbursed
from the Workers' Compensation Administration Revolving Fund.
Expenses incident to representation by the Attorney General or
attorneys of the Department of Industrial Relations incurred in
attempts to recover moneys pursuant to Section 3717 of the Labor Code
shall not exceed the total amounts recovered by the director on
behalf of the Uninsured Employers Benefits Trust Fund pursuant to
this chapter.
(b) The director shall assign investigative and claims' adjustment
services respecting matters concerning uninsured employers injury
cases. The director or his or her representative may make these
service assignments within the department, or he or she may contract
for these services with the State Compensation Insurance Fund, except
insofar as these matters might conflict with the interests of the
State Compensation Insurance Fund. The administrative costs
associated with these services shall be reimbursed from the Workers'
Compensation Administration Revolving Fund and the nonadministrative
costs from the Uninsured Employers Benefits Trust Fund, except when a
budget impasse requires advances as described in subdivision (c) of
Section 62.5. To the extent permitted by state law, the director may
contract for audits or reports of services under this section.
(c) Commencing November 1, 2004, the State Compensation Insurance
Fund and the director shall report annually to the fiscal committees
of both houses of the Legislature and the Director of Finance,
regarding any of the following:
(1) The number of uninsured employers claims paid in the previous
fiscal year, the total cost of those claims, and levels of reserves
for incurred claims.
(2) The administrative costs associated with claims payment
activities.
(3) Annual revenues to the Uninsured Employers Benefits Trust Fund
from all of the following:
(A) Assessments collected pursuant to subdivision (c) of Section
62.5.
(B) Fines and penalties collected by the department.
(C) Revenues collected pursuant to Section 3717.
(4) Projected annual program and claims costs for the current and
upcoming fiscal years.
3716.2. Notwithstanding the precise elements of an award of
compensation benefits, and notwithstanding the claim and demand for
payment being made therefor to the director, the director, as
administrator of the Uninsured Employers Fund, shall pay the claimant
only such benefits allowed, recognizing proper liens thereon, that
would have accrued against an employer properly insured for workers'
compensation liability. The Uninsured Employers Fund shall not be
liable for any penalties or for the payment of interest on any
awards. However, in civil suits by the director to enforce payment of
an award, including procedures pursuant to Section 3717, the total
amount of the award, including interest, other penalties, and
attorney's fees granted by the award, shall be sought. Recovery by
the director, in a civil suit or by other means, of awarded benefits
in excess of amounts paid to the claimant by the Uninsured Employers
Fund shall be paid over to the injured employee or his
representative, as the case may be.
3716.3. (a) Notwithstanding any other provision of law to the
contrary, when the director obtains a judgment against an uninsured
employer, the director may, in addition to any other remedies
provided by law, enforce the judgment by nonjudicial foreclosure.
This enforcement shall not be subject to Chapter 4 (commencing with
Section 703.010) of Division 2 of Title 9 of Part 2 of the Code of
Civil Procedure relating to claiming exemptions after levy.
(b) To enforce the judgment by nonjudicial foreclosure, the
director shall record with the county recorder of any county in which
real property of the parties against whom the judgment is taken is
located, a certified copy of the judgment together with the director'
s notice of intent to foreclose. The notice of intent to foreclose
shall set forth all of the following:
(1) The name, address, and telephone number of the trustee
authorized by the director to enforce the lien by sale.
(2) The legal description of the real property to be foreclosed
upon.
(3) Proof of service by registered or certified mail on the
following:
(A) The parties against whom the foreclosure is sought at their
last known address as shown on the official records of the appeals
board and as shown on the latest recorded deed, deed of trust, or
mortgage affecting the real property which is the subject of the
foreclosure.
(B) All of the owners of the real property which is subject to the
foreclosure at their last address as shown on the latest equalized
assessment roll.
(c) Upon the expiration of 20 days following recording of the
judgment and notice of intent to foreclose, the trustee may proceed
to sell the real property. Any sale by the trustee shall be conducted
in accordance with Article 1 (commencing with Section 2920) of
Chapter 2 of Title 14 of Part 4 of Division 3 of the Civil Code
applicable to the exercise of powers of sale of property under powers
created by mortgages and deeds of trust.
(d) The director may authorize any person, including an attorney,
corporation, or other business entity, to act as trustee pursuant to
subdivision (b).
(e) Except as provided in subdivision (f), this section shall
apply to all judgments which the director has obtained or may obtain
pursuant to Section 3717, 3726, or 5806.
(f) This section shall not apply to the principal residence of an
employer if the appeals board finds that the employer, on the date of
injury, employed 10 or fewer employees. An employer seeking this
exemption shall provide proof of payment of tax withholding required
pursuant to Division 6 (commencing with Section 13000) of the
Unemployment Insurance Code, to assist in determining the number of
employees on the date of injury.
3716.4. Whenever a final judgment has been entered against a motor
carrier of property subject to the jurisdiction and control of the
Department of Motor Vehicles or a passenger stage corporation,
charter-party carrier of passengers, or a household goods carrier
subject to the jurisdiction and control of the Public Utilities
Commission as a result of an award having been made pursuant to
Section 3716.2, the director may transmit to the Public Utilities
Commission or the Department of Motor Vehicles, whichever has
jurisdiction over the affected carrier, a copy of the judgment along
with the name and address of the regulated entity and any other
persons, corporations, or entities named in the judgment which are
jointly and severally liable for the debt to the State Treasury with
a complaint requesting that the Public Utilities Commission or the
Department of Motor Vehicles immediately revoke the carrier's Public
Utilities Commission certificate of public convenience and necessity
or Department of Motor Vehicles motor carrier permit.
3716.5. In the payment of workers' compensation benefits from the
Uninsured Employers Fund, the director shall do the following:
(a) Designate the job classifications of employees who are paid
compensation from the fund.
(b) Compile data on the job classifications of employees paid
compensation from the fund and report this data to the Legislature by
November 1, 1990, and annually thereafter.
3717. (a) A findings and award that is the subject of a demand on
the Uninsured Employers Fund or an approved compromise and release or
stipulated findings and award entered into by the director pursuant
to subdivision (e) of Section 3715, or a decision and order of the
rehabilitation unit of the Division of Workers' Compensation, that
has become final, shall constitute a liquidated claim for damages
against an employer in the amount so ascertained and fixed by the
appeals board, and the appeals board shall certify the same to the
director who may institute a civil action against the employer in the
name of the director, as administrator of the Uninsured Employers
Fund, for the collection of the award, or may obtain a judgment
against the employer pursuant to Section 5806. In the event that the
appeals board finds that a corporation is the employer of an injured
employee, and that the corporation has not secured the payment of
compensation as required by this chapter, the following persons shall
be jointly and severally liable with the corporation to the director
in the action:
(1) All persons who are a parent, as defined in Section 175 of the
Corporations Code, of the corporation.
(2) All persons who are substantial shareholders, as defined in
subdivision (b), of the corporation or its parent. In the action it
shall be sufficient for plaintiff to set forth a copy of the findings
and award of the appeals board relative to the claims as certified
by the appeals board to the director and to state that there is due
to plaintiff on account of the finding and award of the appeals board
a specified sum which plaintiff claims with interest. The director
shall be further entitled to costs and reasonable attorney fees, and
to his or her investigation and litigation expenses for the appeals
board proceedings, and a reasonable attorney fee for litigating the
appeals board proceedings. A certified copy of the findings and award
in the claim shall be attached to the complaint. The contents of the
findings and award shall be deemed proved. The answer or demurrer to
the complaint shall be filed within 10 days, the reply or demurrer
to the answer within 20 days, and the demurrer to the reply within 30
days after the return day of the summons or service by publication.
All motions and demurrers shall be submitted to the court within 10
days after they are filed. At the time the civil action filed
pursuant to this section is at issue, it shall be placed at the head
of the trial docket and shall be first in order for trial.
Nothing in this chapter shall be construed to preclude informal
adjustment by the director of a claim for compensation benefits
before the issuance of findings and award wherever it appears to the
director that the employer is uninsured and that informal adjustment
will facilitate the expeditious delivery of compensation benefits to
the injured employee.
(b) As used in this section, "substantial shareholder" means a
shareholder who owns at least 15 percent of the total value of all
classes of stock, or, if no stock has been issued, who owns at least
15 percent of the beneficial interests in the corporation.
(c) For purposes of this section, in determining the ownership of
stock or beneficial interest in the corporation, in the determination
of whether a person is a substantial shareholder of the corporation,
the rules of attribution of ownership of Section 17384 of the
Revenue and Taxation Code shall be applied.
(d) For purposes of this section, "corporation" shall not include:
(1) Any corporation which is the issuer of any security which is
exempted by Section 25101 of the Corporations Code from Section 25130
of the Corporations Code.
(2) Any corporation which is the issuer of any security exempted
by subdivision (c), (d), or (i) of Section 25100 of the Corporations
Code from Sections 25110, 25120, and 25130 of the Corporations Code.
(3) Any corporation which is the issuer of any security which has
qualified either by coordination, as provided by Section 25111 of the
Corporations Code, or by notification, as provided by Section 25112
of the Corporations Code.
3717.1. In any claim in which an alleged uninsured employer is a
corporation, the director may cause substantial shareholders and
parents, as defined by Section 3717, to be joined as parties.
Substantial shareholders may be served as provided in this division
for service on adverse parties, or if they cannot be found with
reasonable diligence, by serving the corporation. The corporation,
upon this service, shall notify the shareholder of the service, and
mail the served document to him or her at the shareholder's last
address known to the corporation.
3717.2. Upon request of the director, the appeals board shall make
findings of whether persons are substantial shareholders or parents,
as defined in Section 3717. The director may in his or her discretion
proceed against substantial shareholders and parents pursuant to
Section 3717 without those findings of the appeals board.
3718. The cause of action provided in Section 3717 and any cause of
action arising out of Section 3722 may be joined in one action
against an employer. The amount recovered in such action from such
employer shall be paid into the State Treasury to the credit of the
Uninsured Employers Fund.
3719. Any suit, action, proceeding, or award brought or made
against any employer under Section 3717 may be compromised by the
director, or such suit, action, or proceeding may be prosecuted to
final judgment as in the discretion of the director may best subserve
the interests of the Uninsured Employers Fund.
3720. (a) When the appeals board or the director determines under
Section 3715 or 3716 that an employer has not secured the payment of
compensation as required by this division or when the director has
determined that the employer is prima facie illegally uninsured, the
director may file for record in the office of the county recorder in
the counties where the employer's property is possibly located, a
certificate of lien showing the date that the employer was determined
to be illegally uninsured or the date that the director has
determined that the employer was prima facie illegally uninsured. The
certificate shall show the name and address of the employer against
whom it was filed, and the fact that the employer has not secured the
payment of compensation as required by this division. Upon the
recordation, the certificate shall constitute a valid lien in favor
of the director, and shall have the same force, effect and priority
as a judgment lien and shall continue for 10 years from the time of
the recording of the certificate unless sooner released or otherwise
discharged. A copy of the certificate shall be served upon the
employer by mail, by the director. A facsimile signature of the
director accompanied by the seal imprint of the department shall be
sufficient for recording purposes of liens and releases or
cancellations thereof considered herein. Certificates of liens may be
filed in any or all counties of the state, depending upon the
information the director obtains concerning the employer's assets.
(b) For purposes of this section, in the event the employer is a
corporation, those persons whom either the appeals board finds are
the parent or the substantial shareholders of the corporation or its
parent, or whom the director finds pursuant to Section 3720.1 to be
prima facie the parent or the substantial shareholders of the
corporation or its parent, as defined in Section 3717, shall be
deemed to be the employer, and the director may file the certificates
against those persons.
(c) A person who claims to be aggrieved by the filing of a lien
against the property of an uninsured employer because he or she has
the same or a similar name, may apply to the director to have filed
an amended certificate of lien which shows that the aggrieved
applicant is not the uninsured employer which is the subject of the
lien. If the director finds that the aggrieved applicant is not the
same as the uninsured employer, the director shall file an amended
certificate of lien with the county recorder of the county in which
the aggrieved applicant has property, which shall show, by reasonably
identifying information furnished by the aggrieved applicant, that
the uninsured employer and the aggrieved applicant are not the same.
If the director does not file the amended certificate of lien within
60 days of application therefor, the applicant may appeal the
director's failure to so find by filing a petition with the appeals
board, which shall make a finding as to whether the applicant and the
uninsured employer are the same.
(d) Liens filed under this section have continued existence
independent of, and may be foreclosed upon independently of, any
right of action arising out of Section 3717 or 5806.
3720.1. (a) In any claim in which the alleged uninsured employer is
a corporation, for purposes of filing certificates of lien pursuant
to Section 3720, the director may determine, according to the
evidence available to him or her, whether a person is prima facie a
parent or substantial shareholder, as defined in Section 3717. A
finding that a person was prima facie a parent or substantial
shareholder shall be made when the director determines that there is
sufficient evidence to constitute a prima facie case that the person
was a parent or substantial shareholder.
(b) Any person aggrieved by a finding of the director that he or
she was prima facie a parent or substantial shareholder may request a
hearing on the finding by filing a written request for hearing with
the director. The director shall hold a hearing on the matter within
20 days of the receipt of the request for hearing, and shall mail a
notice of time and place of hearing to the person requesting hearing
at least 10 days prior to the hearing. The hearing officer shall hear
and receive evidence, and within 10 days of the hearing, file his or
her findings on whether there is sufficient evidence to constitute a
prima facie case that the person was a substantial shareholder or
parent. The hearing officer shall serve with his or her findings a
summary of evidence received and relied upon, and the reasons for the
findings. A party may at his or her own expense require that the
hearing proceedings be recorded and transcribed.
(c) A party aggrieved by the findings of the hearing officer may
within 20 days apply for a writ of mandate to the superior court.
Venue shall lie in the county in which is located the office of the
director which issued the findings after the hearing.
3721. The director shall provide the employer with a certificate of
cancellation of lien after the employer has paid to the claimant or
to the Uninsured Employers Fund the amount of the compensation or
benefits which has been ordered paid to the claimant, or when the
application has finally been denied after the claimant has exhausted
the remedies provided by law in those cases, or when the employer has
filed a bond in the amount and with such surety as the appeals board
approves conditioned on the payment of all sums ordered paid to the
claimant, or when, after a finding that the employer was prima facie
illegally uninsured, it is finally determined that the finding was in
error. The recorder shall make no charge for filing the certificates
of lien, for filing amended certificates of lien, or for
cancellation when liens are filed in error. Cancellation of lien
certificates provided to the employer may be filed for recordation by
the employer at his or her expense.
3722. (a) At the time the stop order is issued and served pursuant
to Section 3710.1, the director shall also issue and serve a penalty
assessment order requiring the uninsured employer to pay to the
director, for deposit in the State Treasury to the credit of the
Uninsured Employers Fund, the sum of one thousand five hundred
dollars ($1,500) per employee employed at the time the order is
issued and served, as an additional penalty for being uninsured at
that time or issue and serve a penalty assessment order pursuant to
subdivision (b).
(b) At any time that the director determines that an employer has
been uninsured for a period in excess of one week during the calendar
year preceding the determination, the director shall issue and serve
a penalty assessment order requiring the uninsured employer to pay
to the director, for deposit in the State Treasury to the credit of
the Uninsured Employers Fund, the greater of (1) twice the amount the
employer would have paid in workers' compensation premiums during
the period the employer was uninsured, determined according to
subdivision (c), or (2) the sum of one thousand five hundred dollars
($1,500) per employee employed during the period the employer was
uninsured. A penalty assessment issued and served by the director
pursuant to this subdivision shall be in lieu of, and not in addition
to, any other penalty issued and served by the director pursuant to
subdivision (a).
(c) If the employer is currently insured, or becomes insured
during the period during which the penalty under subdivision (b) is
being determined, the amount an employer would have paid in workers'
compensation premiums shall be calculated by prorating the current
premium for the number of weeks the employer was uninsured within the
three-year period immediately prior to the date the penalty
assessment is issued. If the employer is uninsured at the time the
penalty under subdivision (b) is being determined, the amount an
employer would have paid in workers' compensation premiums shall be
the product of the employer's payroll for all periods of time the
employer was uninsured within the three-year period immediately prior
to the date the penalty assessment is issued multiplied by a rate
determined in accordance with regulations that may be adopted by the
director or, if none has been adopted, the manual rate or rates of
the State Compensation Insurance Fund for the employer's governing
classification pursuant to the standard classification system
approved by the Insurance Commissioner. The classification shall be
determined by the director or the director's designee at the time the
penalty assessment is issued on the basis of any information
available to the director regarding the employer's operations. Unless
the amount of the employer's payroll for all periods during which
the employer was uninsured within the three-year period is otherwise
proven by a preponderance of evidence, the employer's payroll for
each week the employer was uninsured shall be presumed to be the
state average weekly wage multiplied by the number of persons
employed by the employer at the time the penalty assessment is
issued. For purposes of this subdivision, "state average weekly wage"
means the average weekly wage paid by employers to employees covered
by unemployment insurance as reported by the United States
Department of Labor for California for the 12-month period ending
March 31 of the calendar year preceding the year in which the penalty
assessment order is issued.
(d) If upon the filing of a claim for compensation under this
division the Workers' Compensation Appeals Board finds that any
employer has not secured the payment of compensation as required by
this division and finds the claim either noncompensable or
compensable, the appeals board shall mail a copy of their findings to
the uninsured employer and the director, together with a direction
to the uninsured employer to file a verified statement pursuant to
subdivision (e).
After the time for any appeal has expired and the adjudication of
the claim has become final, the uninsured employer shall be assessed
and pay as a penalty either of the following:
(1) In noncompensable cases, two thousand dollars ($2,000) per
each employee employed at the time of the claimed injury.
(2) In compensable cases, ten thousand dollars ($10,000) per each
employee employed on the date of the injury.
(e) In order to establish the number of employees the uninsured
employer had on the date of the claimed injury in noncompensable
cases and on the date of injury in compensable cases, the employer
shall submit to the director within 10 days after service of
findings, awards, and orders of the Workers' Compensation Appeals
Board a verified statement of the number of employees in his or her
employ on the date of injury. If the employer fails to submit to the
director this verified statement or if the director disputes the
accuracy of the number of employees reported by the employer, the
director shall use any information regarding the number of employees
as the director may have or otherwise obtains.
(f) Except for penalties assessed under subdivision (b), the
maximum amount of penalties which may be assessed pursuant to this
section is one hundred thousand dollars ($100,000). Payment shall be
transmitted to the director for deposit in the State Treasury to the
credit of the Uninsured Employers Fund.
(g) (1) The Workers' Compensation Appeals Board may provide for a
summary hearing on the sole issue of compensation coverage to effect
the provisions of this section.
(2) In the event a claim is settled by the director pursuant to
subdivision (e) of Section 3715 by means of a compromise and release
or stipulations with request for award, the appeals board may also
provide for a summary hearing on the issue of compensability.
3725. If an employer desires to contest a penalty assessment order,
the employer shall file with the director a written request for a
hearing within 15 days after service of the order. Upon receipt of
the request, the director shall set the matter for a hearing within
30 days thereafter and shall notify the employer of the time and
place of the hearing by mail at least 10 days prior to the date of
the hearing. The decision of the director shall consist of a notice
of findings and findings which shall be served on all parties to the
hearing by registered or certified mail within 15 days after the
hearing. Any amount found due by the director as a result of a
hearing shall become due and payable 45 days after notice of the
findings and written findings have been mailed by registered or
certified mail to the party assessed. A writ of mandate may be taken
from these findings to the appropriate superior court upon the
execution by the party assessed of a bond to the state in double the
amount found due and ordered paid by the director, as long as the
party agrees to pay any judgment and costs rendered against the party
for the assessment. The writ shall be taken within 45 days after
mailing the notice of findings and findings.
3726. (a) When no petition objecting to a penalty assessment order
is filed, a certified copy of the order may be filed by the director
in the office of the clerk of the superior court in any county in
which the employer has property or in which the employer has or had a
place of business. The clerk, immediately upon such filing, shall
enter judgment for the state against the employer in the amount shown
on the penalty assessment order.
(b) When findings are made affirming or modifying a penalty
assessment order after hearing, a certified copy of such order and a
certified copy of such findings may be filed by the director in the
office of the clerk of the superior court in any county in which the
employer has property or in which the employer has or had a place of
business. The clerk, immediately upon such filing, shall enter
judgment for the state against the employer in the amount shown on
the penalty assessment order or in the amount shown in the findings
if the order has been modified.
(c) A judgment entered pursuant to the provisions of this section
may be filed by the clerk in a looseleaf book entitled "Special
Judgments for State Uninsured Employers Fund." Such judgment shall
bear the same rate of interest and shall have the same effect as
other judgments and be given the same preference allowed by law on
other judgments rendered for claims for taxes. The clerk shall make
no charge for the service provided by this section to be performed by
him.
3727. If the director determines pursuant to Section 3722 that an
employer has failed to secure the payment of compensation as required
by this division, the director may file with the county recorder of
any counties in which such employer's property may be located his
certificate of the amount of penalty due from such employer and such
amount shall be a lien in favor of the director from the date of such
filing against the real property and personal property of the
employer within the county in which such certificate is filed. The
recorder shall accept and file such certificate and record the same
as a mortgage on real estate and shall file the same as a security
interest and he shall index the same as mortgage on real estate and
as a security interest. Certificates of liens may be filed in any and
all counties of the state, depending upon the information the
director obtains concerning the employer's assets. The recorder shall
make no charge for the services provided by this section to be
performed by him. Upon payment of the penalty assessment, the
director shall issue a certificate of cancellation of penalty
assessment, which may be recorded by the employer at his expense.
3727.1. The director may withdraw a stop order or a penalty
assessment order where investigation reveals the employer had secured
the payment of compensation as required by Section 3700 on the date
and at the time of service of such order. The director also may
withdraw a penalty assessment order where investigation discloses
that the employer was insured on the date and at the time of an
injury or claimed injury, or where an insured employer responded in
writing to a request to furnish the status of his workers'
compensation coverage within the time prescribed.
3728. (a) The director may draw from the State Treasury out of the
Uninsured Employers Benefits Trust Fund for the purposes of Sections
3716 and 3716.1, without at the time presenting vouchers and itemized
statements, a sum not to exceed in the aggregate the level provided
for pursuant to Section 16400 of the Government Code, to be used as a
cash revolving fund. The revolving fund shall be deposited in any
banks and under any conditions as the Department of General Services
determines. The Controller shall draw his or her warrants in favor of
the Director of Industrial Relations for the amounts so withdrawn
and the Treasurer shall pay these warrants.
(b) Expenditures made from the revolving fund in payment of claims
for compensation due from the Uninsured Employers Benefits Trust
Fund and from the Workers' Compensation Administration Revolving Fund
for administrative and adjusting services rendered are exempted from
the operation of Section 925.6 of the Government Code. Reimbursement
of the revolving fund from the Uninsured Employers Benefits Trust
Fund or the Workers' Compensation Administration Revolving Fund for
expenditures shall be made upon presentation to the Controller of an
abstract or statement of the expenditures. The abstract or statement
shall be in any form as the Controller requires.
3730. When the last day for filing any instrument or other document
pursuant to this chapter falls upon a Saturday, Sunday or other
holiday, such act may be performed upon the next business day with
the same effect as if it had been performed upon the day appointed.
3731. Any stop order or penalty assessment order may be personally
served upon the employer either by (1) manual delivery of the order
to the employer personally or by (2) leaving signed copies of the
order during usual office hours with the person who is apparently in
charge of the office and by thereafter mailing copies of the order by
first class mail, postage prepaid to the employer at the place where
signed copies of the order were left.
3732. (a) If compensation is paid or becomes payable from the
Uninsured Employers Fund, whether as a result of a findings and
award, award based upon stipulations, compromise and release executed
on behalf of the director, or payments voluntarily furnished by the
director pursuant to Section 4903.3, the director may recover damages
from any person or entity, other than the employer, whose tortious
act or omission proximately caused the injury or death of the
employee. The damages shall include any compensation, including
additional compensation by way of interest or penalty, paid or
payable by the director, plus the expense incurred by the director in
investigating and litigating the workers' compensation claim and a
reasonable attorney fee for litigating the workers' compensation
claim. The director may compromise, or settle and release any claim,
and may waive any claim, including the lien allowed by this section,
in whole or in part, for the convenience of the director.
(b) Except as otherwise provided in this section, Chapter 5
(commencing with Section 3850) of Part 1 of Division 4 shall be
applicable to these actions, the director being treated as an
employer within the meaning of Chapter 5 to the extent not
inconsistent with this section.
(c) Actions brought under this section shall be commenced within
one year after the later of either the time the director pays or the
time the director becomes obligated to pay any compensation from the
Uninsured Employers Fund.
(d) In the trial of these actions, any negligence attributable to
the employer shall not be imputed to the director or to the Uninsured
Employers Fund, and the damages recoverable by the director shall
not be reduced by any percentage of fault or negligence attributable
to the employer or to the employee.
(e) In determining the credit to the Uninsured Employers Fund
provided by Section 3861, the appeals board shall not take into
consideration any negligence of the employer, but shall allow a
credit for the entire amount of the employee's recovery either by
settlement or after judgment, as has not theretofore been applied to
the payment of expenses or attorney's fees.
(f) When an action or claim is brought by an employee, his or her
guardian, conservator, personal representative, estate, survivors, or
heirs against a third party who may be liable for causing the injury
or death of the employee, any settlement or judgment obtained is
subject to the director's claim for damages recoverable by the
director pursuant to subdivision (a), and the director shall have a
lien against any settlement in the amount of the damages.
(g) No judgment or settlement in any action or claim by an
employee, his or her guardian, conservator, personal representative,
survivors, or heirs to recover damages for injuries, where the
director has an interest, shall be satisfied without first giving the
director notice and a reasonable opportunity to perfect and satisfy
his or her lien. The director shall be mailed a copy of the complaint
in the third-party action as soon as reasonable after it is filed
with the court.
(h) When the director has perfected a lien upon a judgment or
settlement in favor of an employee, his or her guardian, conservator,
personal representative, survivors or heirs against any third party,
the director shall be entitled to a writ of execution as a lien
claimant to enforce payment of the lien against the third party with
interest and other accruing costs as in the case of other executions.
In the event the amount of the judgment or settlement so recovered
has been paid to the employee, his or her guardian, conservator,
personal representative, survivors, or heirs, the director shall be
entitled to a writ of execution against the employee, his or her
guardian, conservator, personal representative, survivors, or heirs
to the extent of the director's lien, with interest and other
accruing costs as in the cost of other executions.
(i) Except as otherwise provided in this section, notwithstanding
any other provision of law, the entire amount of any settlement of
the action or claim of the employee, his or her guardian,
conservator, personal representative, survivors, or heirs, with or
without suit, is subject to the director's lien claim for the damages
recoverable by the director pursuant to subdivision (a).
(j) Where the action or claim is brought by the employee, his or
her guardian, conservator, personal representative, estate,
survivors, or heirs, and the director has not joined in the action,
and the employee, his or her guardian, conservator, personal
representative, estate, survivors, or heirs incur a personal
liability to pay attorney's fees and costs of litigation, the
director's claim for damages shall be limited to the amount of the
director's claim for damages less that portion of the costs of
litigation expenses determined by multiplying the total cost of
litigation expenses by the ratio of the full amount of the director's
claim for damages to the full amount of the judgment, award, or
settlement, and less 25 percent of the balance after subtracting the
director's share of litigation expenses, which represents the
director's reasonable share of attorney's fees incurred.
(k) In the trial of the director's action for damages, and in the
allowance of his or her lien in an action by the employee, guardian,
executor, personal representative, survivors, or heirs, the
compensation paid from the Uninsured Employers Fund pursuant to an
award as provided in Section 3716 is conclusively presumed to be
reasonable in amount and to be proximately caused by the event or
events which caused the employee's injury or death.
(l) In the action for damages the director shall be entitled to
recover, if he or she prevails, the entire amount of the damages
recoverable by the director pursuant to subdivision (a), regardless
of whether the damages recoverable by the employee, guardian,
conservator, personal representative, survivors, or heirs are of
lesser amount.
