Workers’ comp leads employment law changes

Workers’ compensation reform is a major emphasis of the new employment laws going into effect for 2012. Plus, there are other changes, such as credit check restrictions for employers, penalties for minimum wage violators and the closing of a loophole that restricted same-sex couples’ insurance benefits.

Five assembly bills — AB 335, 378, 397, 1168 and 1426 — made significant changes in the workers’ compensation process. AB 378 and 1168, in particularly, were both aimed to lower the workers’ compensation insurance rates for employers.

To minimize the incentive for doctors to take regular over-the-counter drugs and repackage them into a “compound drug,” AB 378 was passed to limit the amount of money dispersed for a patient for compounded drugs.

"Drug compounding — a legal but rarely necessary practice — has exploded as a physician profit-center in workers' comp," said Assemblymember Jose Solorio (D-Anaheim), the author of the bill. "The State Compensation Insurance Fund reports that what was ‘rarely’ billed prior to 2007 rapidly escalated to over $58 million in billings in a 16-month period. That practice must be stopped."

In a similar vein, AB 1168 attempts to limit the practice of outside vendors charging unreasonable fees for counseling related to workers’ compensation — costs which are then passed on to the employer.

"A class of consultants known as 'vocational experts' has emerged to counsel disabled workers about their level of permanent disability," said Assemblymember Richard Pan (D-Sacramento), in a release. "While this could be a positive development in the workers' compensation system, some counselors are charging exorbitant fees for their services."

The bill requires public hearings to adopt a reasonable fee schedule for hourly billing rates.

The state Assembly also passed AB 397 aimed at eliminating the “underground economy” by requiring contractors, who at the time they received the license were exempt from workers’ compensation coverage, to verify they are still exempt from coverage.

Department of Industrial Relations Director Christine Baker and Labor Commissioner Julie A. Su were two of the strongest proponents of the bill.

“Both have stated that everybody in the state benefits when employers play by the rules,” said Peter Melton, public information officer of DIR. “The minimum wage and overtime laws are strong public policies, and the failure to enforce them obviously hurts workers who are denied an honest day’s pay for an honest day’s work, and it hurts employers who do play by the rules.”

The Assembly also saw a need to streamline the workers’ compensation process.

AB 335 requires the administrative director to determine a reasonable set of rules and regulations. The department will need a fully accessible website and all materials will be in plain language.

According to the California Chamber of Commerce, to avoid duplicate bureaucracy and inconsistency in the workers’ compensation process, AB 1426 eliminates the court administrator position.

"Current notices are too long, complex, often frightening, do not convey the main points to injured workers and are difficult for employers to keep updated," Solorio said.

AB 22 prohibits employers and potential employers from running credit checks on applicants and employees, with the exception of managerial positions and at certain financial institutions.

Lisa Kerns of Volt Workforce Solutions in Fresno said her firm usually just runs credit checks for mid-level accounting positions, which the bill still allows and the majority of firms would fit in that same category.

“It won’t affect employers too much because they can still run criminal background checks,” Kerns said.

The Cal Chamber adamantly opposed the bill, labeling it a job killer.

“Like other pre-employment screening tools, such as a minimum grade point average or college degree requirement, employee credit reports provide objective information regarding an individual’s past behavior or character as an indicator of their likely future behavior,” the chamber said on its website.

Prior to Senate Bill 757, certain out-of-state insurers exploited a loophole to deny insurance coverage for same-sex domestic partners because they are not licensed or registered in California. The loophole also put California-based insurers at a competitive disadvantage.

SB 757 closed the loophole by making every health insurance policy subject to all state requirements, regardless of insurer.

“SB 757 will not only end a discriminatory practice but will also help ensure a level playing field for California’s licensed insurers,” said Sen. Ted W. Lieu (D-Torrance), the author of the bill, in a release.

SB 117 prohibits the state from signing a contract for more than $100,000 with a company that shows a history of discrimination based on gender or sexual orientation, in regards to benefits.