AB 1138, Ed Chau, D-Alhambra, was amended March 21 to add language that would require employers to post on their premises a list of all covered employees and update the information quarterly, or each time a covered employee is removed or added. The bill originally proposed nonsubstantive changes to a section of the Labor Code dealing with citations and penalty assessment orders on employers.
The recent amendments to AB 1138 would require employers to maintain a list of covered employees including names, addresses and the last four digits of Social Security numbers. The employers would have to provide the list to the Division of Labor Standards Enforcement (DLSE), the Department of Industrial Relations (DIR), the Department of Insurance, the Employment Development Department and its workers' compensation carrier.
The bill says “the exclusive remedy provision shall not apply for compensable injuries and illnesses suffered during a period that an employee is not included in a notice of covered employees or the list of covered employees.”
On top of that, the bill says that the “absence of the name of any employee on any notice of covered employees or any list of covered employees … conclusively establishes that the employer did not secure payment of compensation from an insurance carrier.”
Employers would be required to retain copies of all covered employee notices and lists for at least five years. Failure by an employer to retain each notice or each list or provide copies to DIR or DLSE would also conclusively establish that the employer was uninsured under the provisions in AB 1138.
Finally, an employer that fails to post a list of covered employees would face a fine of $100 per employee for the first violation and $500 per employee for additional violations. An employer that fails to turn over records when requested by a state agency is subject to a fine of $250 per employee for the first violation and $1,000 per employee for subsequent violations.
The bill is backed by the California Labor Federation - they say they don't intend to penalize honest employers but that they want employees to be able to see if they’re covered and make sure they actually are an "employee."
The goal, says labor, is to allow enforcement agencies, when making a call on an employer to audit employees versus independent contractors, to more easily discern which workers are, in fact, insured and which workers are not insured.
First off, most employers have no idea who is an independent contractor versus an employee under the eyes of the law - in particular since the standards concerning that distinction are different for Federal tax purposes and the definitions applicable to workers' compensation.
Second, employers already report on a quarterly basis employees to the Employment Development Department. Labor standards enforcement agencies should start there for the list of "employees" when the decide to audit an employer - no extra cost to the government or to employers since this is already in place.
Finally, I don't think any employee reads the mandated postings now, let alone some new posting with even more information. Most people don't care until something happens and some benefit is denied - then it's the lawyers that care and the issue of a posting becomes more of a litigation tool rather than an enforcement mechanism.
AB 1138 is just a bad idea and imposes more government on responsible employers and will do nothing to stop unscrupulous employers from subverting the law.