Should California extend special workers’ comp protections to day laborers?

That’s what AB 206 would boil down to. AB 206 (see link to the current bill text below), sponsored by Assemblywoman Lorena Gonzalez Fletcher,  is to be considered in the California Assembly Insurance Committee tomorrow.

An earlier version of AB 206 was considered last year, but held over as a two year bill for consideration in 2018. At that time the Assembly Insurance Committee did an analysis of the pros and cons of the bill, which can be found here:

http://leginfo.legislature.ca.gov/faces/billAnalysisClient.xhtml?bill_id=201720180AB206

California law excludes from comp coverage those who work for less than 52 hours or are contracted to work for less than 52 hours and earn under $100 during a 90 day period. On the other hand, homeowners policies are required to provide protection for homeowner liability to employees employed by the homeowner. Since those who work few hours and receive little pay are not deemed employees under current law, homeowner coverage is usually not triggered.

The Assembly Insurance Committee 2017 analysis raised multiple scenarios of workers who would be deemed “employees” if the 52 hour rule was deleted, including the following:

1. The teenager you hire to mow your lawn

2. The high school girl who babysits twice a month for you;

3. The man who congregates in the Home Depot parking lot who is hired on a 1 or 2 day basis by a roofing contractor.

4. The man who congregates in the Home Depot parking lot who is hired by a homeowner for a Saturday to dig trenches for a new sprinkler system

5. The tax preparer who works in tax season out of her home, and who is hired from a Craigslist ad.

Faced with stiff opposition from employers and insurers, proponents of AB 206 regrouped and came up with the current proposal.

Rather than sweeping a wide number of baby-sitters, teenage lawn mowers and other service providers up into the comp system, the current bill simply carves out a special deal for day laborers.

The bill would define day laborers as “a person who is directly hired by the home owner or occupant on a one-time basis, to perform general maintenance, repairs, upgrades, gardening, or landscaping, and who does not have a valid business license or contractor’s license, or is not required to have those licenses for the work performed.”

The bill is supported by some nonprofits and labor organizations whom I greatly respect, and it is true that the bill would extend coverage to some vulnerable workers who fall through the cracks of the current system.

However, I must confess misgivings about carving out a special deal for these workers and giving them preference over the multitude of other short time workers doing project based work that does not fall within the day laborer definition.

What are my concerns?

One concern is cost. To my knowledge there has been no real study done on the projected cost to property insurers. So in a state where many homeowners and renters are struggling with high costs of owning or renting a home, it is unclear what this bill would do to costs of insuring those properties. Clearly the costs will be passed along, but how significant will that be? Would that negatively affect low income people? We don’t know. The issue probably merits a reliable study and could be a good project for CHSWC or an analysis by the California Department of Insurance.

Another concern is whether this bill might have unintended consequences, incentivizing some contractors to use more day laborers instead of hiring regular employees. We already know that there are massive problems with misclassification of workers in California. Will this bill accelerate the practice of some contractors relying on non-union day labor to do construction project or landscaping project duties? We don’t know, but it strikes me as likely. Again, this could be a good study for CHSWC.

A third concern is the arbitrary nature of the provision. A landscape worker I hire who comes back now and then for small projects would not be covered but a day laborer on a “one time basis” would. The bill would not cover the myriad of workers who are doing “gig economy” work delivering persons and things to homeowners, for example.

Yet another concern is the potential for fraud. When a day laborer is hired for a one time project, typically no paper work is filled out. The hirer does not know the true identity of the person picked up at the Home Depot parking lot, for example. While this does not mean that no day laborers should get coverage, any honest analysis would admit that there is an increased chance of abuse or fraud in such situations.

Could a solution be to set up a separate compensation fund to pay off these sorts of day laborer claims and assess all employers or all insurers (both comp and property  & casualty)? Might a day laborer bill be more palatable if there is some tracking system to determine when the work is done and by whom? What other types of controls, if any should be merged into such system?

While the bill’s proponents  should be honored for their concern and compassion for a vulnerable worker population, there are many details that need to be addressed before such a bill becomes law.

Here is the link to the current version of AB 206:

http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201720180AB206

Stay tuned. In the next week I’ll be featuring my 2018 California workers’ comp quiz.

Julius Young

https://www.boxerlaw.com/attorney/julius-o-young/

 

 

 

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