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Note: Authority cited: Sections 54, 55, 59, and 3702.10, Labor Code. Reference: Sections 59, 3702.1, 3702.5 and 3702.10, Labor Code.






s 15456. Exempt.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code Reference: Sections 59, 3702.1 and 3702.10, Labor Code.






s 15458. Claims Administration and Recordkeeping.
Workers' compensation claims and claim files shall be administered and maintained in accordance with the provisions of Articles 6 and 9 of these regulations.


Note: Authority cited: Sections 54, 55, 59 and 3702.7, Labor Code. Reference: Sections 129, 3700, 3701, 3702, 3702.1 and 3702.7, Labor Code.






s 15459. Notification of Willful Failure to Pay Benefits.
The claims administrator shall notify the Manager in writing within three days of a self insured employer's willful failure to provide adequate funding for the timely payment of workers' compensation benefits in accordance with provisions of the Labor Code.


Note: Authority cited: Sections 54, 55, 59 and 3702.10, Labor Code. Reference: Sections 59, 129, 3700, 3701, 3702 and 3702.1, Labor Code.






s 15461. Examination.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 59, 3702, 3702.1 and 3702.10, Labor Code.






s 15463. Revocation of Certificate.
(a) The Manager may issue a Notice of Intent to Revoke to any holder of a Certificate to Administer. The notice shall indicate the cause for the revocation action and advise the holder of the Certificate of the right to a hearing.
(b) The procedure for revocation of a Certificate of Consent to Administer shall be in accordance with Article 11 of these regulations.




Note: Authority cited: Sections 54, 55, 59 and 3702.10, Labor Code. Reference: Sections 59, 3702.1, 3702.7 and 3702.10, Labor Code.







s 15470. General.
(a) A California non-profit, mutual benefit corporation for the sole purpose of operating a group workers' compensation self insurance fund to pool compensation liabilities of two or more private employers shall be established by the organizers or members of any applicant group self insurer pursuant to Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code. This non-profit, mutual benefit corporation shall be the "group self insurer".
(b) The group self insurer will make application for a Certificate to Self Insure to the Manager as provided in Article 2 of these regulations and, if granted approval by the Director, shall be the holder of the Certificate to Self Insure.
(c) Each proposed group member shall also make application for an Affiliate Certificate to Self Insure to the Manager, as provided in Article 2 of these regulations, and if granted by the Director, shall be the holder of an Affiliate Certificate to Self Insure under the Certificate to Self Insure granted to the group self insurer.
(d) The group self insurer shall post and maintain a security deposit with the Manager as set forth in Article 3 of these regulations to secure the expected workers' compensation liabilities of the group self insurer, based on the prior history of liabilities of all its members.
(e) The group self insurer shall file a Self Insurer's Annual Report as set forth in Article 5 of these regulations and shall estimate compensation liabilities as set forth in Article 6 of these regulations.
(f) The group self insurer shall comply with the transfer of liability requirements of Article 8.
(g) The group self insurer shall fall under the continuing jurisdiction of the Director and any Certificates to Self Insure or Affiliate Certificates issued to a group self insurer or a group member may be revoked as set forth in Article 10 of these regulations.
(h) Hearing and appeal procedures set forth in Article 11 shall be applicable to self insurance matters set forth in Section 15430 involving group self insurers or group members.
(i) The group self insurer shall comply with recordkeeping and audit requirements in Article 9 and the claims administration requirements of Article 12 of these regulations.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 59, 3700, 3701, 3701.5, 3702, 3702.2, 3702.5 and 3702.10, Labor Code.






s 15471. Initial Feasibility Study.
(a) Accompanying each group self insurer's initial application for a Certificate To Self Insure required by Section 15203 of these regulations, shall also be an feasibility study prepared by an independent risk management individual or firm addressing all of the following:
(1) The advantages and disadvantages of group self insurance for the proposed group members as compared to the options of individual self insurance, or coverage under a policy issued by a carrier(s);

(2) Identification of all proposed group members and the combined total payroll for the proposed group self insurer;
(3) A consolidated summary of the historical workers' compensation claims loss experience and the allocated loss expenses of the proposed group members for the three most recent, completed, full policy years, as well as, the current partially completed policy year to the most current quarter under the current policy;
(4) An evaluation of the historical workers' compensation claims costs for the group members and actuarial projection of the expected claims costs for the first five years of the group operation. The actuarial projection to be prepared by (A) an independent person with a designation of Fellow of the Casualty Actuarial Society (FCAS); or (B) by a member of the American Academy of Actuaries (MAAA) with current experience in making California workers' compensation actuarial projections.
(5) A five year proforma financial statement including, as a minimum, an income statement, balance sheet, projected cash flows, and claims payout projections. The proforma financial statement must include a detailed separation of assets, liabilities, retained earnings, taxes, and dividends. If any claims costs are discounted, the interest rate assumptions and payout patterns must be described and based on reasonable assumptions. The claims payout schedule shall be calculated using the 80th percent confidence level figures from the actuarial study.
(6) A summary of the specific details of the group self insurer's operating plan including, but not limited to:
(A) The legal and organizational structure;
(B) Method of governance;
(C) General management of the pool, including underwriting policies, insurance coverage, billing, etc.
(D) Rating plans or premiums or other means by which group funding during the first five years of operation will generated and the amounts to be generated by the methods proposed for each of the first 5 years of operation;
(7) The first 12 month budget of the group self insurer;

(8) Excess Insurance Coverage including estimated cost, attachment point of specific excess coverage policy and aggregate excess policy (if any), and maximum liability of each excess policy;
(9) Summary of the third party claims administration agency chosen to handle the group self insurer's claims;
(10) Safety and loss control services that will be available from the group self insurer to group members;
(11) Underwriting requirements for initial and subsequent member selection into the group self insurer, including particular emphasis as to whether any underwriting requirement would be excluded from coverage by the specific excess or aggregate excess insurance coverage;
(12) Name of certified public accountant that will prepare annual financial reports for the group self insurer;
(13) Name of actuary and their professional actuarial designation who will prepare actuarial reports for the group self insurer and the frequency of such evaluation reports;
(14) Means by which the group self insurer will post the required security deposit and how that cost or deposit will be allocated to the group members;
(15) Any fidelity coverage and errors and omissions coverage that will be maintained by the group;


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701 and 3702.1, Labor Code.






s 15472. Minimum Net Worth of A Group Self Insurer.
(a) Each applicant group and each group self insurer granted a Certificate to Self Insure shall have and maintain a minimum net worth as provided in Section 15203.2(f).
(b) The group administrator shall maintain a copy of the current and immediate past year's independently audited financial statement of each group member in the files of the group self insurer.
(c) The group administrator shall immediately advise the Manager in writing if at any time the consolidated net worth of the group members of the self insurer fall below the minimum amount set forth in subsection (a) of this section.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5, 3702, 3702.2 and 3702.10, Labor Code.






s 15473. Homogeneity of Group Members.
(a) Each group self insurer shall maintain homogeneity of its group members by one of the following methods:
(1) All group members shall have the same, predominant, two digit Standard Industrial Classification Code (SIC Code) as found in the Standard Industrial Classification Code Manual published by the United States Department of Commerce; or

(2) All group members are required in the by-laws of the group self insurer or by laws of the group applicant to be members in good standing in a specific industry trade association, and each trade association sponsored group self insurer is limited to one, designated three digit Standard Industrial Classification Code industry grouping.
Note: A trade association may sponsor more than one group self insurer, but each would be limited to a single 3 digit SIC Code industry grouping.
(b) The Manager shall also consider any other information available on the nature of the business of each group member and may require the group applicant or group self insurer to present additional information to verify that all group member applicants meet the requirements of subsection (a) of this section.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700 and 3702.10, Labor Code.






s 15474. Reporting Periods.
All group self insurers shall administer their self insurance program on a calendar year basis. Regardless of initial start-up date of any group self insurer, the self insurer shall file an annual report as required by Section 15251, for the remaining months of that calendar year.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3702.1, 3702.2 and 3702.10, Labor Code.






s 15475. Board of Trustees.
(a) Each group self insurer shall have a Board of Trustees that is responsible for all operations of the group self insurer.
(b) Each trustee on the Board of Trustees shall be elected by the group members or, if each group member has a seat on the Board of Trustees, the trustee may be appointed by the group member. At least two-thirds of the trustees shall be employees or officers of the group members.
(c) The duties of the Board of Trustees shall include the responsibility to approve the request of any proposed member to join the group self insurer, subject to subsequent application and approval of the group member by the Director of Industrial Relations.
(d) The Board of Trustees shall take all necessary precautions to protect assets of the group self insurer, including all of the following:
(1) Designate a "Group Administrator" to administer the financial affairs and normal day-to-day operations of the group self insurer. The group administrator shall not be an owner, operator or employee of the third party administrator handling the claims of the group self insurer;
(2) Furnish a fidelity bond in an amount determined by the Board of Trustees to be an amount sufficient to assure the integrity of member or group funds handled by the Trustees, the Group Administrator, and employees of the group self insurer. Evidence of such bond shall be provided to the Manager upon request.
(3) Require the third party administrator handling the workers' compensation claims of the group self insurer to carry sufficient fidelity bond for the funds handled and errors and omissions coverage for the claims handled to protect the integrity of the group self insurer's funds;
(4) Restrict disbursements to the payment and expenses of handling claims, administrative expenses, posting of security deposit, and other expenses necessary for operating the group self insurer;
(5) Establish necessary bank accounts and accounting procedures for control of funds and accurate financial reporting;
(6) Audit the financial accounts and records of the group self insurer annually immediately after the December 31 close of the reporting year by an independent, certified public accountant;
(7) Hire an actuary to conduct an actuarial review of the group self insurer's claims to establish a level of cash needed to fund anticipated claims;
(8) Insure that all group members pay their share of group expenses, that none of the funds collected are extended as credit to any group member for the payment of premiums, and collect delinquent accounts from any group member;

(9) The Board of Trustees, the group administrator, or fiscal agent shall not utilize any of the funds collected from group members for any purpose not directly related to the payment of compensation liabilities of the group self insurer, posting of security deposit, payment of assessments and penalties as a group self insurer or the reasonable costs of operation of the group self insurer. Excess moneys not needed for current operation of the group self insurer shall be invested by the Board of Trustees, at its discretion, into California government bonds and notes, U.S. Treasury Notes and bonds, U.S. Government Agency issues, investment share accounts in savings and loans or credit unions whose deposits are insured by a federal agency, and savings accounts or certificates of deposit issued by a duly chartered commercial bank. Deposits in banks, savings and loans, or credit unions shall be limited to institutions in the State of California and shall not exceed the federally insured amount in any one account.
(e) The Board of Trustees may delegate specific functions to the group administrator of the group self insurer, including, but not limited to:
(1) contracting with the third party claims administrator for the handling of claims;

(2) determining the premium or other means of cost sharing to be charged each group member;
(3) investing surplus moneys subject to the restrictions of subsection (d) of this section and any others adopted by the Board of Trustees in addition to those contained in subsection (d);
(4) reviewing and accepting applications from prospective members to the group self insurer; and
(5) executing the Agreement of Assumption and Guarantee For Group Members or the Indemnity Agreement on behalf of the group self insurer.
All delegated functions shall be specifically defined in the group self insurer's by-laws.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3700.1, 3701, 3701.5, 3702.1, 3702.2 and 3702.10, Labor Code.








s 15476. Advance Premium Discounts.
The Board of Trustees of a group self insurer using a premium plan may not authorize advance premium discounts to any member.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701 and 3702.10, Labor Code.






s 15477. Surplus or Insufficient Funding.
(a) Any surplus moneys for a calendar year in excess of the amount necessary to fulfill all compensation obligations for that calendar year, including a provision for incurred but not reported claims, may be declared to be refundable by the Board of Trustees of the group self insurer at any time.
(1) The amount of such declaration shall be a fixed liability of the group self insurer at the time of the declaration and any surplus in the compensation loss fund shall be held for a minimum period of 12 months from the date of the Board of Trustees' declaration.
(2) The date of payment of such refund shall be as agreed to by the Board of Trustees, except that the moneys not needed to satisfy the compensation loss fund requirements as established by the aggregate excess contract, may be refunded immediately after the end of the calendar year.
Note: It is the intent of this regulation to assure that total assets of the group self insurer are greater than the total liabilities of the group self insurer in each calendar year.
(b) In the event that member funds collected and investment income associated with any calendar year are insufficient to completely fund all reported claims and expenses for that year, unfunded amounts by calendar year shall be immediately reported to the Manager with a proposed plan to achieve full funding. The plan to achieve full funding for all claims is subject to approval by the Manager. The plan to achieve full funding may include, but is not limited to, all of the following:
(1) Use of group self insurer funds collected in other calendar years, but that are unnecessary for the payment of claims or expenses for the calendar year collected;
(2) Use of investment earnings associated with other calendar years, but not necessary for the payment of claims or expenses in the calendar year in which the earnings are associated;
(3) Special assessment of all group self insurer members by the Board of Trustees to make up the funding insufficiency.
(d) If the plan to achieve full funding for all claims is not approved by the Manager, the Manager may order the Board of Trustees of the group self insurer to immediately assess the group members for the full amount of the deficiency and/or order that any surplus funds or dividends distributed to group members during the previous 12 calendar months from the date of the discovery of the funding deficiency by the group self insurer by immediately returned.
(e) If the Manager determines that actions specified in subsection (d) of this section will not achieve full funding of all claim liability for the group self insurer, the Manager may request the Director to order an outside Conservator be appointed at the expense of the group self insurer to manage the financial affairs of the group self insurer and to take whatever steps may be necessary in order to return a financially troubled group self insurer to full financial solvency.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5 and 3702.10, Labor Code.






s 15478. Excess Insurance.
(a) All group self insurers shall have and maintain in full force a specific excess workers' compensation insurance policy issued by a admitted casualty insurance carrier authorized to transact such business in the State by the Department of Insurance. The specific excess policy shall not have a minimum retention level above $500,000 and the policy may not be canceled or renewed without prior written notice to the Manager and the group self insurer at least 30 days prior to the date of cancellation or non-renewal by the carrier.
(b) Any group self insurer may have and maintain in full force an aggregate excess workers' compensation insurance policy issued by an admitted casualty insurance carrier authorized to conduct such business in the State of California. The aggregate policy may not be canceled or renewed without prior written notice to the Manager and the group self insurer at least 30 days prior to the date of cancellation or non-renewal by the carrier.
Note: No credit toward security deposit will be given for aggregate excess coverage as set forth in Section 15210.3.
(c) If a group self insurer for any reason is unable to pay compensation due or to post security deposit required or both, and the Director orders the Self Insurer's Security Fund to assume the liabilities of the group self insurer pursuant to Labor Code Section 3701.5, the specific excess carrier or aggregate excess carrier shall make all payments due directly to the Security Fund as would have been made by the excess carrier to the group self insurer after the retention level of the policy had been reached.
(d) The group self insurer may not own its own specific excess or aggregate excess carrier that issues the policy for the group self insurer.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5, 3702.10 and 3740-3747, Labor Code.







s 15479. Indemnity Agreement and Power of Attorney.
(a) Each group member of a group self insurer shall execute an indemnity agreement and power of attorney that shall be on either a Form A4-8 (Rev 1/94), Indemnity Agreement and Power of Attorney or another form of an Indemnity Agreement and Power of Attorney which shall be subject to the approval of the Manager.
(b) The indemnity agreement and power of attorney shall contain, in substance, the following provisions:

(1) An agreement under which each member of a group self insurer agrees to assume and discharge, jointly and severally, any compensation liability under Labor Code Section 3700-3705 of any and all other employers that are parties to the group self insurer indemnity agreement; and,
(2) The agreement provides that, in addition to the rights of the group self insurer to enforce the indemnity agreement, in the event of a failure of the group self insurer to enforce such rights after reasonable notice to the group self insurer, the Director of Industrial Relations shall have the right independently to enforce the indemnity agreement on behalf of the group self insurer including the joint and several liability of group members for payment of all compensation liabilities under the indemnity agreement and the liability of group members for any unpaid contributions and assessments; and
(3) Provisions requiring that the Board of Trustees of the group self insurer designate and appoint a group administrator empowered to accept the service of process on behalf of the group members and authorized to act for and bind the group self insurer and all group members in all transactions relating to or arising out of the operation of the group self insurer; and

(4) Provisions for the right of the Director of Industrial Relations to substitute an outside Conservator for the group administrator; and
(5) A provision granting full power of attorney and signature authority to the group administrator of the group self insurer to execute documents, enter contracts, accept service of process on behalf of the group self insurer, and conduct the general business of the group self insurer, and, that said signature of the group administrator shall bind each and every group member jointly and severally.
Note: A copy of Form A4-8 (Rev 1/94), Indemnity Agreement and Power of Attorney, is contained in the Appendix following the last Article of these Group 2 regulations.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5, 3702, 3702.1, 3702.2, 3702.3, 3702.5, 3702.7 and 3702.10, Labor Code.






s 15480. Termination of Membership in a Group.
(a) No group member in a group self insurer may be canceled or terminated from membership in a group self insurer unless at least 60 days advance written notice has been given to the group member and to the Manager.
(b) The group self insurer shall remain liable for all compensation liabilities of any group member resulting from any claim with a date of injury during the period of membership in the group self insurer, including the 60 day period required for termination of membership.
Exception 1: The group self insurer's liability for claims shall terminate on the date of issuance of a standard workers' compensation insurance policy issued by a admitted carrier.
Exception 2: A former self insurer's claims may be transferred to a carrier as set forth in Labor Code Section 3702.8(c) under a special excess workers' compensation policy.
(c) Notice to the Manager of termination of a group member from a group self insurer as set forth in subsection (a) of this section shall be good cause for revocation of the Affiliate Certificate issued to the group member on the termination date or the policy issue date as set forth in subsection (b) of this section.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5, 3702 and 3702.10, Labor Code.







s 15481. Actuarial Certification of Losses.
(a) At least every other year, each group self insurer shall have an actuarial analysis done of its historical loss development and a projection of anticipated loss development. The actuary performing this study shall be either:
(1) Associate or Fellow of the Casualty Actuary Society; or
(2) Member of the American Academy of Actuaries.
(b) The analysis and results of the study shall be presented to the group self insurers' Board of Trustees and made available in written form to the Board of Trustees and to any group member requesting a copy. The study shall be commenced immediately following the close of the ninth month of each calendar year and the written report presented to the Board of Trustees by January 1 of the new calendar year.
(c) The written actuarial report shall be provided to the Manager by March 1 of each required year it is prepared by the group administrator.
(d) The Board of Trustees shall ensure that funding of claims losses for the group shall be based on the actuarial projection at the 80% confidence level.
Note: Sample By Laws. A sample of bylaws for a Group Self Insurer to assist groups in developing a set of by-laws is in the appendix following these regulations.


Note: Authority cited: Sections 54, 55 and 3702.10, Labor Code. Reference: Sections 3700, 3701, 3701.5 and 3702.10, Labor Code.







s 15550. Delegation of Enforcement Authority.
The Director of Industrial Relations delegates concurrent authority to enforce Labor Code Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727 to the Division of Labor Standards Enforcement.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15551. Direction to File Verified Statement.
"Direction to File Verified Statement" means the notice sent pursuant to Labor Code Section 3722 to employers found by the Workers' Compensation Appeals Board not to have secured the payment of compensation.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15552. Director.
"Director" means the Director of Industrial Relations or his designated agents or delegees.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15553. Division.
"Division" means Division of Labor Standards Enforcement unless otherwise specified.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15554. Findings.
"Findings" means Findings issued by the Division after a hearing on the objection to a Penalty Assessment Order or a Stop Order.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15555. Issue.
"Issue" means to issue and serve a Stop Order, a Penalty Assessment Order or a Notice on the employer.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15556. Notice of Findings on Penalty Assessment Order or Stop Order.
"Notice of Findings on Penalty Assessment Order or Stop Order" means the notice issued by the Division to an employer after a hearing on the objection to a Penalty Assessment Order or a Stop Order.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15557. Penalty Assessment Order.
"Penalty Assessment Order" means an order issued by the Division to an employer requiring the payment of penalties as set forth in Labor Code Sections 3710.1, 3711 or 3722.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15558. Special Judgment.
"Special Judgment" means the judgment entered by the clerk of the Superior Court pursuant to Labor Code Section 3726.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15559. Stop Order.
"Stop Order" means an order issued by the Director pursuant to Labor Code Section 3710.1 to an employer prohibiting the use of employees' labor until the employer secures the payment of compensation as required by Labor Code Section 3700.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15560. Uninsured Employer.
"Uninsured Employer" means any employer who has failed to secure the payment of compensation as required by Labor Code Section 3700.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 371, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15561. Verified Statement.
"Verified Statement" means a written form sent by the Workers' Compensation Appeals Board to an employer upon which such employer is directed to indicate (under penalty of perjury) the number of employees in his employ on the date of injury and submit this statement to the Division.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15562. Verified Petition.
"Verified Petition" means a written statement made and signed by an employer either (1) under oath taken before a notary public or other officer authorized to take affidavits and to administer oaths or (2) under a declaration stating in substance "I declare under penalty of perjury that the foregoing is true and correct" and further stating the date and place of execution. This petition is to be used by an employer who wishes to object to a Penalty Assessment Order and thereby request an administrative appeals.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15563. Access to Places of Labor.
The Division, its deputies and agents shall have free access to information about workers' compensation coverage in all places of labor. The Division shall investigate any employer to determine whether he has secured the payment of workers' compensation as required by law.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15564. Inquiry into Workers' Compensation Status.
The Division shall inquire of any employer the status of such employer's workers' compensation coverage pursuant to Section 3711 of the Labor Code.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15565. Posting Notice of Workers' Compensation Carrier.
Each employer is required to post a notice of his workers' compensation carrier at his headquarters or branch office together with the date of the expiration of his policy and the telephone number of the nearest office of the Labor Commissioner so that employees may call to report expiration of such coverage (as required by Labor Code Section 3713). Failure to post such notice is a misdemeanor.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15566. Assessment of Penalty.
Insured employers shall be assessed penalties for the failure or refusal to furnish information concerning the status of their workers' compensation coverage. Uninsured employers shall be assessed penalties for the failure to secure the payment of workers' compensation coverage for their employees.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15567. Penalty Assessment Orders.
Penalties shall be assessed by the issuance of Penalty Assessment Orders and shall be served as prescribed in these regulations.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15568. Types of Penalty Assessment.
(a) Penalties in Non-Injury Cases.
(1) A fifty ($50) dollar penalty shall be assessed against an insured employer who fails or refuses to make a written response as to the status of his workers' compensation insurance when directed to do so by the Division.
(2) A one hundred ($100) dollar penalty shall be assessed an uninsured employer for each employee in his employ and not necessarily actually working at the time, a Stop Order is served upon him for failing to carry workers' compensation coverage on his employees.
(b) Penalties in Injury Cases.
(1) A one hundred ($100) dollar penalty per employee employed on the date of a claimed injury shall be assessed the employer where the Workers' Compensation Appeals Board finds (a) the employer was uninsured and (b) the injury was not compensable.
(2) A five hundred ($500) dollar penalty per employee employed on the date of injury shall be assessed an employer where the Workers' Compensation Appeals Board finds (a) the employer was uninsured and (b) the injury was compensable.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15569. Maximum Penalties.
The maximum penalties that may be assessed under Section 15568(a)(2) and Section 15568(b)(1) and (b)(2) shall not exceed ten thousand ($10,000) dollars.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15570. Number of Employees.
(a) Uninsured Employers in Non-Injury Cases. When issuing a one hundred ($100) dollar Penalty Assessment Order against an uninsured employer, the number of employees employed by such employer, and not necessarily those actually working at the time, in non-injury cases shall be ascertained by the Division at the time the Stop Order is served.
(b) Uninsured Employers in Injury Cases.

(1) After the issuance of a final decision of the Workers' Compensation Appeals Board, the Appeals Board shall mail to the uninsured employer and the Division a copy of the final decision and notice of the provisions of Labor Code Sections 3710.1 and 3722 which require such employer to pay penalties of one hundred ($100) dollars per employee and five hundred ($500) dollars per employee in non-compensable and compensable cases, respectively.
(2) In order to establish the number o employees, such employer shall submit to the Division within ten (10) days after service of the aforementioned documents by the Workers' Compensation Appeals Board, a verified statement of the number of employees in his employ on the date of injury.
(3) If such employer fails to submit to the Division a verified statement indicating the number of employees employed or if the Division disputes the accuracy of such verified statement, on the date of injury the Division shall issue a Penalty Assessment Order using such information regarding the number of such employees as the Division may have or otherwise obtain.
(4) Notice of the Penalty Assessment Order shall be mailed to the employer at his residence or usual place of business by registered or certified mail.

(5) The employer to whom the assessment is directed may file within twenty (20) days after receipt thereof a verified petition in writing, objecting to the assessment and setting forth the grounds for his objection.
(6) If such employer does not file a petition with the Division within said twenty (20) days, such assessment shall become conclusive and the amount thereof shall be due and payable from the employer so assessed to the Division for deposit in the State Treasury to the credit of the Uninsured Employers Fund.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15571. When Issued.
Where an employer is found to be without workers' compensation insurance as required by law, the Division shall issue and serve a Stop Order on such employer (1) prohibiting his use of employee labor until he acquires coverage and (2) requiring him to pay lost wages to his employees affected by the work stoppage, not exceeding ten (10) days' pay, pending compliance by such employer.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15571.5. When Effective.
A Stop Order shall be effective immediately upon service and shall remain in effect during any appeal proceedings, unless and until the employer acquires workers' compensation coverage.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15572. Failure to Observe Stop Order Constitutes Misdemeanor.
Such Stop Order shall inform the employer that failure to observe same constitutes a misdemeanor, and if the employer is convicted thereof, the court is required to impose a mandatory jail sentence in the county jail of not less than ten (10) days and a fine of not less than three hundred ($300) dollars.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15573. Injunctive Relief.
Where an uninsured employer fails to comply with a Stop Order, the Division may seek injunctive relief from the courts.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.






s 15574. Stop Order.
The Stop Order issued and served on the uninsured employer pursuant to Labor Code Section 3710.1 shall contain the following information:
(a) The uninsured employer shall cease and desist the use of employee labor until he obtains the required workers' compensation coverage.
(b) Such employer shall be assessed a penalty of one hundred ($100) dollars per employee employed at the time the Stop Order is issued and served for failure to have obtained workers' compensation.
(c) The correct name and legal entity of the employer, the employer's address, the date, the time, the place of issuance, the signature and the name of the official who issues the Stop Order.
(d) The appeal procedure for objecting to a Stop Order.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.






s 15575. Penalty Assessment Orders.
(a) $50 Penalty Assessment Order. This order, issued pursuant to Labor Code Section 3711 shall contain the following information:
(1) The employer has failed to furnish a written statement to the Division stating the name of his workers' compensation insurance carrier.

(2) Failure to furnish such statement within ten (10) days constitutes prima facie evidence of the employer's neglect or failure to comply with the coverage requirements of the law.
(3) The employer, by virtue of the Order, is assessed a penalty of fifty ($50) dollars for such failure.
(4) The correct name and legal entity of the employer, the employer's address, the date, the place of issuance, the signature and the name of the official who issues the order.
(5) The appeal procedure for objecting to this penalty assessment order.
(6) The procedure used by the Division to obtain a judgment against the employer, should he fail to pay the assessment.
(b) $100 Non-Injury Penalty Assessment Order. The order, issued pursuant to Labor Code Section 3710.1 shall contain the following information:
(1) The employer has been found to be without the required workers' compensation insurance.

(2) The employer, by virtue of the Order, is assessed a penalty of one hundred ($100) dollars per employee employed at the time the Order is issued for failure to have workers' compensation coverage.
(3) The correct name and legal entity of the employer, the employer's address, the date, the time, the place of issuance, the signature and the name of the official who issued the Order.
(4) The appeal procedure for objecting to the Penalty Assessment Order.
(5) The procedure used by the Division to obtain a judgment against the employer, should he fail to pay the assessment.
(c) $100 Injury-related Penalty Assessment Order. The order, issued pursuant to Labor Code Section 3710.1 shall contain the following information:
(1) The Workers' Compensation Appeals Board has found the employer to be uninsured in a claimed injury and that such injury is noncompensable.
(2) The employer, by virtue of the Order, is assessed a penalty of one hundred ($100) dollars employee employed on the date of such claimed injury.
(3) The correct name and legal entity of the employer, the employer's address, the date, the place of issuance, the signature and the name of the official who issued the Order.
(4) The appeal procedure for objecting to the Order.
(5) The procedure used by the Division to obtain a judgment against the employer, should he fail to pay the assessment.
(d) $500 Injury-related Penalty Assessment Order. The Order issued pursuant to Labor Code Section 3722 shall contain the following information:
(1) The Workers' Compensation Appeals Board has found the employer to be uninsured and the claimed injury compensable.
(2) The employer, by virtue of the Order, is assessed a penalty of five hundred ($500) dollars per employee employed on the date of injury.
(3) The correct name and legal entity of the employer, the employer's address, the date, the place of issuance, the signature and the name of the official who issued the Order.
(4) The appeal procedure for objecting to the Order.
(5) The procedure used by the Division to obtain a judgment against the employer, should he fail to pay the assessment.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15576. Direction to File Verified Statement.
The statement, which shall be mailed to the employer by the Workers' Compensation Appeals Board simultaneously with the issuance and service of Findings of Fact, Findings and Order or Findings and Award, shall contain the following information:
(a) The Workers' Compensation Appeals Board has found the employer to be without the required workers' compensation coverage.
(b) The Division shall assess the employer a penalty of one hundred ($100) dollars or five hundred ($500) dollars per employee at the time of the injury pursuant to Labor Code Sections 3710.1 and 3722, respectively.
(c) The employer is requested to complete and submit to the Division within ten (10) days the verified statement on the reverse side of the Direction to File Verified Statement indicating the number of employees employed on the date of injury.
(d) The Division may dispute the accuracy of such verified statement.
(e) The Appeal procedure for objecting to the one hundred ($100) dollar injury-related Penalty Assessment Order (Labor Code Section 3710.1) and to the five hundred ($500) dollar injury-related Penalty Assessment Order (Labor Code Section 3722).


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15577. Verified Statement.
The verified statement, which shall be mailed to the employer by the Workers' Compensation Appeals Board simultaneously with the issuance of Findings of Fact, Findings and Order or Findings and Award, shall be found on the reverse side of the Direction to File Verified Statement and shall contain the following information:
(a) That the employer must complete the verified statement and submit the requested information to the Division.
(b) The number of employees in the employer's employ on the date of injury.
(c) A certification under penalty of perjury by the employer that such number is true and correct.
(d) The employer's signature, address and the date and place of execution thereof.







s 15578. Service.
Any Stop Order or Penalty Assessment Order under the law and pursuant to these regulations issued to and served upon an employer may be served as follows:
(a) By delivering a copy of same to the employer if the employers is an individual;
(b) By delivering a copy of same to any general partner of the employer if the employer is a partnership;
(c) By delivering a copy of same to any person specified in Section 416.10 of the Code of Civil Procedure (specified corporate officers or designated agent) if the employer is a corporation;
(d) By any other manner authorized under the Code of Civil Procedure for the service of process in a civil action.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15579. Review of Proceedings to Correct Designation of Legal Entity or Clerical Error.
(a) During an appeal hearing, a hearing officer may establish the correct legal entity of the employer and may amend any necessary documents to reflect said true legal entity.
(b) The Division may correct a clerical error where such error has been made in an order, or decision until it becomes final to conform with the facts and the intended wording.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15580. Withdrawal of Orders.
The Division may withdraw a Stop Order or a Penalty Assessment Order:
(a) Where investigation indicates the employer had secured the payment of compensation as required by Section 3700 of the Labor Code at the time of service of such Orders; or
(b) Where an insured employer responded in writing within the prescribed time to a request to furnish the status of his workers' compensation coverage; or
(c) Where investigation indicates the employer had no employees.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15581. Stop Order.
Where an employer objects to a Stop Order and desires a hearing thereon, such employer may make an oral or written request for a hearing. Upon receipt of such request, the Division shall set the matter for a hearing within five (5) days from the date of receipt thereof.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714, 3718, 3722, 3723, 3725, 3726 and 3727, Labor Code.







s 15582. Penalty Assessment Orders.
An employer may object to a Penalty Assessment Order within twenty (20) days after the service of the Order by filing a verified petition objecting to said Penalty Assessment Order and setting forth the ground(s) for such objections which are as set forth in Section 15584 of this Article. Upon the filing of such petition within the time prescribed, the Division shall set the matter for hearing within thirty (30) days thereafter.


Note: Authority cited: Sections 55 and 3710, Labor Code. Reference: Sections 3700, 3710, 3710.1, 3710.2, 3711, 3712, 3713, 3714,3718, 3722, 3723, 3725, 3726 and 3727, Labor Code. (continued)