ARTICLE 2. Uninsured Employers Fund [3710. - 3733.]

Cal. Labor Code - LAB 2.

in effect

Cal. Labor Code - LAB § 3710. Section 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.

Cal. Labor Code - LAB § 3710.1. Section 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.

Cal. Labor Code - LAB § 3710.2. Section 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.

Cal. Labor Code - LAB § 3710.3. Section 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.

Cal. Labor Code - LAB § 3711. Section 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.

Cal. Labor Code - LAB § 3712. Section 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.

Cal. Labor Code - LAB § 3714. Section 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.

Cal. Labor Code - LAB § 3715. Section 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.

Cal. Labor Code - LAB § 3716. 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.

Cal. Labor Code - LAB § 3716.1. Section 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.

Cal. Labor Code - LAB § 3716.2. Section 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.

Cal. Labor Code - LAB § 3716.3. Section 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.

Cal. Labor Code - LAB § 3716.4. Section 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.

Cal. Labor Code - LAB § 3716.5. Section 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.

Cal. Labor Code - LAB § 3717. Section 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.

Cal. Labor Code - LAB § 3717.1. Section 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.

Cal. Labor Code - LAB § 3717.2. Section 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.

Cal. Labor Code - LAB § 3718. Section 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.

Cal. Labor Code - LAB § 3719. Section 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.

Cal. Labor Code - LAB § 3720. Section 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.

Cal. Labor Code - LAB § 3720.1. Section 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.

Cal. Labor Code - LAB § 3720.2. Section 3720.2.

(a) In a claim in which the uninsured employer or a substantial shareholder, as determined pursuant to this article, has caused to be recorded in a county a vesting deed conveying an ownership interest in real property after the date of the employee’s injury and prior to the recording of a certificate of lien in the county by the director pursuant to Section 3720, and provided that such property has not subsequently been transferred to a bona fide purchaser, the director may determine according to the evidence available to the director whether the transferor of such real property intended to retain a beneficial interest in the real property, such that a resulting trust for the benefit of the uninsured employer or substantial shareholder was created. A prima facie finding that the transaction created a resulting trust for the benefit of the uninsured employer or substantial shareholder may be made when the director determines that there is sufficient evidence to show either of the following circumstances are present: (1) The recorded vesting deed indicates thereon that the transfer was made as a gift or that no transfer tax to the county was paid. (2) The transferor made the transfer with actual intent to hinder, delay, or defraud collection of reimbursement for funds paid by the Uninsured Employers Benefits Trust Fund to or on behalf of an injured worker. A finding made pursuant to this paragraph may be made when at least three or more of the following circumstances are present: (A) The transfer was to a personal or business associate or a relative by blood, affinity, or marriage of the transferor. (B) The transferor maintains the real property as a place of residence or business after the transfer. (C) The transferring parties did not employ an escrow or title company to close the transaction transferring the real property. (D) The value of the consideration received by the transferor was not reasonably equivalent to the value of the real property transferred. (E) The transferor failed to attend scheduled hearings and trials of the appeals board after the transfer. (F) The transferor owns legal title to no other real property in the county. (b) When the director determines pursuant to subdivision (a) that a transfer of real property by the uninsured employer or a substantial shareholder created a resulting trust for the benefit of such transferor, a certificate of lien recorded by the director pursuant to Section 3720 shall attach to that resulting trust in the property and shall constitute a valid lien against the property in favor of the director in the same manner as if the transfer had not occurred. (c) When the director determines pursuant to subdivision (a) that a transfer created a resulting trust for benefit of the transferor, the director shall mail written notices of the prima facie determination of said resulting trust to the transferor and transferee at their addresses as shown on the recorded vesting deed, the official address record of the appeals board, and to any other more recent addresses the director may have. The notice shall advise the transferring parties of their right to appeal the finding, and that a lien may record and attach against the subject real property stating therein that, “THE DIRECTOR HAS MADE A PRIMA FACIE DETERMINATION PURSUANT TO LABOR CODE SECTION 3720.2 THAT THE TRANSFEREE, [FIRST AND LAST NAME], HOLDS TITLE TO THE REAL PROPERTY AT [STREET ADDRESS, CITY AND PARCEL NUMBERS] ON BEHALF OF THE TRANSFEROR, [FIRST AND LAST NAME], IN A RESULTING TRUST” in bold and uppercase letters on the certificate of lien. (d) A person aggrieved by a prima facie finding of the director pursuant to subdivision (a) that the transferor of the property intended to retain a beneficial interest, such that a resulting trust was created, may request a hearing on the finding by filing a written request for hearing with the director. The director, through a hearing officer appointed by 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 the 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 findings on whether there is sufficient evidence to constitute a prima facie case that the transfer of real property is subject to a resulting trust. The hearing officer shall serve with the findings a summary of evidence received and relied upon and the reasons for the findings. A party may at their own expense require that the hearing proceedings be recorded and transcribed. (e) A party aggrieved by the findings of the hearing officer may within 20 days apply for a writ of mandate to the superior court. The venue shall lie in the county in which the real property is located. (f) This section does not affect the interests, priorities, and ownership rights of bona fide encumbrancers and purchasers.

Cal. Labor Code - LAB § 3721. Section 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.

Cal. Labor Code - LAB § 3722. Section 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.

Cal. Labor Code - LAB § 3725. Section 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.

Cal. Labor Code - LAB § 3726. Section 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.

Cal. Labor Code - LAB § 3727. Section 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.

Cal. Labor Code - LAB § 3727.1. Section 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.

Cal. Labor Code - LAB § 3728. Section 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.

Cal. Labor Code - LAB § 3730. Section 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.

Cal. Labor Code - LAB § 3731. Section 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.

Cal. Labor Code - LAB § 3732. Section 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.

Cal. Labor Code - LAB § 3733. Section 3733.

(a) The Legislature finds and declares that it is in the best interest of the State of California to provide a person, regardless of his or her citizenship or immigration status, with the benefits provided pursuant to this article, and therefore enacts this section pursuant to Section 1621(d) of Title 8 of the United States Code. (b) A person shall not be prohibited from receiving compensation paid or payable from the Uninsured Employers Benefits Trust Fund solely because of his or her citizenship or immigration status. (c) It is the intent of the Legislature to override Section 15740 of Article 1 of Subchapter 2.1.1 of Chapter 8 of Division 1 of Title 8 of the California Code of Regulations. (d) The provisions of this section are declaratory of existing law.

Source: CA Legislative Counsel Bulk DataURL: https://downloads.leginfo.legislature.ca.gov/pubinfo_2025.zipFetched: 6/27/2026