California’s UEF Program

California’s UEF Program Shirley H James, Manager, California Uninsured Employers Benefit Trust Fund Anthony Mischel and Fred Lonsdale, Office of Director of Industrial Relations, Legal California UEF

California UEF • Created by Legislature, 1972. • The Mission of the Uninsured Employers Benefit Trust Fund: • Provide timely benefits to eligible injured workers; and • To make it prohibitively expensive for illegally uninsured employers to do business. California UEF

Hallmarks of California UEF • Sources of Funding • UEF Derivatively Only Liable If Award Against Employer Not Paid • Employer Personally Liable to Injured Worker (IW) • Collection Rights By UEF • Enforcement Of Obligation To Be Insured California UEF

UEF Funding • Employer assessments (surcharges) provides funding for payment of benefits • UEF expected to contribute $ 5 million of that money • From collection on prior cases. • Penalties assessed against uninsured employers by Labor Commissioner. California UEF

UEF Has Derivative Liability • The Fund’s Liability for Benefits to IWs of Illegally Uninsured Employers Only After Award Issued Against Employer That Goes Unpaid • No Direct Liability Possible From UEF to IW • Liability is through the employer (2 preconditions) • Award against employer • Unpaid • UEF is not the guarantor • Lack of Direct Liability Has Consequences For UEF’s Procedures California UEF

Uninsured Employer Personally Liable • Case In Chief Is Between IW and Employer • IW’s goal is enforceable, civil judgment against employer • If an award of benefits is enforceable, the injured worker demands payment from the uninsured employer. Should the employer fail to pay, UEF must pay the award • Result is initial requirement to • Name the employer correctly, and • Serve the employer California UEF

Due Process Considerations • Why Due Process Matters • WCAB considered judicial body • Employer’s personal liability adjudged • Property may be seized by UEF • When Is Due Process Preserved • If not in IW’s case, uncollectible judgment • Seems to be unique to California UEF. California UEF

Procedures For Joining UEF California UEF

Lien Rights • Liens and Penalties For Discretionary Payments • Advance on collectible awards • Extra penalty from employer to UEF for advances being necessary • Prejudgment Lien Rights • Real property liens • Due process considerations California UEF

UEF Procedures –2- California UEF

Collection Rights • Can Collect All Moneys Paid • Including penalties UEF does not pay • Persons Liable With Employer • Partners/Community property • Joint venturers • Some shareholders of corporate employers • Limited Liability Company Members California UEF

Bankruptcy Issues • About Ten Percent Of Employers File Bankruptcy • Mostly Chapter 7 Discharges • Two Issues For Proceedings • IW’s case proceeding • UEF’s ability to collect • Dischargability • In Re Camilli (9th Cir.) – AZ • George (9th Cir.) – CA • Collection History California UEF

Other Enforcement Actions Possible • Referrals of Currently Uninsured Employers To Labor Commissioner • Stop orders & penalties • Current procedures • Additional penalties after workers’ compensation award • Criminal Sanctions California UEF

UEF Procedures –3- California UEF

How UEF Operates California UEF

With Many Thanks • Staff of Uninsured Employers Benefit Trust Fund • Office of The Director – Legal Unit California UEF

California’s UEF Program