AB1336 amends the workers’ compensation funding framework to create and clarify several special accounts in the State Treasury and to direct how revenues and penalties are deposited and spent. The measure includes a one‑time, nongeneral‑fund allocation to establish a Farmworker Climate Change Heat Injury and Death Fund aimed at administrative costs tied to heat‑injury provisions.
For practitioners: the bill changes who pays for state oversight and benefits by authorizing the director to impose separate surcharges on employers and by creating continuously appropriated trust accounts for certain nonadministrative benefits. That shifts recurring program costs onto employer surcharges and locks some expenditures into trust structures that operate outside the annual budget act for nonadministrative payments.
At a Glance
What It Does
Requires the director to levy separate employer surcharges to capitalize several newly defined or clarified accounts that support workers’ compensation administration, uninsured‑employer benefits, subsequent injury benefits, Cal‑OSHA operations, and labor enforcement. It also sets procedural rules for collection and authorizes limits on revenues for some funds; regulations governing collection are to be adopted by the director.
Who It Affects
Insured and self‑insured employers (allocation tied to payroll), insurance carriers and claims administrators who will report premium/indemnity bases, the Department of Industrial Relations and its Cal‑OSHA components, and state entities that administer workers’ compensation benefits and enforcement programs. Workers who claim benefits will see funding routed through these dedicated accounts.
Why It Matters
The bill replaces ad hoc annual appropriations for certain benefits and enforcement activities with dedicated surcharge revenue streams and continuously appropriated trust accounts for nonadministrative benefits. That reduces annual budget uncertainty for benefit payments but creates a persistent employer cost and changes compliance and reporting obligations for insurers and self‑insurers.
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What This Bill Actually Does
The bill reorganizes how California collects and holds money for core pieces of its workers’ compensation and workplace‑safety apparatus. It (1) codifies separate special accounts in the State Treasury, each tied to a discrete purpose — administration, uninsured‑employer benefits, subsequent injuries, occupational safety and health, and labor enforcement — and (2) prescribes how revenues and penalty proceeds flow into those accounts.
Several of these accounts are designated as trust funds with the director of the department named trustee and are earmarked for “nonadministrative” expenses such as benefit payments and statutorily required reports and audits.
To protect benefit flows during budgetary disruption, the bill allows the Uninsured Employers Benefits Trust Fund and the Subsequent Injuries Benefits Trust Fund to advance administrative expenses if the primary revolving fund cannot pay them on time; those advances must be repaid in full when the Legislature enacts the annual Budget Act. The text also directs how penalty income from enforcement of insurance‑coverage requirements is first used to cover insurance‑program administration and then, if there is an excess, may be channelled to the uninsured‑employer trust for nonadministrative expenditures, subject to appropriation rules.On the safety side, the bill creates an Occupational Safety and Health Fund and provides for the transfer of most assets from a prior targeted inspection and consultation fund into the new account, consolidating resources that support Cal‑OSHA functions.
It further establishes a Labor Enforcement and Compliance Fund to support Division activities across multiple code divisions. The measure ties assessment and surcharge collection to employer payroll data and assigns the director the authority to adopt collection rules and procedures.Finally, the bill includes a statutory sunset: the whole section is set to repeal on January 1, 2031.
That makes the package a medium‑term financing arrangement rather than a permanent overhaul, which has implications for agencies and employers when planning compliance and budgeting for the next several years.
The Five Things You Need to Know
The director must allocate total surcharge amounts between insured and self‑insured employers in proportion to payroll for the most recent year with available payroll data.
The regulations must require surcharges paid by self‑insurers to be expressed as a percentage of indemnity paid during the most recent year, and surcharges for insured employers to be expressed as a percentage of premium.
The Occupational Safety and Health Fund is limited to generating no more than $57,000,000 in revenues (2013–14 fiscal year base), adjustable thereafter to reflect approved appropriation increases and reconciliation of prior over/under assessments.
The Labor Enforcement and Compliance Fund is capped at $46,000,000 for the 2013–14 fiscal year (subject to later adjustments to match appropriation changes and reconciliations).
Rules and regulations the director adopts to collect the new surcharges are exempted from the Administrative Procedure Act’s formal rulemaking process.
Section-by-Section Breakdown
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Workers’ Compensation Administration Revolving Fund — purposes and a farmworker account
This subsection establishes the Workers’ Compensation Administration Revolving Fund as a special State Treasury account and lists permissible uses: core workers’ compensation administration (excluding some specified activities), the Return‑to‑Work Program, insurance‑coverage enforcement by the Labor Commissioner, and funding for a Farmworker Climate Change Heat Injury and Death Fund limited to administrative costs tied to the heat‑injury provision. The text also designates a one‑time intra‑fund transfer source for the farmworker account from nongeneral funds within the revolving fund.
Uninsured Employers Benefits Trust Fund — trustee, use, and advances
Creates the Uninsured Employers Benefits Trust Fund as a continuously appropriated trust account with the director as trustee and restricts uses to nonadministrative payments for workers injured while employed by uninsured employers. The subsection authorizes the fund to advance administrative expenses if the primary revolving fund cannot pay them during budgetary impasses, with a statutory obligation to reimburse the trust upon enactment of the Budget Act. It also redirects certain penalty proceeds into this financing structure and requires a separately stated surcharge amount for this fund.
Subsequent Injuries Benefits Trust Fund — scope and reimbursement rules
Mirrors the uninsured‑employer trust setup for workers with prior serious permanent disabilities, creating a separately funded trust that is continuously appropriated for nonadministrative subsequent‑injury benefits. It repeats the same advance/reimbursement mechanism for administrative expenses during budgetary disruption and requires a separately stated surcharge amount for the fund.
Occupational Safety and Health Fund — new account and asset transfers
Establishes an Occupational Safety and Health Fund to support the Division of Occupational Safety and Health, the OSH Standards Board, and the OSH Appeals Board. The provision directs the bulk transfer of moneys and related financial items from the existing Cal‑OSHA Targeted Inspection and Consultation Fund into this new account on specified dates, effectively consolidating those resources under the new fund while preserving a defined remainder transfer schedule.
Labor Enforcement and Compliance Fund; surcharges and fraud assessments
Creates the Labor Enforcement and Compliance Fund, paid for by a separate employer surcharge, and outlines the director’s authority to levy multiple distinct surcharges and assessments (including an assessment to collect the Fraud Assessment Commission’s aggregate amount). The subsection specifies allocation mechanics between insured and self‑insured employers (proportional to payroll), directs that self‑insurer charges be computed on indemnity while insured‑employer charges be computed on premium, and states that revenues must not exceed amounts reasonably necessary for the statutory purposes.
Revenue caps and collection governance
Sets an explicit revenue cap for the Occupational Safety and Health Fund ($57,000,000 base) and for the Labor Enforcement and Compliance Fund ($46,000,000 base) in the 2013–14 fiscal year, with later adjustments tied to appropriation changes and reconciliation rules. It also requires the director to promulgate regulations for surcharge collection and provides that the collection regulations are exempt from the Administrative Procedure Act.
Sunset
Declares the entire section will remain in effect only until January 1, 2031, at which point it is repealed — creating a fixed horizon for the financing and trust arrangements established by the section.
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Who Benefits
- Farmworkers (administrative support for heat‑injury provisions): the bill provides a dedicated administrative funding source designed to support implementation of heat‑injury and death provisions specifically tied to agricultural workers’ climate risks.
- Workers injured while employed by uninsured employers: the continuously appropriated Uninsured Employers Benefits Trust Fund prioritizes nonadministrative benefit payments so claimants have a clearer funding stream even if annual appropriations fluctuate.
- Workers with prior serious permanent disabilities: the Subsequent Injuries Benefits Trust Fund locks in a dedicated revenue stream for statutory subsequent‑injury payments and related audits/reports, improving predictability for eligible claimants.
- Cal‑OSHA and enforcement boards: consolidation of targeted‑inspection assets into a dedicated Occupational Safety and Health Fund gives these bodies a clearer, ring‑fenced resource base for inspection, standards, and appeals activities.
Who Bears the Cost
- Insured and self‑insured employers: the bill requires separate surcharges allocated between insured and self‑insured employers (proportional to payroll), increasing employer costs and creating new reporting obligations tied to premium and indemnity bases.
- Insurance carriers and claims administrators: carriers must report premium data and incorporate surcharge calculations into premium‑related accounting; self‑insurers must track indemnity to the director’s specifications.
- Department of Industrial Relations (administration): while the bill secures funding for many activities, the department absorbs responsibility for administering multiple new accounts and regulations — including implementing collection rules exempt from the APA.
- Small agricultural employers: because allocation is tied to payroll, labor‑intensive employers in agriculture could see a concentrated surcharge impact, even though the farmworker fund was established to support agricultural safety administration.
Key Issues
The Core Tension
The central dilemma is between funding certainty for benefits and enforcement (protecting workers and agencies) and the redistribution of costs onto employers via new surcharges and administratively lightened rulemaking; the measure secures money for claimants and inspectors but does so by locking in employer charges and curtailing regular rulemaking safeguards.
The bill erects a set of trusts and dedicated revenue streams that simultaneously insulate benefit payments from yearly budget negotiations and impose recurring, administratively complex costs on employers. The continuous appropriation language for nonadministrative payouts reduces cash‑flow risk for claimants but also weakens the Legislature’s short‑term control over those expenditures.
Allowing administrative‑expense advances from trust funds during budget impasses protects operations in the near term, but it creates contingent liabilities that could deplete benefit pools if repayments are delayed or revenues fall short.
On implementation, the director is charged with substantial regulatory work: setting surcharge percentages, collecting across insured and self‑insured regimes, and reconciling prior over/under assessments. The statute exempts those rules from the APA, which speeds implementation but limits public notice, comment, and judicial review opportunities; that raises legal and stakeholder‑engagement risks.
Finally, the sunset creates a hard deadline for evaluating whether the new funding model achieves its goals — but it may also encourage short‑term behavior and leave no permanent resolution for structural funding gaps.
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