IR # 98-6
Tueday, March 10, 1998

Rick Rice
Dean Fryer
(415) 972-8835

DIR Launches "Operation Insure" -- Pilot Program to Identify and Bring Illegally Uninsured Employers Into Compliance

SAN FRANCISCO -- A three-part pilot project is now underway which matches information from various state agencies to identify employers who are illegally uninsured for workers' compensation, John C. Duncan, Director of the California Department of Industrial Relations today announced.

"This project will aid in leveling the playing field for law-abiding insured employers and reduce the taxpayer burden caused by those who are not," Duncan said. "The pilot is designed not only to identify employers who are illegally uninsured for workers' compensation, but to provide a mechanism to bring them into compliance as well."

"Illegally uninsured employers unfairly put the vast majority of law-abiding employers who comply with California's workers' compensation insurance requirements at a significant competitive disadvantage," he added. "Once they comply, their employees will be covered for any work-related injuries and illnesses without having to resort to tax-payer funded programs for assistance."

The pilot project, which Duncan dubbed "Operation Insure," utilizes the computer databases of several state agencies to cross-reference information and provide a listing of employers who have had lapses in workers' compensation coverage.

Agencies participating in the pilot project include the Department of Industrial Relations, the Employment Development Department, the Department of Insurance, and the Workers' Compensation Insurance Rating Bureau.

The first pilot project will identify employers who have had workers' compensation insurance in the past but have no current coverage on record with the Workers' Compensation Insurance Rating Bureau. These employers will be matched to payroll records from the Employment Development Department to determine their coverage status. Once uninsured employers are identified, they will receive a "notice to comply" from the DIR Division of Labor Standards Enforcement (DLSE). DLSE will follow-up to ensure compliance.

The second pilot project targets employers in industries with high rates of noncompliance and high cost to the state's Uninsured Employers Fund (UEF), which pays workers' compensation benefits to injured workers of illegally uninsured employers. DLSE will similarly contact the illegally uninsured employers and follow-up to ensure compliance.

A third pilot project will test methods of improving new employers' knowledge of the requirement for compensation coverage and will identify new employers who willfully avoid compliance. Again, DLSE will notify those employers and bring them into compliance.

Based upon the results of this pilot, which will be tested for the next six months on a limited group of employers, the Department of Industrial Relations may choose to expand the program to eventually include all employers in the state.

The concept behind Operation Insure was developed in cooperation with the California Commission on Health and Safety and Workers' Compensation (CHSWC), which was provided the authority under the Workers' Compensation Reform act of 1993 to monitor and suggest improvements to the state's workers' compensation system. Further information about the CHSWC role in this project or its other activities can be obtained by contacting the Commission's executive officer, Christine Baker, at (415) 557-1304.

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