California Passes Bill on Employer Rights in Workers’ Comp Arbitration

By | September 7, 2011

The California State Legislature on Tuesday passed a bill that California Insurance Commissioner Dave Jones said will make workers’ compensation policies more transparent and fair.

The measure, Senate Bill 684, provides that employers must be notified in writing and allowed to negotiate when an insurer intends to use arbitration to resolve disputes with the employer. The bill also gives a right to the employer to decide whether to negotiate and resolve arbitration disputes in California and/or under California law.

The bill, sponsored by the California Department of Insurance and authored by state Senate Majority Leader Ellen Corbett (D-San Leandro), received bipartisan support.

‘This bill will create an important protection for California’s employers by no longer allowing insurers to force businesses, small and large, to arbitrate out of state without their foreknowledge and consent,’ Jones said in a statement. ‘SB 684 will ensure that both employers and insurers both freely and mutually agree to terms of the workers’ compensation policy.’

SB 684 would require that employers be notified up front when they receive a quote that they can negotiate the dispute resolution provisions, particularly whether or not to arbitrate out of state and under a law other than California. Employers who decide to accept that quote must sign the disclosure to indicate that they understand and accept the terms of the agreement.

“I urge Gov. Jerry Brown to sign this bill which is aimed at making sure that businesses are protected as we continue to face an uncertain economy,” Jones said.

The provisions laid out in SB 684 will apply to workers’ compensation policies issued or renewed on or after July 1, 2012.

Topics California Workers' Compensation Commercial Lines Business Insurance

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