Legislation on Disaster Insurance Claims Introduced

Senator Bill Dodd (D-Napa) introduced legislation, sponsored by Insurance Commissioner Ricardo Lara, to streamline residential insurance claims for victims of disasters such as wildfires.

Senate Bill 872 expands the definition of additional living expenses that must be paid to homeowners for losses incurred in a state of emergency. Upon submission of a claim, it requires an advance payment of no less than four months for costs such as housing, furniture rental, and transportation. Also, it requires an advance payment of no less than 25 percent of a policy limit for lost contents without submission of an inventory form.

The bill, co-authored by Senator Mike McGuire (D-Healdsburg), requires insurers to give homeowners a 60-day grace period for payment of residential premiums after an emergency. Also, insurance companies will be barred from deducting the land value from payouts for those who build on new lots.

PUC Delays Incorporation of New Wildfire Board Opinions until 2021

When the new Wildfire Safety Advisory Board was last year, Governor Gavin Newsom and state lawmakers established it as a way to provide the California Public Utilities Commission (PUC) with additional expertise on how utilities can prevent fires. This week, PUC officials told them their opinions on wildfire prevention efforts won't be incorporated until 2021. 

PUC officials cited the incredibly tight turnaround time to try to review and implement any recommendations made by the board, as the utility companies are scheduled to propose wildfire-related prevention measures by February 7, 2020. 

The 2021 wildfire season is notably a more practical timeframe for addressing and implementing any opinions by the new board. 

As reported by Politico, the board was created by AB 1054 to increase utility accountability in exchange for state-backed financial aid. While many of their recommendations will not be part of the fire plan approval process until next year, it will submit suggestions on overall regulatory improvements by June 30, which the PUC is set to act on at its December 20 meeting.

AB 5 Quick Takes

Republicans Introducing AB 5/Dynamex Bills. Along with AB 1925 (Obernolte), exempting “small business” as defined from the requirements of the ABC Test, AB 1928 (Kiley), which appears intended to codify the Borello standard for classification disputes, and SB 806 (Grove), currently a placeholder bill, Republican legislators have introduced these additional AB 5/Dynamex bills: SB 867 (Bates) removing the sunset on the exemption from AB 5 for newspaper distributors and carriers, SB 868 (Bates) expanding the current AB 5 exemption for freelance journalists, and SB 875 (Grove) relating to court interpreters. 

It remains likely that the bill for changes to AB 5 (Gonzalez) will be AB 1850 (Gonzalez). 

Supreme Court Again Considering Dynamex Retroactivity. In Gonzalez v. San Gabriel Transit (S259027), the California Supreme Court has granted a petition for review on the issue of retroactivity of the Dynamex decision. Further action on Gonzalez was deferred pending consideration and disposition of the same issue in Vazquez v. Jan-Pro Franchising International, Inc. (S258191) by request from the United States Court of Appeals for the Ninth Circuit. It should be noted, however, that the requests for an order directing depublication of the opinion are denied. The Court of Appeal in Gonzalez found that Dynamex did apply retroactively. The retroactivity issue is complicated by language in Assembly Bill 5 (Gonzalez), which will likely be taken into account in the Court’s analysis. 

More Fallout from AB 5. Attached is an interesting article from the LA Times relating to union membership and recently released data from the US Department of Labor, Bureau of Labor Statistics (BLS). The data shows that union membership is increasing in California. The article attributes that in part to a series of laws passed over the last several years, including AB 5. From a different perspective, here is what the Nevada County paper wrote about AB 5: https://www.theunion.com/news/representatives-businesses-grapple-with-ab-5-an-independent-contractor-law/

Two-Year Bills Approaching Deadline to Pass Out of House of Origin

Next Friday, January 31, 2020, is the deadline for each house to pass legislation that was introduced in their house from the odd-numbered year. The Assembly has 53 bills to consider leading up to the January 31 deadline, whereas the Senate has 22 bills. 

Leading up to that deadline, each house was focused on getting those bills passed through their respective fiscal committees, many of which made their way from policy committees meeting their own deadline of January 17 to take action on 2-year fiscal bills. 

Commissioner Lara Clears Obstacles for Licensing Individuals with Cannabis-Related Convictions

Commissioner Ricardo Lara has directed the Department of Insurance to use its discretion in deciding whether to issue licenses to those with cannabis-related convictions in support of Proposition 64, the Adult Use of Marijuana Act, approved by voters in 2016. 

This action will clear obstacles to becoming an agent, broker, or other licensee for those whose past convictions are eligible to be dismissed or reduced under the current law. 

Department staff will be able to consider whether an applicant’s prior convictions fall under the provisions of Proposition 64 when reviewing applications for an agent or broker license. Prior to the passage of Proposition 64, individuals with a cannabis-related conviction may have been denied an agent or broker license. Under this new directive, these individuals will be considered for licensure even if the court has not yet granted formal reduction or dismissal of the conviction. 

The Department’s website provides general information related to producer licensing requirements and considerations. It also provides resources for where individuals with prior cannabis-related convictions can find more information about Proposition 64 as well as seeking relief from the courts.

Legislative Update

Second-year deadlines and more bill introductions continue to keep this January busy around the Capitol. Here are some key bills to keep your eye on as we move forward this year. 

Health 

AB 1953 (Bloom D) Veterinary medicine. Under the Veterinary Medicine Practice Act, prescribed actions constitute the practice of veterinary medicine, making violation of its provisions a crime. This bill would include in the actions that constitute the practice of veterinary medicine the collection of blood from a dog for the purpose of transferring or selling that blood, or blood products derived from the blood, to a licensed veterinarian for use at a registered premise. 

AB 1966 (Salas D) Gene synthesis providers. This bill would require the State Department of Public Health to develop gene sequence and customer screening guidelines for gene synthesis providers and manufacturers of gene synthesis equipment with the purpose of increasing gene synthesis security and improving biosecurity efforts relating to the misuse of gene synthesis products. The bill would require the department to create a process to certify that gene synthesis providers and manufacturers of gene synthesis equipment are in compliance with the guidelines and would require, beginning January 1, 2023, a gene synthesis provider operating in California to be certified. 

AB 1976 (Eggman D) Mental health services: assisted outpatient treatment. Existing law authorizes participating counties to pay for services provided from money distributed to the counties from various continuously appropriated funds, including the Mental Health Services Fund, when included in a county plan. This bill would instead require a county or group of counties to offer those mental health programs unless a county opts out by a resolution passed by the governing body stating the reasons for opting out and any facts or circumstances relied on upon making that decision. 

Business 

SB 873 (Jackson D) Gender: discrimination: pricing. This bill would prohibit a business establishment from discriminating against a person because of a person’s gender with respect to the price charged for any two consumer products from the same manufacturer that are substantially similar if those products are priced differently based on the gender of the individuals for whose use the products are intended or marketed, as specified. 

SB 878 (Jones R) Department of Consumer Affairs Licensing: applications: wait times. This bill would require each board within the department that issues licenses to prominently display the current timeframe for processing initial and renewal license applications on its internet website. 

Insurance 

AB 1815 (Daly) Workers’ compensation. This bill would require the administrative director to adopt and revise the medical-legal fee schedule at least every two years and to do so separate and apart from adopting and revising the medical fee schedule. 

SB 872 (Dodd D) Residential property insurance: state of emergency. This bill would require an insurer to provide 6-month extensions to collect the full replacement cost if an insured acting in good faith and with reasonable diligence encounters delays in approval for, or reconstruction of, the insured property that is beyond the insured’s control. The bill would additionally require coverage for loss of use relating to a state of emergency to be for a period of no less than 24 months, plus an extension of up to 12 additional months, for a total of 36 months, if an insured acting in good faith and with reasonable diligence encounters delays in the reconstruction process, as specified. The bill would extend the prohibition against limiting or denying payment of the building code upgrade cost or the replacement cost to an insured who has decided to purchase any already built structure at a new location and would prohibit an insurer from deducting the value of land at the new location if the insured decides to purchase an already built structure at a new location. 

Labor 

AB 1947 (Kalra D) Employment violation complaints: requirements: time. Current law generally authorizes people who believe that they have been discharged or otherwise discriminated against in violation of any law enforced by the Labor Commissioner to file a complaint with the Division of Labor Standards Enforcement within 6 months after the occurrence of the violation. This bill would extend the period of time within which people may file complaints subject to the 6-month deadline, described above, to within one year after the occurrence of the violations. 

SB 867 (Bates R) Worker status: independent contractors: newspaper distributors or newspaper carriers. This bill would delete the inoperative date of January 1, 2021, applicable to newspaper distributors or newspaper carriers, thereby making the above exemption apply indefinitely. 

SB 868 (Bates R) Worker status: independent contractors: freelance journalists. This bill would revise the exemption to exempt all freelance journalists, without regard to the number of content submissions per year, from the application of Dynamex and the above provisions. 

Taxes 

AB 1948 (Bonta D) Taxation: cannabis. AUMA currently requires the Legislative Analyst’s Office to submit a report to the Legislature by January 1, 2020, with recommendations for adjustments to the tax rate to achieve the goals of undercutting illicit market prices and discouraging use by persons younger than 21 years of age while ensuring sufficient revenues are generated for specified programs. AUMA also authorizes the Legislature to amend its provisions with a 2/3 vote of both houses to further its purposes and intent. This bill would reduce that excise tax rate to 11% on and after the operative date of this bill until July 1, 2023, at which time the excise tax rate would revert back to 15%. The bill would suspend the imposition of the cultivation tax on and after the operative date of this bill until July 1, 2023. The bill would require the bureau, Department of Food and Agriculture, and California Department of Tax and Fee Administration to provide the Legislature with reports measuring the success of this bill 

SB 876 (McGuire D) Corporation Tax Law. The Corporation Tax Law taxes according to, or measured by, net income, computed at a specified rate upon the basis of the net income for that taxable year, on every corporation, except as provided. This bill would state the intent of the Legislature to enact legislation amending the Corporation Tax Law. 

Transportation 

AB 1964 (Frazier D) Autonomous vehicles. This bill would expand the definition of the term “autonomous vehicle” to also include a remotely operated vehicle, defined as a specified type of vehicle that is capable of being operated by a driver or operator that is not inside of the vehicle.