California Courts of Appeal Reports
AN INDEPENDENT HOME SUPP. S. v. SUPERIOR CT., D048235 (Cal.App. 12-21-2006) AN INDEPENDENT HOME SUPPORT SERVICE, INC., Petitioner, v. THE SUPERIOR COURT OF SAN DIEGO COUNTY, Respondent; STATE COMPENSATION INSURANCE FUND, Real Party in Interest. D048235 Court of Appeal of California, Fourth District, Division One December 21, 2006 Certified for Publication
THE COURT: Petition for writ of mandate following order striking portions of complaint, No. GIC854544, Jay M. Bloom, Judge. Petition granted.
Law Offices of D. Anthony Gaston and D. Anthony Gaston for Petitioner.
No appearance for Respondent.
Robert W. Daneri, Judith D. Sapper, Jody A. Hale and Pedro G. Ruiz for Real Party in Interest.
NARES, J.
On this petition for peremptory writ of mandate (petition)
we are presented with the question of whether compliance
with the provisions of Civil Code[fn1] section 1812.5095,
part of the Employment Agency, Employment Counseling, and
Job Listing Services Act (Employment Agency Act) (Div. 3,
pt. 4, tit. 2.91, § 1812.500 et seq.) exempts
petitioner An Independent Home Support Service, Inc.
(AIHSS), a referral agency that provides domestic workers
to individuals and entities, from state law requirements of
maintaining workers’ compensation insurance for the
domestic workers. We conclude that by complying with the
terms of section 1812.5095 such referral agencies are
deemed not to be the employers, for the purposes of
workers’ compensation, of the domestic workers they refer.
Accordingly, we issue a writ of mandate directing the
respondent Superior Court of San Diego County to vacate its
order granting real party in interest State Compensation
Insurance Fund’s (State Fund) motion to strike references
in AIHSS’s complaint to Civil Code section 1812.5095, Civil
Code section 1812.501, and Unemployment Insurance Code
section 687.2.
FACTUAL AND PROCEDURAL BACKGROUND[fn2]
AIHSS is a domestic agency as defined in section 1812.501,
subdivision (h). It provides a referral service to
individuals and entities that require the services of a
domestic worker, typically for an elderly or infirm family
member. The company has a roster or pool of between 100 and
150 domestic workers. Patients who need home care assistance
are often referred to AIHSS by hospitals at the time they
discharge an individual, and, if the patient’s care
custodian is unable or unwilling to administer to his or
her needs, the patient may call AIHSS. AIHSS will then
refer a domestic worker for an interview with the patient.
The domestic worker is free to accept or decline the
engagement and negotiate the hourly rate of pay. The
domestic worker submits biweekly invoices to AIHSS which
are approved by the care recipient. AIHSS is responsible
for collecting sums due the domestic worker. Receipts are
deposited in a separate dedicated trust account, and the
domestic worker is paid from this account.
In February 2004 the California Department of Industrial
Relations, Division of Labor Standards Enforcement (the
Department) conducted an investigation of AIHSS’s offices.
As a result of the investigation, the Department determined
that AIHSS was employing three office workers for which it
had not obtained workers’ compensation insurance in
violation of the law. Thereafter, after a hearing before
the Labor Commissioner, that determination was upheld as to
two employees. As to the third, that individual was
determined to be not subject to workers’ compensation
insurance because that employee was a shareholder, officer
and director of AIHSS.
AIHSS obtained workers’ compensation insurance from State
Fund on behalf of the two office workers. State Fund then
performed an “underwriting inspection” of AIHSS’s business.
As a result of the inspection, State Fund advised AIHSS it
had determined that the domestic workers referred to
patients by AIHSS were employees of AIHSS for workers’
compensation purposes. According to AIHSS, this
determination would raise its monthly workers’ compensation
premiums from approximately $100 per month to as high as
$16,000 per month.
AIHSS appealed that determination to State Fund’s San Diego
District Office, asserting that the domestic workers were
independent contractors, not employees, under section
1812.5095 and the test set forth in S. G. Borello & Sons,
Inc. v. Department of Industrial Relations (1989) 48 Cal.3d
341 (Borello). State Fund denied the appeal, finding that
the domestic workers were considered employees of AIHSS for
workers’ compensation purposes. In doing so, State Fund did
not discuss the applicability of section 1812.5095 or
Borello.
AIHSS appealed State Fund’s decision to the Insurance
Commissioner. AIHSS was informed that as of June 2005 the
Insurance Commissioner no longer heard appeals pertaining
to a worker’s status as employee or independent contractor.
AIHSS then filed a complaint against State Fund for
declaratory relief, breach of contract and injunctive
relief, alleging that its domestic workers were independent
contractors under section 1812.5095 and Borello. In the
complaint, they supported their allegations in part by
referring to and relying on section 1812.501, subdivision
(h), which defines “domestic agencies,” and Unemployment
Insurance Code section 687.2, which provides when a company
such as AIHSS is considered an employer of domestic workers
for unemployment insurance purposes.
In November 2005 State Fund filed a motion to strike all
references in the complaint to Civil Code sections
1812.501, subdivision (h), 1812.5095, and Unemployment
Insurance Code section 687.2. State Fund argued that these
code sections were irrelevant as the Legislature did not
intend that they apply to workers’ compensation insurance,
but only to unemployment insurance.
The court agreed with State Fund and granted the motion to
strike, finding:
“These provisions pertain to the interpretation and
applicability of unemployment insurance, not workers
compensation, which is at issue here. The Workers
Compensation Act is liberally construed to extend benefits
to persons injured in their employment. [Citation.] The
tests to determine whether there is an employment
relationship [have] been established through case law.”
This petition followed.
DISCUSSION
AIHSS asserts that its compliance with section 1812.5095
exempts it from state law requirements of maintaining
workers’ compensation insurance for the domestic workers it
refers to patients, and therefore the court erred in
granting State Fund’s motion to strike. We conclude that
compliance with the requirements of section 1812.5095 does
exempt AIHSS from maintaining workers’ compensation
insurance for its domestic workers. Therefore we grant
AIHSS’s petition seeking to set aside the court’s order
granting State Fund’s motion to strike.[fn3]
I. Standard of Review
Because we are called upon to construe a statutory scheme,
we accord no deference to the trial court’s determination.
Instead, we apply de novo review to the issues posed by
this action. (Radian Guaranty, Inc. v. Garamendi (2005) 127
Cal.App.4th 1280, 1288.)
II. Principles of Statutory Interpretation
“In interpreting a statute where the language is clear,
courts must follow its plain meaning. [Citation.] However,
if the statutory language permits more than one reasonable
interpretation, courts may consider various extrinsic aids,
including the purpose of the statute, the evils to be
remedied, the legislative history, public policy, and the
statutory scheme encompassing the statute. [Citation.] In
the end, we `”must select the construction that comports
most closely with the apparent intent of the Legislature,
with a view to promoting rather than defeating the general
purpose of the statute, and avoid an interpretation that
would lead to absurd consequences.”‘” (Torres v. Parkhouse
Tire Service, Inc. (2001) 26 Cal.4th 995, 1003; see also
Harris v. Capital Growth Investors XIV (1991) 52 Cal.3d
1142, 1165-1166.)
III. Analysis
A. Section 1812.5095 Unambiguously Applies to Workers’
Compensation
AIHSS asserts that the court erred in striking from its
complaint references to section 1812.5095 and other
relevant statutes because its compliance with the terms of
section 1812.5095 meant it was deemed not to be the
employer for workers’ compensation purposes of domestic
workers it refers to clients. We conclude that the plain
language of section 1812.5095 demonstrates that it was
intended to apply to workers’ compensation insurance, not,
as State Fund asserts and the court found, only
unemployment insurance.
Section 1812.5095, subdivision (b) provides in part: “An
employment agency is not the employer of a domestic worker
for whom it procures, offers, refers, provides, or attempts
to provide work, if all of the following factors
characterize the nature of the relationship between the
employment agency and the domestic worker for whom the
agency procures, offers, refers, provides, or attempts to
provide domestic work. . . .” (Italics added.) Section
1812.5095, subdivision (b) then sets forth nine different
requirements that the employment agency must comply with in
order for it not to be considered the employer of the
domestic worker. ( § 1812.5095, subd. (b)(1)-(9).)
Of relevance to this appeal is subdivision (d) of section
1812.5095, which provides for the following written notice
the employment agency must give to each domestic worker:
“An employment agency referring a domestic worker to a job
shall inform that domestic worker, in writing, on or before
the signing of the contract pursuant to paragraph (1) of
subdivision (b), that the domestic worker may be obligated
to obtain business permits or licenses, where required by
any state or local law, ordinance, or regulation, and that
he or she is not eligible for unemployment insurance, state
disability insurance, social security, or workers’
compensation benefits through an employment agency
complying with subdivision (b). The employment agency
referring a domestic worker shall also inform that domestic
worker, if the domestic worker is self-employed, that he or
she is required to pay self-employment tax, state tax, and
federal income taxes.” (Italics added.)
Further, subdivision (f) of section 1812.5095 provides: “An
employment agency referring a domestic worker to a job
shall orally communicate to the person seeking domestic
services the disclosure set forth below prior to the
referral of the domestic worker the following disclosure
statement: [¶] `(Name of agency) is not the employer
of the domestic worker it referred to you. Depending on
your arrangement with the domestic worker, you may have
employer responsibilities.’ [¶] Within three
business days after the employment agency refers a domestic
worker to the person seeking domestic services, the
following statement printed in not less than 10-point type
shall be mailed to the person seeking domestic services:
[¶] `(Name of agency) is not the employer of the
domestic worker it referred to you. The domestic worker may
be your employee or an independent contractor depending on
the relationship you have with him or her. If you direct
and control the manner and means by which the domestic
worker performs his or her work you may have employer
responsibilities, including employment taxes and workers’
compensation, under state and federal law. For additional
information contact your local Employment Development
Department and the Internal Revenue Service.” (Italics
added.)
Contrary to the contention of State Fund, and the findings
of the court, nothing in the plain language of section
1812.2095 limits its application to unemployment insurance.
Subdivision (b) states that a referral agency that complies
with its terms is not considered the employer. Further,
there is no rational reason (and State Fund posits none)
why the Legislature would require the agencies to notify
domestic workers that they will not receive workers’
compensation benefits from the agency if section 1812.5095
did not apply to workers’ compensation insurance. If State
Fund’s interpretation were accepted, such notices would in
effect be false and would confuse domestic workers as to
who was responsible for providing workers’ compensation
insurance. Rather, that notice and the notice required to
be given to the clients hiring domestic workers were
intended to make clear who was responsible for that
obligation. In clear language, the Legislature mandated that
(1) domestic workers be informed that the referral agency
was not responsible for providing workers’ compensation
insurance; and (2) domestic workers and the clients hiring
them be informed that one or the other of them would be
responsible for workers’ compensation insurance, depending
upon the nature of their relationship. The plain language
of section 1812.5095 demonstrates it applies to workers’
compensation insurance.
Moreover, the items that the employment agencies must
comply with to be deemed not the employer of a domestic
worker are the same type of factors that would compel a
finding that a company or individual was not the employer
of a worker for workers’ compensation purposes under common
law tests. In order to be considered not an “employer” for
purposes of section 1812.5095, employment agencies must,
among other things, (1) allow the domestic worker to sign
with other employment agencies and work for persons not
referred by the employment agency; (2) allow the domestic
worker to select or reject any work referred by the
employment agency; (3) allow the domestic worker to
negotiate the amount of pay for the work referred; (4) not
provide training to the domestic worker; (5) allow the
domestic worker to perform his or her work “without any
direction, control, or supervision exercised by the
employment agency with respect to the manner and means of
performing the domestic work”; (6) “not provide tools,
supplies, or equipment necessary to perform the domestic
work”; (7) incur no obligation to pay the domestic worker
if “the person for whom the services were performed fails
or refuses to pay for the domestic work”; and (8) not have
the power to terminate the domestic worker from his or her
employment with the person to which the domestic worker was
referred. ( § 1812.5095, subd. (b)(1)-(9).)
In Borello, supra, 48 Cal.3d 341, the California Supreme
Court discussed the factors relevant to determining if an
individual is an employee or independent contractor for
workers’ compensation insurance. Of primary importance was
“`whether the person to whom service is rendered has the
right to control the manner and means of accomplishing the
result desired. . . .’ [Citations.]” (Id. at p. 350.) The
high court also indicated that the right to discharge at
will without cause is strong evidence of an
employee-employer relationship. (Ibid.) Other factors
relevant to the determination, derived largely from the
Restatement Second of Agency, include “(a) whether the one
performing services is engaged in a distinct occupation or
business; (b) the kind of occupation, with reference to
whether, in the locality, the work is usually done under
the direction of the principal or by a specialist without
supervision; (c) the skill required in the particular
occupation; (d) whether the principal or the worker supplies
the instrumentalities, tools, and the place of work for the
person doing the work; (e) the length of time for which the
services are to be performed; (f) the method of payment,
whether by the time or by the job; (g) whether or not the
work is a part of the regular business of the principal;
and (h) whether or not the parties believe they are
creating the relationship of employer-employee.” (Borello,
supra, at p. 351.)
Finally, the Supreme Court noted that other jurisdictions
apply a test involving six criteria. (Borello, supra, 48
Cal.3d at p. 354.) The court explained, “Besides the `right
to control the work,’ the factors include (1) the alleged
employee’s opportunity for profit or loss depending on his
managerial skill; (2) the alleged employee’s investment in
equipment or materials required for his task, or his
employment of helpers; (3) whether the service rendered
requires a special skill; (4) the degree of permanence of
the working relationship; and (5) whether the service
rendered is an integral part of the alleged employer’s
business.” (Id. at pp. 354-355.)
Thus, the standards an employment agency must meet to not
be considered an “employer” under section 1812.5095 would
compel the conclusion under the common law test that that
it was not an employer of domestic workers for workers’
compensation purposes. This is also compelling evidence the
Legislature, in enacting section 1812.5095, intended that
employment agencies that met the requirements of that
section were not employers for workers’ compensation
purposes. The reason such agencies are required to give
notice to domestic workers they refer that they are not
their employer and not responsible for unemployment
insurance, state disability insurance, social security, and
workers’ compensation is that compliance with section
1812.5095’s terms renders domestic referral agencies not
the employer of domestic workers for all of these
obligations.
State Fund raises numerous arguments why the plain language
of section 1812.5095 does not mean what its states. State
Fund argues AIHSS’s interpretation of section 1812.2095 is
incorrect because (1) the Workers’ Compensation Act must be
liberally construed in favor of awarding workers’
compensation benefits; (2) workers’ compensation is an
exclusive and complete system and therefore there is no
authority for applying section 1812.5095 to workers’
compensation insurance; (3) section 1812.5095 does not
provide an exclusive remedy; (4) a review of legislative
history compels the conclusion that section 1812.5095 does
not absolve employment agencies of liability for workers’
compensation insurance; and (5) the relevant language in
section 1812.2095 results from a “scrivener’s error”. We
address these contentions in order.
A. Liberal Construction of the Workers’ Compensation Act
It is true that the Workers’ Compensation Act (Act) “must
be liberally construed to extend benefits to persons
injured in their employment.” (Borello, supra, 48 Cal.3d at
p. 349.) “The Act intends comprehensive coverage of
injuries in employment. It accomplishes this goal by
defining `employment’ broadly in terms of `service to an
employer’ and by including a general presumption that any
person `in service to another’ is a covered `employee.'”
(Id. at p. 354.)
However, this does not mean that all relationships are
covered. An employer is defined as “[e]very person
including any public service corporation, which has any
natural person in service.” (Lab. Code, § 3300,
subd. (c), italics added.) An employee is defined as “every
person in the service of an employer under any appointment
or contract of hire or apprenticeship, express or implied,
oral or written, whether lawfully or unlawfully employed.”
(Lab. Code, § 3351, italics added.)
However, an independent contractor, who is defined as a
“person who renders service for a specified recompense for
a specified result, under the control of his principal as
to the result of his work only and not as to the means by
which such result is accomplished” (Lab. Code, §
3353), is not covered. (Gonzalez v. Workers’ Comp. Appeals
Bd. (1996) 46 Cal.App.4th 1584, 1589.) “`The law clearly
provides that Labor Code section 3357’s presumption of
employee status is overcome if the essential contract of
hire, express or implied, is not present under Labor Code
section 3351.'” (Barragan v. Workers’ Comp. Appeals Bd.
(1987) 195 Cal.App.3d 637, 643.)
Thus, to be covered an individual must be “in the service
of an employer” and not an independent contractor. There is
nothing in section 1812.5095 that contradicts the Act if it
deems employment agencies that meet certain criteria not to
be “employers” of domestic workers they refer and
determines that the domestic workers may be “in the service
of” the client, not the agency. This is the purpose of the
required disclosure to the domestic worker that the agency
is not responsible for workers’ compensation insurance, and
the disclosure to the client that it may be considered an
employer responsible for workers’ compensation insurance,
unless the domestic worker is an independent contractor as
to the client. Thus, section 1812.5095 is consistent with
the Act.
B. The Act as an Exclusive and Complete System
State Fund asserts that section 1812.5095 cannot carve out
certain relationships from coverage under the Act because
of the complete and exclusive coverage of the Act that
covers “every person and does not allow for the exemptions
claimed by [AIHSS].” Thus, State Fund argues an exemption
or “exclusion” from the Act must be found in the Act
itself, not statutes outside of its parameters. This
contention is unavailing.
State Fund provides no authority for its position that any
exclusions must be found in the Act itself. Indeed, one
test in determining whether an individual comes under the
Act’s purview or is an independent contractor is “whether
there are any other specific statutory exclusions.”
(Johnson v. Workmans’ Comp. Appeals Bd. (1974) 41
Cal.App.3d 318, 322, italics added.)
Further, contrary to State Fund’s assertion, courts are
“permitted to scour the various codes to determine if a
person is an employee under workers’ compensation law.”
Labor Code section 2750.5, which is not part of the Labor
Code section governing workers’ compensation, makes a
unlicensed contractor who is performing work for which a
license is required an employee of the hirer of the
unlicensed contractor for purposes of workers’ compensation
insurance. (State Compensation Ins. Fund v. Workers’ Comp.
Appeals Bd. (1985) 40 Cal.3d 5, 11.) As the California
Supreme reasoned there: “We have concluded that [Labor
Code] section 2750.5, including the penultimate paragraph,
must be interpreted as applying to workers’ compensation
cases. Although [Labor Code] section 2700 states that the
division is not applicable to workers’ compensation but
only to other matters, [Labor Code] section 2700 was
adopted in 1937, and the subsequent enactment and amendment
of [Labor Code] section 2750.5, including the last
paragraph, show clearly that it was intended to have an
effect in workers’ compensation cases. The subsequently
enacted special provision takes precedence over the general
provision. [Citations.] The presence of a provision
affecting workers’ compensation in a division not intended
to affect workers’ compensation is clearly explained in the
legislative history. While the bill when introduced may not
have been intended to affect workers’ compensation
principles, it was thereafter amended so that the principles
set forth in the bill would apply to workers’ compensation
cases.” (State Compensation Ins. Fund. v. Workers’ Comp.
Appeals Bd., supra, 40 Cal.3d at pp. 11-12.) Thus, our
Supreme Court has concluded that a division of the Labor
Code outside that governing workers’ compensation, which
explicitly stated that it was not to apply to workers’
compensation matters, nevertheless did.
Further, the Penal Code has sections that determine
workers’ compensation coverage for certain prisoners
engaged in forced labor. Under Penal Code sections 4017 and
4125.1, county prisoners, when engaged in compulsory work,
are only entitled to worker’s compensation coverage if
engaged in “prevention and suppression of forest, brush and
grass fires.” (Parsons v. Workers’ Comp. Appeals Bd. (1981)
126 Cal.App.3d 629, 633-634.)
Thus, we may properly look outside the division of the
Labor Code governing workers’ compensation to determine if
an individual or entity is exempted or included within the
requirement that employers carry workers’ compensation
insurance.
C. Lack of Exclusive Remedy under Section 1812.5095
State Fund asserts that because the Employment Agency Act,
of which section 1812.5095 is a part, does not provide an
exclusive remedy, domestic workers may still claim to be
employees for workers’ compensation purposes. This
contention is irrelevant to the issue before the court.
It is true, as State Fund points out, that the provisions
of the Employment Agency Act “are not exclusive and do not
relieve the parties subject to this title from the duty to
comply with all other applicable laws.” ( §
1812.523, subd. (e).) Section 1812.523, subdivision (f)
provides that “[t]he remedies provided in this title are not
exclusive and shall be in addition to any other remedies or
procedures provided in any other law.”
But State Fund’s contention misses the point. Domestic
workers that would potentially fall within the confines of
section 1812.5095 are free to assert that they are
employees of an employment agency for workers’ compensation
purposes because it has not complied with the requirements
of that section and therefore is considered an employer.
Further, they may claim to be employees, not independent
contractors, of the person or entity hiring them for
in-house care, depending upon the nature of the particular
employment relationship. If they are considered to be
employees of person or entity hiring them, they may pursue
any remedy available under the Workers’ Compensation Act.
However, employment agencies that comply with the terms of
section 1812.5095 are not employers of domestic workers and
therefore the Workers’ Compensation Act and its remedies
have no application.
D. Resort to Secondary Sources To Interpret Section
1812.5095
State Funds contends that because the term “employer” in
section 1812.5095 “lends itself to several
interpretations,” we must look to the legislative history
of the Employment Agency Act, which shows that it was not
intended to apply to workers’ compensation insurance. We
first conclude that because the term employer is not vague
or ambiguous, it is not necessary to resort to the
legislative history of the act to resolve this petition.
Moreover, even if it were proper to consider the
legislative history of section 1812.5095, it supports the
conclusion that section 1812.3095 was intended to apply to
workers’ compensation purposes.
Section 1812.501, subdivision (f) provides the definition
of an employer of a domestic worker as “any individual,
company, partnership, association, corporation, agent,
employee, or representative for whom or for which an
employment agency or job listing service attempts to obtain
an employee or to place a job seeker.” Thus, in the
Employment Agency Act, the person who seeks and receives
the services of a domestic worker is considered the
domestic worker’s employer, not the agency referring the
worker. Further, as discussed above, if an employment
agency complies with section 1812.5095’s requirements, it
is not considered an employer under the Employment Agency
Act for specific responsibilities including workers’
compensation insurance. State Fund does not point to
anything in section 1812.5095, or the Employment Agency Act
in general, that makes the term “employer” ambiguous.
Accordingly, we cannot consider the legislative history of
section 1812.5095 because, “[i]n determining intent, we
look first to the words of the statute, giving the language
its usual, ordinary meaning. If there is no ambiguity in
the language, we presume the Legislature meant what it
said, and the plain meaning of the statute governs.
[Citation.]” (Hunt v. Superior Court (1999) 21 Cal.4th 984,
1000.) “Only when the language of a statute is susceptible
to more than one reasonable construction is it appropriate
to turn to extrinsic aids, including the legislative
history of the measure, to ascertain its meaning.” (Diamond
Multimedia Systems, Inc v. Superior Court (1999) 19 Cal.4th
1036, 1055.)
Moreover, even if section 1812.5095’s reference to
“employer” were vague and ambiguous, a resort to the
legislative history of the Employment Agency Act does not
support State Fund’s position that it was intended to apply
to only unemployment insurance.
In the 2005-2006 Regular Session of the Legislature,
Assembly Bill No. 551 was introduced, seeking to amend
certain portions of section 1812.5095. The proposed
amendments, among other things, would have increased the
disclosure requirements of referral agencies. An assembly
bill analysis of the proposed amendments reveals that the
Legislature understood, as recently as June of 2005, that
under section 1812.5095 employment agencies were not
considered employers for workers’ compensation purposes:
“The stated purpose of this bill is to clarify the
differences between domestic referral agencies and
employers of domestic services. In this industry, there
are two general types of businesses. First, some
businesses that provide domestic services are the actual
employers of the domestic workers that are placed in an
individual’s home. As such, the company is responsible
for, among other things, employment tax withholding and
the provision of workers’ compensation coverage. The
second type of business generally procures employment for
others by the placement of domestic help in private
homes. These businesses are sometimes referred to as
`employment agencies’ or `referral agencies.’ [¶]
Existing law provides that the referral agency will not be
deemed to be the employer of the domestic worker if
certain factors characterize the nature of the
relationship between the referral agency and the domestic
worker. In such a situation, the domestic worker will
either be an employee of the client or an independent
contractor. This determination depends on a multi-factored
common law test for determining whether there is an
employment relationship. The most important factor is
whether the client directs and controls the manner and
means by which the domestic worker performs his or her
work. If the client is deemed to be the employer of the
domestic worker, the client may have employer
responsibilities, including employment taxes and workers’
compensation.” (Assem. Com. on Labor and Employment,
Analysis of Assem. Bill No. 551 (2005-2006 Reg. Sess.)
April 20, 2005, pp. 2-3, italics added.)
Proponents of the bill, in arguing for the need for the
increased disclosures to domestic workers the amendments
would provide, also demonstrated an understanding that
agencies that complied with section 1812.5095, and thus
were not deemed “employers” of domestic workers, were not
responsible for workers’ compensation insurance, and the
hiring party, depending on the relationship with the
worker, might be:
“The most important factor in determining whether a
domestic worker is an `employee’ or an `independent
contractor’ is whether the client directs and controls the
manner and means by which the domestic worker performs his
or her work. If the client is deemed to be the employer
of the domestic worker, the client may have employer
responsibilities, including employment taxes and workers’
compensation. [¶] If a referral agency does not
disclose the fact that it is not the employer, or that the
consumer entering into the contractual relationship with
the domestic worker may be the employer, the consumer may
mistakenly believe that the domestic worker is an employee
of the referral agency, while the worker may assume that
the agency or consumer is responsible for employment taxes
and workers’ compensation insurance. Thus, the consumer
may unwittingly face potential tax liability and
penalties, and the domestic worker may not be protected
from unemployment, injury on the job, or disability
because employment taxes were not paid.” (Sen. Com. on
Labor and Industrial Relations, Analysis of Assem. Bill
No. 551 (2005-2006 Reg. Sess.) June 22, 2005, p. 2,
italics added.)
This legislative history demonstrates that the Legislature
understood in discussing the proposed amendments to section
1812.5095 that (1) referral agencies that complied with its
terms were not “employers” and thus not responsible for
workers’ compensation insurance; and (2) the client hiring
domestic workers might have the responsibility for
providing workers’ compensation insurance, depending upon
the client’s relationship with the domestic worker.
Assembly Bill No. 551 passed both houses of the
Legislature, but was later vetoed by the governor.[fn4] In
his veto message the governor also demonstrated an
understanding that section 1812.5095 applied to workers’
compensation insurance:
“This bill requires duplicative reporting for agencies
which provide referral services for domestic employees.
Current law already provides sufficient reporting
requirements to ensure that those who hire domestic
workers are well aware of their obligations to pay taxes
and procure workers’ compensation insurance.” (Governor’s
veto message to Assem. on Assem. Bill No. 551 (Sept. 2,
2005) (2005-2006 Reg. Sess.) p. 1, italics added.)
Thus, not only the Legislature, but also the governor
understood, long after section 1812.5095 was originally
enacted, that it was intended to define employment
relationships for workers’ compensation purposes. As the
most recent expression of the meaning of this statute, we
give these statements considerable weight.
State Fund points to the legislative history of Assembly
Bill No. 1370 which, among other things, enacted section
1812.5095 in 1993. Although some statements in that history
on their face lend some support State Fund’s position, a
more in-depth analysis results in the conclusion that
section 1812.5095 was intended to cover workers’
compensation insurance.
State Fund first points to the stated purpose of Assembly
Bill No. 1370 that was:
“[T]o clarify existing law and to resolve the dispute
between domestic employment agencies and the Employment
Development Department regarding the proper interpretation
and application of relevant provisions of the Unemployment
Insurance Code, the Employment Agency, Employment
Counseling, and Job Listing Services Act with respect to
the characterization of domestic employment agencies as
agents and not employers of the domestic workers they
refer.” (Stats. 1993, ch. 1275, § 5, p. 7506,
italics added.)
State Fund asserts that because this statement does not
mention workers’ compensation insurance, it was not
intended to apply to such matters. State Fund also asserts
that because there was no preexisting conflict or ambiguity
in the law over whether domestic referral agencies were
employers for workers’ compensation purposes, it cannot be
interpreted as applying to such matters. These contentions
are unavailing.
The Assembly Committee on Finance, Insurance and Public
Indebtedness commented that Assembly Bill No. 1370 was
intended to be “declaratory of existing law decided in
Avchen v. Kid[d]oo (1988) 200 Cal.App.3d 532 [Avchen].”
(Assem. Com. on Finance, Insurance and Public Indebtedness,
Analysis of Assem. Bill No. 1370 (1993-1994 Reg. Sess.) as
amended Apr. 12, 1993, p. 1.)
The Court of Appeal in Avchen, supra, 200 Cal.App.3d at
pages 536-537, held that a nurses’ registry was not an
employer of nurses for purposes of unemployment insurance
because of the lack of control over the nurses by the
registry and because the predecessor to the Employment
Agency Act and other statutes explicitly defined the nature
of the relationship between nurses and their registries as
one of agency, not employment. As stated by the Senate
Rules Committee, proponents of Assembly Bill No. 1370
stated “that many referral agencies operate in a manner
consistent with the principles of the [Avchen] decision and
want to codify these principles in statute as they apply to
domestic referral agencies.” (Sen. Rules Com., Off. of Sen.
Floor Analyses, Analysis of Assem. Bill No. 1370 (1993-1994
Reg. Sess.) as amended Sept. 7, 1993, p. 5.)
State Fund argues that as Avchen involved unemployment
insurance, not workers’ compensation, Assembly Bill No.
1370 could only be read as clarifying the law in that
limited area. However, in the case Riley v. Southwest
Marine, Inc. (1988) 203 Cal.App.3d 1242 (Riley), the Court
of Appeal applied Avchen to a workers’ compensation case.
In Riley, the plaintiff was retained by Manpower, Inc., a
“labor broker,” which sent Riley to work at Southwest
Marine as a general laborer. Southwest Marine provided all
the training, equipment and supervision. Manpower “dealt
only with payroll matters, issuing Riley a check on
submission of time cards and taking care of withholding
social security, federal and state taxes, and paying
premiums for unemployment insurance, workers’ compensation
and [other] insurance.” (Id. at p. 1246, fn. omitted.)
Riley was injured on the job. He filed a workers’
compensation claim and later brought a tort suit against
Southwest Marine, contending “he was not a Southwest Marine
employee and therefore was not limited to a remedy in the
nature of workers’ compensation.” (Riley, supra, 203
Cal.App.3d at p. 1247.) The trial court granted summary
judgment in favor of Southwest Marine, and the Court of
Appeal affirmed, holding that a dual employment
relationship existed as a matter of law because the
undisputed evidence demonstrated that Riley was under
Southwest Marine’s direct supervision and control at the
time of his injury. (Id. at p. 1252.)
In rejecting Riley’s claim that a tort remedy against
Southwest Marine should be allowed as an exception to the
exclusive jurisdiction of the workers’ compensation system,
the court stated, “Nor does there appear to exist any
legislative support for Riley’s proposed exception. The
borrowed servant doctrine is neither new nor only recently
applied to the labor brokerage situation. The fact the
legislative branch has not sought to amend the workers’
compensation statutes to permit a tort remedy for labor
broker employees is a strong indication of approval for the
judicial interpretation limiting such employees to the
statutory remedy in such circumstances.” (Riley, supra, 203
Cal.App.3d at p. 1259, fn. omitted.) The Court of Appeal
contrasted the situation to that presented in Avchen, where
the California Legislature had enacted legislation for
nursing labor brokers that stated they were not the
employers of nurses: “In California, the Legislature, in the
case of labor brokers in the nursing field, i.e., nurses’
registries, has specifically provided that the registries
are a nurse’s `agent’ rather than `employer.’ (See Bus. &
Prof. Code, §§ 2732.05, 9958 et seq.;[fn5]
Avchen, supra, 200 Cal.App.3d 532.)” (Riley, supra, 203
Cal.App.3d at p. 1259, fn. 11.)
Thus, the existing law that Assembly Bill No. 1370 sought
to clarify and apply to domestic referral agencies, had, at
the time Assembly Bill No. 1370 was being considered, been
interpreted as holding that nurses’ registries were not
only not employers for unemployment insurance, but also for
purposes of worker’s compensation. The Legislature is
presumed to be aware of existing law at the time it
considers enacting a statute.
Further, the fact that the stated purpose in enacting
Assembly Bill No. 1370 failed to specifically mention
workers’ compensation is of no moment. Regardless of the
original intent in enacting section 1812.5095, the language
of the statute does not, expressly or impliedly, limit its
reach to unemployment insurance. The Legislature could have
easily stated in subdivision (a) that domestic referral
agencies were “employers for unemployment insurance
purposes only.” “[A] court is not authorized in the
construction of a statute, to create exceptions not
specifically made. If the statute announces a general rule
and makes no exception thereto, the courts can make none.”
(Stockton Theatres, Inc. v. Palermo (1956) 47 Cal.2d 469,
476.)
The express language of the statute reveals that if
domestic referral agencies comply with its terms, they are
not the employers of the domestic workers, and, as a
result, are not responsible for workers’ compensation
insurance. Legislative intent may not be used to bootstrap
a meaning that cannot be found in the statutory language.
(See City of Sacramento v. Public Employees’ Retirement
System (1994) 22 Cal.App.4th 786, 793-794.) “The will of
the Legislature must be determined from the statutes;
intentions cannot be ascribed to it at odds with the
intentions articulated in the statutes.” (People v. Knowles
(1950) 35 Cal.2d 175, 182.)
State Fund points to a Senate amendment to section
1812.5095 while Assembly Bill No. 1370 was being considered
for enactment that, at first blush, provides the strongest
support for its position that it does not apply to workers’
compensation. As of August 17, 1993, the text of section
1812.5095, subdivision (a) provided in part: “An employment
agency . . . is not the employer of a domestic worker for
whom it procures, offers, refers, provides, or attempts to
provide work, if all of the following factors characterize
the nature of the relationship between the employment
agency and the domestic worker for whom the agency
procures, offers, refers, provides, or attempts to provide
domestic work. . . .” (Sen. Amend. to Assem. Bill No. 1370
(1993-1994 Reg. Sess.) Aug. 17, 1993.) However, the Senate
then amended this subdivision on August 26, 1993, to state:
“An employment agency . . . is not the employer for any
purpose of a domestic worker for whom it procures, offers,
refers, provides, or attempts to provide work, if all of
the following factors characterize the nature of the
relationship between the employment agency and the domestic
worker for whom the agency procures, offers, refers,
provides, or attempts to provide domestic work. . . .”
(Sen. Amend. to Assem. Bill No. 1370 (1993-1994 Reg. Sess.)
Aug. 26, 1993, italics added.) On September 1, 1993, the
italicized language was removed: “An employment agency . . .
is not the employer of a domestic worker for whom it
procures, offers, refers, provides, or attempts to provide
work, if all of the following factors characterize the
nature of the relationship between the employment agency
and the domestic worker for whom the agency procures,
offers, refers, provides, or attempts to provide domestic
work. . . .” (Sen. Amend. to Assem. Bill No. 1370
(1993-1994 Reg. Sess.) Sept. 1, 1993.) The Senate Rules
Committee, on September 7, 1993, described the September 1
amendment as “[d]elet[ing] provisions that would have
exempted an employment agency, under certain conditions,
from the definition of `employer’ for workers’ compensation
and other purposes. Exemptions still remain for employment
tax purposes.” (Sen. Rules Com., Off. of Sen. Floor
Analyses, Analysis of Assem. Bill No. 1370 (1993-1994 Reg.
Sess.) as amended Sept. 7, 1993, p. 3759, italics added.)
However, the September 1, 1993 Senate amendment only
deleted the singular phrase added on August 26, 1993. It
did not delete the other references to workers’
compensation which specifically state that referral
agencies complying with section 1812.5085 must inform
domestic workers and their clients that the agencies are
not responsible for workers’ compensation insurance. “When
a statute is unambiguous . . . its language cannot `be
expanded or contracted by the statements of individual
legislators or committees during the course of the
[legislative] process.’ [Citation.]” (Kanter v.
Warner-Lambert Co. (2002) 99 Cal.App.4th 780, 791.)
When the Senate version of Assembly Bill No. 1370 went to
the Assembly for concurrence in the Senate amendments, all
Senate amendments were detailed. (Assem. Off. of Research,
Concurrence in Sen. Amends. to Assem. Bill No. 1370
(1993-1994 Reg. Sess.) Sept. 7, 1993, p. 1.) The amendment
that the Senate described as omitting provisions that would
extend section 1812.5095 to workers’ compensation was,
however, not mentioned. (Assem. Off. of Research,
Concurrence in Sen. Amends. to Assem. Bill No. 1370, supra,
Sept. 7, 1993, p. 1.) Even more important, the Assembly
concurrence in the Senate amendments states that Assembly
Bill No. 1370 “[r]equired the employment agency referring or
placing a domestic worker in a job to inform that worker,
in writing, of the worker’s obligation to obtain any
necessary business permits or licenses, and to pay
unemployment insurance, state disability insurance,
workers’ compensation insurance, and other state and federal
taxes.” (Assem. Off. of Research, Concurrence in Sen.
Amends. to Assem. Bill No. 1370, supra, Sept. 7, 1993, p.
1.)
The obvious upshot of this is that the Assembly, from which
the legislation originated, did not agree with the Senate’s
unilateral statement of the import of its September 1, 1993
amendment. In sum, the legislative history of section
1812.5095 does not support State Fund’s contention that it
was intended only to apply to unemployment insurance.
E. Section 1812.5095 Does Not Contain a “Scrivener’s”
Error
State Fund’s last argument is that AIHSS’s interpretation
of section 1812.5095 results from a “scrivener’s” error.
This contention is unavailing.
“The separation of powers doctrine prevents us from
rewriting statutes that do not conflict with the
Constitution, other than to correct an obvious and minor
drafting error where necessary to effectuate the intent of
the Legislature.” (Gray Cary Ware & Freidenrich v. Vigilant
Ins. Co. (2004) 114 Cal.App.4th 1185, 1193-1194.) Here,
there is no error, either obvious or minor.
In support of its contention that section 1812.5095
contains a scrivener’s error, State Fund submits a
statement of the Senate Rules Committee as to what notice
the domestic referral agency was required to give to
domestic workers:
“This bill also specifies that: [¶] . . .
[¶] 2. An employment agency shall inform the
domestic worker in writing that he or she may be obligated
to obtain business permits or licenses; is not eligible
for unemployment insurance, state disability or workers’
compensation benefits if the employment agency is not the
employer. . . .” (Sen. Rules Com., Off. of Sen. Floor
Analyses, Analysis of Assem. Bill No. 1370 (1993-1994
Reg. Sess.) as amended September 7, 1993, pp. 3-4,
italics added.)
State Fund asserts that the “if” was inadvertently left out
of the final version of section 1812.5095, subdivision (d),
which, as specified above, states:
“An employment agency referring a domestic worker to a
job shall inform that domestic worker, in writing, on or
before the signing of the contract pursuant to paragraph
(1) of subdivision (b), that the domestic worker may be
obligated to obtain business permits or licenses, where
required by any state or local law, ordinance, or
regulation, and that he or she is not eligible for
unemployment insurance, state disability insurance, social
security, or workers’ compensation benefits through an
employment agency complying with subdivision (b).”
(Italics added.)
State Fund does not explicitly state how this purported
error helps its position. It appears, however, that State
Fund is arguing that domestic referral agencies are not
employers for workers’ compensation purposes only if they
are not deemed employers under the common law test applied
by courts in workers’ compensation cases.
However, the statement by the Senate Rules Committee,
paraphrasing subdivision (d) of section 1812.5095, is not
inconsistent with that section. The word “if” only refers
to the fact that a domestic referral agency is only
considered not to be an employer if it meets certain
criteria specified in the statute. Moreover, the “if” in the
statement by the Senate Rules Committee modifies not only
the notice as to workers’ compensation, but also as to
unemployment insurance and state disability insurance.
Thus, to accept State Fund’s argument, section 1812.5095
would also not shield domestic referral agencies from
unemployment and disability insurance obligations if they
did not meet the common law test defining employees versus
independent contractors, and section 1812.5095 would be
rendered meaningless.
DISPOSITION
Let a peremptory writ of mandate issue directing the
respondent Superior Court of San Diego County to vacate its
order of January 20, 2006, granting real party in interest
State Compensation Insurance Fund’s motion to strike
references in its complaint to Civil Code section
1812.5095, Civil Code section 1812.501, subdivision (h),
and Unemployment Insurance Code section 687.2. Our order of
May 26, 2006, staying the trial court proceedings is
vacated. Costs on the writ proceeding are awarded to
petitioner.
WE CONCUR:
HUFFMAN, Acting P. J.
McINTYRE, J.
[fn1] All further statutory references are to the Civil Code
unless otherwise specified.
[fn2] Because we are reviewing the court’s grant of State
Fund’s motion to strike portions of AIHSS’s complaint in
this matter, we accept as true all material factual
allegations contained therein. (Blank v. Kirwin (1985) 39
Cal.3d 311, 318.)
[fn3] Based upon our holding we need not consider AIHSS’s
contention that even if compliance with section 1812.5095
by itself did not exempt it from the responsibility of
maintaining workers’ compensation, the court erred in
granting State Fund’s motion to strike because that fact
would be relevant to determining if they met the common law
test for determining if it were an employer under workers’
compensation law.
[fn4] Ordinarily, the legislative history of bills that fail
to pass in the Legislature are entitled to little weight
because of the conflicting intentions of the proponents of
the legislation and those who voted against it. (Grupe
Development Co. v. Superior Court (1993) 4 Cal.4th 911,
922-923.) Here, however, Assembly Bill No. 551 did pass both
houses of the Legislature, and therefore the Legislature’s
intent in passing the legislation can be gleaned from its
legislative history.
[fn5] Former Business and Professions Code section 9958
was repealed in 1989 (Stats. 1989, ch. 704, § 1) and
replaced by Civil Code 1812.524 (Stats. 1989, ch. 704, § 2).