(a) It is the policy of this state to vigorously enforce the laws requiring employers to secure the payment of compensation as required by Section 3700 and to protect employers who comply with the law from those who attempt to gain a competitive advantage at the expense of their workers by failing to secure the payment of compensation.

(b) In order to ensure that the laws requiring employers to secure the payment of compensation are adequately enforced, the Labor Commissioner shall establish and maintain a program that systematically identifies unlawfully uninsured employers. The Labor Commissioner, in consultation with the Administrative Director of the Division of Workers’ Compensation and the director, may prioritize targets for the program in consideration of available resources. The employers shall be identified from data from the Uninsured Employers’ Fund, the Employment Development Department, the rating organizations licensed by the Insurance Commissioner pursuant to Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of Division 2 of the Insurance Code, and any other sources deemed likely to lead to the identification of unlawfully uninsured employers. All state departments and agencies and any rating organization licensed by the Insurance Commissioner pursuant to Article 3 (commencing with Section 11750) of Chapter 3 of Part 3 of Division 2 of the Insurance Code shall cooperate with the Labor Commissioner and on reasonable request provide information and data in their possession reasonably necessary to carry out the program.

(c) As part of the program, the Labor Commissioner shall establish procedures for ensuring that employers with payroll but with no record of workers’ compensation coverage are contacted and, if no valid reason for the lack of record of coverage is shown, inspected on a priority basis.

(d) The Labor Commissioner shall annually, not later than March 1, prepare a report concerning the effectiveness of the program, publish it on the Labor Commissioner’s Web site, as well as notify the Legislature, the Governor, the Insurance Commissioner, and the Administrative Director of the Division of Workers’ Compensation of the report’s availability. The report shall include, but not be limited to, all of the following:

(1) The number of employers identified from records of the Employment Development Department who were screened for matching records of insurance coverage or self-insurance.

(2) The number of employers identified from records of the Employment Development Department that were matched to records of insurance coverage or self-insurance.

(3) The number of employers identified from records of the Employment Development Department that were notified that there was no record of their insurance coverage.

(4) The number of employers responding to the notices, and the nature of the responses, including the number of employers who failed to provide satisfactory proof of workers’ compensation coverage and including information about the reasons that employers who provided satisfactory proof of coverage were not appropriately recognized in the comparison performed under subdivision (b). The report may include recommendations to improve the accuracy and efficiency of the program in screening for unlawfully uninsured employers.

(5) The number of employers identified as unlawfully uninsured from records of the Uninsured Employers’ Benefits Trust Fund or from records of the Division of Workers’ Compensation, and the number of those employers that are also identifiable from the records of the Employment Development Department. These statistics shall be reported in a manner to permit analysis and estimation of the percentage of unlawfully uninsured employers that do not report wages to the Employment Development Department.

(6) The number of employers inspected.

(7) The number and amount of penalties assessed pursuant to Section 3722 as a result of the program.

(8) The number and amount of penalties collected pursuant to Section 3722 as a result of the program.

(e) The allocation of funds from the Workers’ Compensation Administration Revolving Fund pursuant to subdivision (a) of Section 62.5 shall not increase the total amount of surcharges pursuant to subdivision (e) of Section 62.5. Startup costs for this program shall be allocated from the fiscal year 2007–08 surcharges collected. The total amount allocated for this program under subdivision (a) of Section 62.5 in subsequent years shall not exceed the amount of penalties collected pursuant to Section 3722 as a result of the program.

(Amended by Stats. 2007, Ch. 662, Sec. 2. Effective January 1, 2008.)