An act to add Section 3720.2 to the Labor Code, relating to workers’ compensation.
Summary
SB 847 adds Section 3720.2 to the Labor Code to strengthen collection of workers’ compensation liens in cases involving uninsured employers or substantial shareholders who transfer real property after an employee injury but before a lien is recorded. The bill authorizes the Division of Workers’ Compensation director to examine such transfers and determine whether the transferor actually retained a beneficial interest in the property, creating a resulting trust that can still be reached by the lien. It also allows the director to make a prima facie finding of a resulting trust when certain indicators are present, such as a deed showing a gift transfer, no transfer tax paid, or facts suggesting an intent to hinder, delay, or defraud reimbursement to the Uninsured Employers Benefits Trust Fund.
If the director makes that determination, the recorded certificate of lien attaches to the resulting trust as though the transfer had not occurred. The bill requires notice to both transferor and transferee, gives them a right to request a prompt administrative hearing, and allows judicial review by writ of mandate in superior court. It also expressly preserves the rights of bona fide purchasers and encumbrancers, limiting the bill’s reach to transfers that have not already passed to protected third parties.
Impact
The bill expands the enforcement tools available under California’s workers’ compensation lien statutes by adding a new mechanism to challenge post-injury property transfers that may be designed to evade collection. It affects Labor Code Section 3720 and related lien procedures by authorizing the director to treat certain transfers as resulting trusts and to attach liens to those interests, thereby increasing the likelihood that real property remains available to satisfy reimbursement claims involving the Uninsured Employers Benefits Trust Fund. The bill primarily affects uninsured employers, substantial shareholders, transferees of real property, and injured workers whose claims are being reimbursed by the fund.
Sentiment
The available voting history shows strong and consistent support for SB 847, with unanimous or near-unanimous votes at each recorded stage and no recorded opposition in the provided materials. The bill moved through committee and floor votes on consent-calendar tracks, suggesting it was viewed as a relatively noncontroversial enforcement measure. No committee transcript excerpts were provided, so there is no recorded debate in the supplied materials indicating significant public disagreement.
Contention
The main potential point of contention is the bill’s authorization for the director to infer a resulting trust from circumstantial evidence and to record a lien before a full court proceeding, which could be viewed as expanding administrative power over property transfers. Transferors and transferees may be concerned about due process, the speed of the hearing timeline, and the possibility of liens attaching based on a prima facie finding. On the other hand, supporters would likely emphasize the need to prevent uninsured employers from shielding assets and to protect the Uninsured Employers Benefits Trust Fund, while the bill’s express protection for bona fide purchasers and encumbrancers appears designed to limit collateral effects on innocent third parties.