Leo's Associates Inc. v. Department of Industrial Relations

Opinion

EPSTEIN, Acting P. J.

Leo’s Associates, Inc., appeals from a judgment denying its petition for writ of mandamus, filed under California Code of Civil Procedure section 1094.5. It challenges the imposition of penalties by the Department of Industrial Relations, Division of Labor Standards Enforcement (the Division) for failure to have workers’ compensation insurance coverage in force on a particular date. The policy had lapsed before that date

[630]

and had not been reinstated at that time. It was subsequently reinstated retroactive to the date of lapse. It is appellant’s position, in the trial court and in this court, that because of this reinstatement, the penalties should have been set aside. The trial court took a different view, as do we. We affirm.

FACTUAL AND PROCEDURAL SUMMARY

At about midnight on Friday, January 26, 2001, Deputy Labor Commissioner William Egan of the Division conducted an inspection at a business owned by appellant Leo’s Associates. Egan asked to see proof of workers’ compensation insurance in force, as required by Labor Code section 3700. Mr. Dean Gettleson, the owner of Leo’s Associates, was not able to provide proof of coverage. Pursuant to Labor Code sections 3710.1 and 3722, Egan issued a stop order and penalty assessment of $18,000, based on a $1,000 fine for each noncovered employee. (See

Woodline Furniture Mfg. Co. v. Department of Industrial Relations

(1994) 23 Cal.App.4th 1653, 1657, fn. 3 [29 Cal.Rptr.2d 17].)

Appellant had been insured for workers’ compensation through the State Compensation Insurance Fund (SCIF). On October 24, 2000, SCIF notified appellant that the policy was subject to cancellation, effective November 7, 2000, unless all past-due payroll reports and premium payments were made by that date. Appellant submitted the payroll reports on time but paid only a portion of the premium. This was done on January 5, 2001, which brought the policy current to January 1, 2001. Appellant had no documentation of coverage in force at the time of the January 26, 2001 inspection. On February 7, 2001, SCIF sent a notification to appellant stating, “Cancellation withdrawn. This voids cancellation effective 11-07-00. Coverage continues without lapse.” In May 2001, SCIF provided a certificate of coverage for the period, which included January 26, 2001.