Court Opinion

ID: 9558344
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:08:11.331511+00
Date Added: 2024-06-11T09:08:54.633954
License: Public Domain

WERDEGAR, J., Dissenting.
The workers’ compensation claimant in this case, Patrick A. Leonard, Jr., was injured while performing non-business-related repairs on a residential property owned by his father, Patrick A. Leonard, Sr. At the time of his injury, Leonard Jr. was not his father’s employee for purposes of obtaining workers’ compensation benefits, because a residential worker who is “employed by his or her parent, spouse, or child” is excluded from the Labor Code’s definition of “employee.” (Lab. Code, § 3352, subd. (a); hereafter section 3352(a).)1 The majority nonetheless holds Leonard Jr. is entitled to benefits because the Leonards, father and son, jointly elected to bring Leonard Jr. within the compensation provisions of the workers’ compensation law. (§ 4150.)
The majority’s reasoning, as I understand it, is that Leonard Sr. made an election to include his son by “insuring against liability for compensation” (§ 4151, subd. (a)) for Leonard Jr., and Leonard Jr. made his election by failing to give notice, within five days of beginning employment, that he chose not to be covered by workers’ compensation (§ 4154, subd. (b)). It is with the first part of this reasoning that I disagree. I do not believe Leonard Sr.’s purchase of a standard endorsement to his homeowners policy—an endorsement that was required by law (Ins. Code, § 11590) and that made no mention of Leonard Jr. or any other person ordinarily excluded from workers’ compensation—can reasonably be considered an “election” to expand Leonard Sr.’s liability for workers’ compensation benefits to include those workers, like his son, who under the law would not otherwise be entitled to any benefits.
*1202The majority posits two bases for concluding the State Farm homeowners policy, as endorsed, included liability coverage for workers’ compensation benefits for family members, including Leonard Jr., working in the residence. First, the majority asserts the policy was required to cover family members under Insurance Code section 11590 (hereafter section 11590), and that the mandated coverage would therefore be read into the policy if not included. (Maj. opn, ante, at pp. 1193-1195, 1197-1199.) Second, the majority claims the language of the policy itself, by failing expressly to exclude family members from the definition of “residence employees,” covers such family members as well as other residence employees for workers’ compensation benefits. (Maj. opn., ante, at pp. 1196-1197, 1198-1199.)
Neither line of reasoning is persuasive, but it is the first that causes the most concern. The majority, by holding section 11590 requires all liability policies to include coverage for family members working in the home, and by deeming any liability policy to be an election to bring such family members within the workers’ compensation system, effectively nullifies section 3352(a)’s exclusion from the system of domestic injuries to family members. Because homeowners generally carry liability insurance as part of a standard homeowner’s policy, and because under the majority’s interpretation of section 11590 all such policies constitute an election to bring family members into the worker’s compensation system, all family members meeting the time or wage minima in section 3352, subdivision (h), will be entitled to workers’ compensation. In contravention to the plainly stated intent of section 3352(a), the son, daughter, mother or father of the homeowner, employed in child care, gardening, household repair or maintenance, will now be entitled to workers’ compensation benefits for any injury resulting in disability (permanent or temporary) or the need for medical care.
Under the majority reasoning, moreover, all liability policies must, as a matter of law, be interpreted to include coverage for family members working in the home. (Maj. opn., ante, at p. 1199.) By so holding, the majority precludes insurers from revising their standard homeowners policies so as to make clear that their workers’ compensation coverage extends only to those ordinarily entitled to benefits under the workers’ compensation law and not to those statutorily excluded therefrom.

Insurance Code Section 11590

Section 11590 provides, in relevant part: “[N]o policy providing comprehensive personal liability insurance may be issued or renewed in this state on or after January 1, 1977, unless it contains a provision for coverage against *1203liability for the payment of compensation, as defined in Section 3207 of the Labor Code, to any person defined as an employee by subdivision (d) of Section 3351 of the Labor Code. Any such policy in effect on or after January 1, 1977, whether or not actually containing such provisions, shall be construed as if such provisions were embodied therein.” (Italics added.)
Because section 11590 refers to section 3351, subdivision (d) (hereafter section 3351(d)), but not to section 3352(a), the majority concludes section 11590 requires liability policies to include workers’ compensation benefits coverage for all residential workers, as described in section 3351(d), regardless of whether they are excluded from workers’ compensation benefits under section 3352(a). (Maj. opn., ante, at pp. 1196-1198.) In my view, the majority’s reading is unsupported by the language of these related statutes, considered as a whole, and does not accord with the legislative intent, which was simply to ensure the availability of insurance coverage to pay benefits to those domestic workers whom the Legislature had brought within the scope of the workers’ compensation system.
“The workers’ compensation law predicates coverage for work injuries upon defined employment relationships. They are generally to be found, not in the definition of employer, but in the definitions of ‘employee.’ That is, an ‘employee,’ as defined by specific employment relationships, is one who is entitled to workers’ compensation coverage for an injury occurring in the course of the specified employment. [*][] The definitions of ‘employee’ are hierarchically organized, first, to include as ‘employees’ a broad class of employment relationships (§ 3351), and, second, to exclude from this class limited types of employment relationships (§ 3352).” (In-Home Supportive Services v. Workers’ Comp. Appeals Bd. (1984) 152 Cal.App.3d 720, 727 [199 Cal.Rptr. 697], fn. omitted.) In other words, sections 3351 and 3352 together set out the categories of employment relationship that do and do not bring a worker within the scope of the workers’ compensation law.2 A person is not defined as an employee of another by section 3551 alone, but by sections 3551 and 3552 together. Section 11590’s mandate of insurance coverage for those defined as employees by section 3351(d), therefore, is properly understood as referring to those domestic employees who are brought into the workers’ compensation system by section 3351(d) and are not excluded therefrom by section 3552(a).
The history of these sections’ enactment confirms this interpretation of section 11590. Sections 3351(d), 3352(a) and 11590 were enacted together *1204as urgency legislation in 1977, but all three derive from very similar versions of the same statutes, which were enacted together in 1975 and which became effective January 1, 1977. (Stats. 1975, ch. 1263, §§ 3-5, pp. 3313-3314, eff. Jan. 1, 1977; Stats. 1977, ch. 17, §§ 13, 17, 18, pp. 29-31, eff. Mar. 25, 1977.)
Between 1939 and 1977, only a very limited number of domestic workers (those working more than 52 hours per week for the same employer) were covered by workers’ compensation; all others were expressly excluded from the system. (See In-Home Supportive Services v. Workers’ Comp. Appeals Bd., supra, 152 Cal.App.3d at p. 735.) In 1975 the Legislature, by statute (chapter 1263) effective January 1, 1977, repealed the exclusion and the limited exception and added sections 3351(d)—including most domestic workers—and 3352(a)—excluding parents, children and spouses of the employer. In the same statute, the Legislature added section 11590 to the Insurance Code. The 1975 version of section 11590 provided, as does the current version, that policies of comprehensive personal liability insurance must include coverage against liability for workers’ compensation benefits payable “to any person defined as an employee by subdivision (d) of section 3351 of the Labor Code.” (Stats. 1975, ch. 1263, § 3, p. 3313.)
The summary digest prepared by the Legislative Counsel’s office in 1975 explains that the intent of this new statutory scheme was to bring most domestic workers within workers’ compensation, to exclude those employed by a parent, child or spouse, and to provide insurance for homeowners whose domestic workers were thereby brought within the workers’ compensation system. “This bill would remove such exclusions [i.e., the former law excluding most residential workers] to bring such persons formerly excluded within the scope of such [workers’ compensation] law, and would specifically include within the scope of such law persons employed by the owner of a private dwelling whose duties are incidental to the ownership, maintenance, or use of the dwelling, including the performance of household domestic service and babysitting services. [(§ 3351(d)).] This bill would, however, exclude from such coverage those persons employed in such capacities by a parent, spouse, or child. [(§ 3352(a)).] FH ... FID This bill would also prohibit, with designated exceptions, any policy of insurance providing comprehensive personal liability coverage, or endorsement thereto, from being issued, amended, or renewed in this state, on or after January 1, 1977, unless it contains a provision for coverage against liability for payment of workers’ compensation to persons brought within the scope of [the\ Workers’ Compensation Law by this bill.” (Legis. Counsel’s Dig., Assem. Bill No. 469, 2 Stats. 1975 (1975-1976 Reg. Sess.) Summary Dig., pp. 353-354, italics added.)
*1205The intent of the 1975 version of section 11590, then, was to mandate coverage for payment of workers’ compensation benefits to those domestic workers who were brought within the scope of the workers’ compensation system by other provisions of Statutes of 1975, chapter 1263, i.e., those domestic workers included under the new section 3351(d) and not excluded under the new section 3352(a). The homeowner’s spouse, child or parent, of course, was not brought within the scope of workers’ compensation by the statute, because such family members were excluded under the new section 3352(a); the Legislature, in section 11590, naturally did not intend, therefore, to mandate insurance coverage for such workers.
The 1977 urgency legislation (chapter 17 of the 1977 Statutes) made at least three important changes to the 1975 scheme, all addressing problems that came to public and legislative attention at the time the 1975 statute came into effect in January 1977.3 First, the 1975 version of section 3351(d) included only persons employed by owners of private dwellings, leaving uncertain the status of those employed by renters. The 1977 legislation added the current language, “owner or occupant.” (Stats. 1977, ch. 17, § 17, p. 30.) Second, the 1975 scheme contained no time or wage minima, thereby including one-time or casual employees within the system and subjecting the householder to possible liability for benefits to such workers. The 1977 legislation added subdivision (h) to section 3352, excluding domestic workers who worked less than 52 hours or earned less than $100 from a given employer in the 90 days before the injury. (Stats. 1977, ch. 17, § 18, p. 31.) Finally, the 1975 scheme included a provision (former Ins. Code, § 11592) allowing a purchaser of liability insurance to “delete” the workers’ compensation coverage section 11590 required insurers to include in liability policies, upon certifying he or she employed no qualifying workers in the home. A homeowner might well request deletion and make the required certification without realizing that even one-time casual hiring was included and could lead to liability for benefits. The 1977 legislation repealed former section 11592. (Stats. 1977, ch. 17, §§ 2, 13, pp. 28-29.)
These flaws in the 1975 legislation led the Legislature to fear that numerous householders would be deemed employers with employees subject to workers’ compensation, but would not have insurance to cover benefits if the workers were injured. As explained in the 1977 act’s urgency clause, “Because the workers’ compensation insurance coverage anticipated by such *1206Chapter 1263 [the 1975 act] is not readily available to many thousands of persons who would be employers under the act, it is necessary that this act take effect immediately.” (Stats. 1977, ch. 17, § 32, p. 39.) “Implicit in this history is a legislative purpose to impress the workers’ compensation obligation upon householder domestic employers only when the risk spreading mechanism of insurance is available.” (In-Home Supportive Services v. Workers’ Comp. Appeals Bd., supra, 152 Cal.App.3d at p. 736.)
It is clear, therefore, that section 11590, in both its 1975 and 1977 versions, had a simple and straightforward purpose: to ensure that owners and occupants of homes whose domestic employees would, if injured, be entitled to benefits under the workers’ compensation system obtained insurance to cover their liability for such benefits. As the Legislative Counsel explained in 1975, section 11590 was intended to provide insurance “for payment of workers’ compensation to persons brought within the scope of [the] Workers’ Compensation Law” by the 1975 bill. (Legis. Counsel’s Dig., Assem. Bill No. 469, 2 Stats. 1975 (1975-1976 Reg. Sess.) Summary Dig., p. 354.) That class of workers, of course, did not include the homeowner’s spouse, parent or child. The 1977 legislation broadened the inclusive provisions in one way (by including employees of renters), narrowed them in another (by setting time and wage minima), and tightened the insurance mandate by eliminating the insured’s option to decline coverage. No change was made to section 3352(a): The children, spouses and parents of householders continued to be excluded from the scope of the workers’ compensation law and, hence, from the intended scope of section 11590’s mandatory coverage.
Section 11590—part of the Insurance Code—was not intended to create a new definition of “employee” broader than that in the Labor Code or to expand the scope of the workers’ compensation law, but merely to ensure insurance coverage for those domestic workers the Legislature had, in Labor Code sections 3351 and 3352, defined as employees for purposes of workers’ compensation. The majority, however, interprets section 11590 as creating a new, broader, class of “employees” for whose possible receipt of benefits insurance coverage must be provided, even though the members of this new class are not “employees” entitled to any benefits under the Labor Code. Through the automatic “election” the majority finds in the homeowner’s or occupant’s purchase of such insurance, moreover, these additional workers would, without the knowledge of either employer or employee, be brought within the workers’ compensation system. In this topsy-turvy manner, an Insurance Code provision designed merely to provide coverage for existing exposure becomes an indirect, and surely unintended, expansion of *1207the scope of the workers’ compensation system itself, displacing an express exclusion found in the Labor Code’s own delineation of that scope. I cannot agree to that interpretation of the statutes.

The Language of the State Farm Policy

The majority’s second basis for deeming Leonard Sr.’s purchase of a standard State Farm homeowners policy to be an “election” to bring his son within the scope of the workers’ compensation system is the assertion the language of the policy provides coverage for workers’ compensation benefits payable to Leonard Jr. for injuries sustained in his employment in the residence. Again, I disagree.
The majority relies on the policy’s definition of “residence employees” as well as on the endorsement’s statement of “Who is Covered.” These policy provisions, as the majority emphasizes, define residence employee in accord with section 3351(d), excluding those who fall below the time and wage minima of section 3352, subdivision (h), but without any express exclusion of family members. The majority concludes that under a straightforward reading of the policy, Leonard Jr. was therefore a “residence employee.”
I agree Leonard Jr. was a residence employee under the policy. That he was covered for workers’ compensation benefits while working in the residence does not, however, follow. In my view, a reasonable insured and insurer would both understand the endorsement to provide (1) liability coverage for workers’ compensation benefits to those residence employees whose injuries are compensable within the workers’ compensation system, and (2) liability coverage for any civil damages payable to those residence employees who do not come within the workers’ compensation system. Injuries to Leonard Jr. occurring in his residential work were excluded from the scope of the worker’s compensation law by section 3352(a). The endorsement therefore provided his father with coverage for any civil damages he became liable to pay as a result of Leonard Jr.’s injuries. The endorsement, however, cannot reasonably be read as an election by Leonard Sr. to expand the scope of workers’ compensation benefits for which he might become liable.
The endorsement, although titled “Workers’ Compensation (Residence Employees),” contains two separate coverages, one for workers’ compensation benefits and the other for ordinary damages:
“Coverage I” insures Leonard Sr., with respect to residence employees, for “all benefits required of an insured by the California Workers’ Compensation Law.” Under coverage I, State Farm further agreed to be directly and *1208primarily liable “to any residence employee of an insured entitled to the benefits of the California Workers’ Compensation Law.” (Italics added.)
“Coverage II” insures Leonard Sr., again with respect to residence employees, for “all damages for which the insured is legally liable because of bodily injury sustained by a residence employee ... in the course of employment by the insured.”
As a family member categorically excluded from the system under section 3552(a), Leonard Jr. was not “entitled” to any benefits under the workers’ compensation law, and the law “required” no benefits be paid to him. Thus the endorsement’s coverage I simply did not include benefits for injuries to Leonard Jr. while working in the home. Leonard Sr. was covered, however, under coverage II, for any ordinary civil damages he might become liable for as a result of Leonard Jr.’s injuries.
The majority observes that exclusionary clauses in insurance policies must be conspicuous and clear, and that the State Farm policy contains no such exclusion for parents, spouses or children of the insured. (Maj. opn., ante, at p. 1197.) While true, this observation fails to advance the majority’s argument. Leonard Jr. was not excluded from coverage under the policy and endorsement—any civil damages for which Leonard Sr. might become liable as a result of his injuries were expressly covered under coverage II of the endorsement—but neither did Leonard Sr.’s purchase of coverage for any benefits payable under the workers’ compensation law bring him within the workers’ compensation system, from which he was expressly excluded by section 3352(a).
To interpret the policy as expanding a homeowner’s workers’ compensation liability beyond its statutory scope is particularly anomalous where, as here, the policy endorsement merely implements a statutory command for insurance coverage. As we have explained in prior cases, “ ‘Where insurance coverage is required by law, the statutory provisions are incorporated into the insurance contract.’ ” (Transamerica Ins. Co. v. Tab Transportation, Inc. (1995) 12 Cal.4th 389, 398 [48 Cal.Rptr.2d 159, 906 P.2d 1341].) As demonstrated earlier in this opinion, the purpose of section 11590 was simply to mandate insurance coverage for those whom the Labor Code entitled to workers’ compensation benefits. The Labor Code’s provisions defining the eligible class, including section 3352(a), should therefore also govern interpretation of the mandated policy, at least in the absence of any indication the parties actually intended to expand coverage so as to “elect in” workers statutorily excluded from the system.
*1209Leonard Sr. purchased a standard homeowners policy, which contained a mandatory endorsement protecting him from liability for any benefits “required of an insured by the California Workers’ Compensation Law ... to any residence employee of an insured entitled to the benefits of the California Workers’ Compensation Law.” There is no evidence he purchased workers’ compensation insurance so as to cover employees not entitled to such benefits or any particular employee. Indeed, the application for insurance Leonard Sr. completed contains a space labelled “Workers’ Compensation Policy requested?,” but no mark to indicate such a request was made, thus suggesting his intent was to purchase only such coverage as mandated by section 11590. As already discussed, that statute does not mandate coverage of family members working in the home, who are excluded from the definition of employee by section 3352(a). In my view, no reasonable insured would expect the State Farm policy to create workers’ compensation liability or coverage for family members excluded from benefits by section 3552(a).

Conclusion

The State Farm homeowners policy Leonard Sr. purchased did not constitute an election on his part to bring excluded domestic employees within the workers’ compensation system. Leonard Jr. was excluded from benefits by section 3552(a). I would affirm the judgment of the Court of Appeal.
Kennard, J., concurred.

All further unspecified statutory references are to the Labor Code.

More precisely, the definition of employee is contained in the provisions of article 2 of the workers’ compensation law, sections 3350 to 3371. While sections 3351 and 3352 contain the primary inclusive and exclusive provisions, a number of other sections in article 2 contain inclusions or exclusions for particular situations.

For background on the 1977 legislation, see, e.g., Review of Selected 1977 California Legislation: Workers’ Compensation; Domestic Workers (1978) 9 Pacific L.J. 281, 683-686; Auerbach, How to Avoid Hassle on Workers’ Comp., L.A. Times (Dec. 26, 1976) pt. VII, pp. 1-2; Auerbach, Horror Stories Foreseen After New Law in Force, L.A. Times (Dec. 26, 1976) pt. VII, p. 2.)