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<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-02</ns0:ActionDate>
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<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Committee on Insurance</ns0:AuthorText>
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<ns0:Name>Committee on Insurance</ns0:Name>
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<ns0:Title> An act to amend and repeal Section 4651 of the Labor Code, relating to workers’ compensation. </ns0:Title>
<ns0:RelatingClause>workers’ compensation</ns0:RelatingClause>
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<ns0:Subject>Workers’ compensation: prepaid cards.</ns0:Subject>
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<html:p>Existing law establishes a workers’ compensation system, administered by the Administrative Director of the Division of Workers’ Compensation, to compensate an employee for injuries sustained in the course of employment, which, in the case of the death of an employee, includes a death benefit. Existing law governs temporary and permanent disability indemnity payments and prohibits a payment made by a written instrument unless it is immediately negotiable and payable in cash, among other things. Existing law, until January 1, 2027, allows an employer to commence a program under which disability indemnity payments are deposited in a prepaid card account for employees.</html:p>
<html:p>This bill would extend the authorization to deposit indemnity payments in a prepaid card account indefinitely.</html:p>
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<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
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<ns0:Num>SECTION 1.</ns0:Num>
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Section 4651 of the
<ns0:DocName>Labor Code</ns0:DocName>
, as amended by Section 1 of Chapter 806 of the Statutes of 2024, is amended to read:
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<ns0:Num>4651.</ns0:Num>
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(a)
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(1)
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A disability indemnity payment shall not be made by any written instrument unless it is immediately negotiable and payable in cash, on demand, without discount, at some established place of business in the state.
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(2)
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This section does not prohibit an employer from depositing the disability indemnity payment in an account in any bank, savings and loan association, or credit union of the employee’s choice in this state, provided the employee has voluntarily authorized the deposit, nor does it prohibit an employer from electronically depositing the disability indemnity payment in an account in any bank, savings and loan association, or credit union, that the employee has previously authorized to receive electronic deposits of payroll,
unless the employee has requested, in writing, that disability indemnity benefits not be electronically deposited in the account.
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(3)
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(A)
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An employer may commence a program under which disability indemnity payments are deposited in a prepaid card account for the employee. The employee shall provide written consent to the employer to use a prepaid card account for the employee’s disability payments. The prepaid card account shall meet the applicable requirements of Section 1339.1 of the Unemployment Insurance Code. For purposes of this section, the terms “prepaid card” and “prepaid card account” have the same meanings as defined in Section 1339.1 of the Unemployment Insurance Code. For purposes of this section, a prepaid card shall also meet all of the following requirements:
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(i)
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Allow the employee to withdraw the entire balance on the card in one transaction
without incurring fees.
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(ii)
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Allow the employee reasonable access to in-network automatic teller machines (ATMs).
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(iii)
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Allow the employee to make point-of-sale purchases without incurring fees from the financial institution.
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(iv)
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Prohibit a link to any form of credit, including a loan against future payments or a cash advance on future payments.
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(B)
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The fees associated with the use of the prepaid card shall be disclosed to the employee in writing. The only permissible fees associated with the use of a prepaid card are those for a replacement card provided through expedited delivery, out-of-network ATM fees on the third and subsequent withdrawal per deposit, and fees associated with foreign transactions.
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(C)
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If an employee has consented to use the prepaid card payment system under this section, either the employer or the employee may opt to change the method of payment to another method consistent with this section by providing 30 days’ written notice to the other party.
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(b)
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It is not a violation of this section if either of the following delays occurs in connection with a transaction authorized pursuant to this section, and the delay is caused solely by the application of state or federal banking laws or regulations:
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(1)
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A delay in the negotiation of a written
instrument, including a delay in the deposit or electronic deposit of a check to a prepaid card account.
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(2)
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A delay in the deposit of a disability indemnity payment to a prepaid card account.
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<ns0:Num>SEC. 2.</ns0:Num>
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Section 4651 of the
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, as amended by Section 2 of Chapter 806 of the Statutes of 2024, is repealed.
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