agreed to pay the compensation, if any, for which the employer is liable, and may file a copy of such notice with the commission. If it shall thereafter appear to the satisfaction of the commission that the insurance carrier has, through the issuance of its contract of insurance or otherwise, assumed such liability for compensation, such employer shall thereupon be relieved from liability for compensation to such claimant and the insurance carrier shall, after notice, be substituted in place of the employer in any proceeding theretofore or thereafter instituted by such person to recover such compensation, and the employer shall be dismissed therefrom. Such proceeding shall not abate on account of such substitution, but shall be continued against such insurance carrier.

(f) Where any employer is insured against liability for compensation with any insurance carrier and such insurance carrier shall have paid any compensation for which the employer was liable, or shall have assumed the liability of the employer therefor, it shall be subrogated to all the rights and duties of the employer and may enforce any such rights in its own name.

SEC. 35. (a) If any insurance policy shall be issued covering liability for compensation, which policy shall contain any limitation as to the compensation payable, such limitation shall be printed in the body of such policy in boldface type and in addition thereto the words "limited compensation policy" shall be printed on the top of the policy in boldfaced type not less than eighteen point in size.

(b) No insurance carrier shall insure against the liability of the employer for damages recoverable at law by the injured employee under the optional provisions contained in section twelve hereof, and any insurance carrier liable to any such injured employee for compensation upon the payment of the same shall have the same option given by said section twelve to such employee and shall be fully subrogated to his rights, and may enforce such liability for damages against the employer in its own name, anything in the insurance contract to the contrary notwithstanding.

SEC. 36. There is hereby created and established a fund to be known as the "State Compensation Insurance Fund," to be administered by the Industrial Accident Commission of the State, without liability on the part of the State beyond the amount of said fund, for the purpose of insuring employers against liability for compensation under this act and insuring to employees and other persons the compensation fixed by this act for employees and their dependents.

SEC. 37. (a) The State Compensation Insurance Fund shall be a revolving fund and shall consist of such specific appropriations as the legislature may from time to time make or set aside for the use of such fund, all premiums received and paid into the said fund for compensation insurance issued, all property and securities acquired by and through the use of moneys belonging to said fund and all interest earned upon moneys belonging to said fund and deposited or invested, as herein provided.

(b) Said fund shall be applicable to the payment of losses sustained on account of insurance and to the payment of the salaries and other expenses to be charged against said fund in accordance with the provisions contained in this act.

(c) Said fund shall, after a reasonable time during which it may establish a business, be fairly competitive with other insurance carriers, and it is the intent of the legislature that said fund shall ultimately become neither more nor less than self-supporting.

Insurer's rights.

Limited poli

cies.

Liability for

damages.

State insurance fund.

Same subject.

Powers of com

SEC. 38. (a) The commission is hereby vested with full power, mission. authority and jurisdiction over the State Compensation Insurance Fund and may do and perform any and all things whether herein specifically designated, or in addition thereto, which are necessary or convenient in the exercise of any power, authority or jurisdiction over said fund in the administration thereof, or in connection with the insurance business to be carried on by it under the provisions of this act, as fully and completely as the governing body of a private insurance carrier might or could do.

(b) The commission shall have full power and authority, and it shall be its duty, to fix and determine the rates to be charged by the State

Powers of manager.

Rates.

Compensation Insurance Fund for compensation insurance, and to manage and conduct all business and affairs in relation thereto, all of which business and affairs shall be conducted in the name of the State Compensation Insurance Fund, and in that name, without any other name or title, the commission may

(1) Sue and be sued in all the courts of the State in all actions arising out of any act, deed, matter or thing made, omitted, entered into, done. or suffered in connection with the State Compensation Insurance Fund, the administration, management or conduct of the business or affairs relating thereto.

(2) Make and enter into contracts of insurance as herein provided, and such other contracts or obligations relating to the State Compensation Insurance Fund as are authorized or permitted under the provisions of this act.

(3) Invest and reinvest the moneys belonging to said fund as hereinafter provided.

(4) Conduct all business and affairs, relating to the State Compensation Insurance Fund, whether herein specifically designated or in addition thereto.

(c) The commission may delegate to the manager of the State Compensation Insurance Fund, or to any other officer, under such rules and regulations and subject to such conditions as it may from time to time prescribe, any of the powers, functions or duties, conferred or imposed on the commission under the provisions of this act in connection with the State Compensation Insurance Fund, the administration, management and conduct of the business and affairs relating thereto, and the officer or officers to whom such delegation is made may exercise the powers and functions and perform the duties delegated with the same force and effect as the commission, but subject to its approval.

(d) The commission shall not, nor shall any commissioner, officer or employee thereof, be personally liable in his private capacity for or on account of any act performed or contract or other obligation entered into or undertaken in an official capacity, in good faith and without intent to defraud, in connection with the administration, management or conduct of the State Compensation Insurance Fund, its business or other affairs relating thereto.

SEC. 39. In conducting the business and affairs of the State Compensation Insurance Fund, the manager of the said fund or other officer to whom such power and authority may be delegated by the commission, as provided by subsection (c) of section thirty-eight hereof, shall have full power and authority:

(1) To enter into contracts of insurance, insuring employers against liability for compensation and insuring to employees and other persons the compensation fixed by this act.

(2) To sell annuities covering compensation benefits.

(3) To decline to insure any risk in which the minimum requirements of the commission with regard to construction, equipment and operation are not observed, or which is beyond the safe carrying of the State Compensation Insurance Fund, but shall not have power or authority, except as otherwise provided in this subdivision, to refuse to insure any compensation risk tendered with the premium therefor. (4) To reinsure any risk or any part thereof.

(5) To inspect and audit, or cause to be inspected and audited the pay rolls of employers applying for insurance against liability for compensation.

(6) To make rules and regulations for the settlement of claims against said fund and to determine to whom and through whom the payments of compensation are to be made.

(7) To contract with physicians, surgeons, and hospitals for medical and surgical treatment and the care and nursing of injured persons entitled to benefits from said fund.

SEC. 40. (a) It shall be the duty of the commission to fix and determine the rates to be charged by the State Compensation Insurance Fund for compensation insurance coverage as herein provided, and such rates shall be fixed with due regard to the physical hazards of each industry, occupation or employment and, within each class, so

far as practicable, in accordance with the elements of bodily risk or safety or other hazard of the plant or premises or work of each insured and the manner in which the same is conducted, together with a reasonable regard for the accident experience and history of each such insured, and the means and methods of caring for injured persons, but such rates shall take no account of the extent to which the employees in any particular establishment have or have not persons dependent upon them for support.

(b) The rates so made shall be that percentage of the pay roll of any employer which, in the long run and on the average, shall produce a sufficient sum, when invested at three and one-half per cent interest: (1) To carry all claims to maturity; that is to say the rates shall be based upon the "reserve" and not upon the "assessment" plan; (2) To meet the reasonable expenses of conducting the business of such insurance;

(3) To produce a reasonable surplus to cover the catastrophe hazard. SEC. 41. The insurance contracts entered into between the State Compensation Insurance Fund and persons insuring therewith may be either limited or unlimited and issued for one year or, in the form of stamps or tickets or otherwise, for one month or any number of months less than one year, or for one day or any number of days less than one month, or during the performance of any particular work, job or contract: Provided, That the rates charged shall be proportionately greater for a shorter than for a longer period and that a minimum premium charge shall be fixed in accordance with a reasonable rate for insuring one person for one day. Nothing in this act shall be construed to prevent any person applying for compensation insurance from being covered temporarily until the application is finally acted upon, or to prevent the insured from surrendering any policy at any time and having returned to him the difference between the premium paid and the premium at the customary short term for the shorter period which such policy has already run. The State Compensation Insurance Fund may at any time cancel any policy, after due notice, upon a pro rata basis of premium repayment.

Contracts.

Who may be in

SEC. 42. The State Compensation Insurance Fund may issue policies, including with their employees, employers who perform labor sured. incidental to their occupations, and including also members of the families of such employers engaged in the same occupation, such policies insuring to such employers and working members of their families the same compensations provided for their employees, and at the same rates: Provided, That the estimations of their wage values, respectively, shall be reasonable and separately stated in and added to the valuation of their pay rolls upon which their premium is computed. Such policies may likewise be sold to self-employing persons and to casual employees, who, for the purpose of such insurance, shall be deemed to be employees within the meaning of sections twelve to thirty-five, inclusive, of this act.

SEC. 43. The treasurer of the State shall be custodian of all moneys and securities belonging to the State Compensation Insurance Fund, except as otherwise provided in this act, and shall be liable on his official bond for the safe-keeping thereof. All moneys belonging to said fund collected or received by the commission, or the manager of the State Compensation Insurance Fund, under and by virtue of the provisions of this act, shall be delivered to the treasurer of the State or may be deposited to his credit in such bank or banks throughout the State as he may, from time to time, designate, and such moneys when so delivered or deposited shall be credited by the treasurer to the said fund and no moneys received or collected on account of such fund shall be expended or paid out of such fund without first passing into the State treasury and being drawn therefrom as provided in this act. In like manner there shall be delivered to the treasurer all securities belonging to said fund which shall be held by him until otherwise diposed of as provided in this act.

SEC. 44. (a) The commission shall submit each month to the State board of control an estimate of the amount necessary to meet the current disbursements from the State Compensation Insurance Fund during each succeeding calendar month and, when such estimate shall be

Custodian fund.

of

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mates.

esti

Investments.

Municipalities,

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Schedules rates to be nished.

Reports.

of

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Misrepresenting pay rolls.

approved by the State board of control, the controller is directed to draw his warrant on said fund in favor of said commission for such amount, and the treasurer is authorized and directed to pay the same.

(b) At the end of each calendar month the commission shall account to the State board of control and the State controller for all moneys so received, furnishing proper vouchers therefor.

(c) During the months of January and of July of each year the State board of control or the commission shall cause a valuation to be made of the properties and securities which have been acquired and which are held for said fund, and shall report the results of the same to the State controller, whose duty it shall be to keep a special ledger account showing all of the assets pertaining to the State Compensation Insurance Fund. In the controller's general ledger this fund account may be carried merely as a cash account, like other accounts of funds in the State treasury, and therein only the actual cash coming into the State Compensation Insurance Fund shall be credited to such fund. SEC. 45. (a) The commission shall cause all moneys in the State Compensation Insurance Fund, in excess of current requirements, to be invested and reinvested, from time to time, in the securities now or hereafter authorized by law for the investment of funds of savings banks.

(b) The commission shall, from time to time, submit to the State board of control an estimate of the amount required by it for investment, which estimate shall be accompanied by a full description of the kind and character of the investments to be made and, when such estimate shall be approved by the State board of control, the controller is directed to draw his warrant on the State Compensation Insurance Fund in favor of the commission for such amount and the treasurer is authorized and directed to pay the same.

(c) At the end of each calendar month the commission shall account to the said board of control and the State controller for all moneys so received, furnishing proper vouchers therefor.

(d) All moneys in said fund, in excess of current requirements and not otherwise invested, may be deposited by the State treasurer from time to time in the banks authorized by law to receive deposits of public moneys under the same rules and regulations that govern the deposit of other public funds and the interest accruing thereon shall be credited to the State Compensation Insurance Fund.

SEC. 46. Each county, city and county, city, school district, or other public corporation within the State, may insure against its liability for compensation, with the State Compensation Insurance Fund and not with any other insurance carrier unless such fund shall refuse to accept the risk when the application for insurance is made, and the premium therefor shall be a proper charge against the general fund of each such political subdivision of the State.

SEC. 47. When the premium rates for insurance in the State Compensation Insurance Fund shall have been established the commission shall furnish schedule of rates and copies of the forms of policy to the commissioner of labor, to the clerk and to the treasurer of every county, city and county, and city in the State, and it shall be the duty of every public officer to whom the foregoing may be furnished to fill out and transmit to the manager of the State Compensation Insurance Fund applications for compensation insurance in such fund and to receive and transmit to said manager all premiums paid on account of any policy issued or applied for.

SEC. 48. The commission shall each quarter make to the governor of the State, reports of the business done by the State Compensation Insurance Fund during the previous quarter, and a statement of the fund's resources and liabilities, and it shall be the duty of the State board of control to audit such reports and to cause an abstract thereof to be published one or more times in at least two newspapers of general circulation in the State. The commission shall likewise make to the State insurance commissioner all reports required by law to be made by other insurance carriers.

SEC. 49. Any employer who shall willfully misrepresent the amount of the pay roll upon which his premium under this act is to be based shall be liable to the State in ten times the amount of the difference

in premium paid and the amount the employer should have paid had his pay roll been correctly computed, and the liability to the State under this section shall be enforced in a civil action in the name of the State Compensation Insurance Fund and any amount so collected shall become a part of said fund.

SEC. 50. Any person who willfully misrepresents any fact in order to obtain insurance at less than the proper rate for such insurance, or in order to obtain any payments out of such fund, shall be guilty of a misdemeanor.

SEC. 51. The following terms, as used in sections fifty-one to seventytwo, inclusive, of this act, shall, unless a different meaning is plainly required by the context, be construed as follows:

(1) The phrase "place of employment" shall mean and include every place, whether indoors or out or underground, or elsewhere, and the premises appurtenant thereto, where, either temporarily or permanently, any industry, trade, work or business is carried on, or where any process or operation directly or indirectly related to any industry, trade, work or business, is carried on, and where any person is directly or indirectly employed by another for direct or indirect gain or profit, but shall not include any place where persons are employed solely in farm, dairy, agricultural, viticultural, or horticultural labor, in stock or poultry raising or in household domestic service.

(2) The term "employment" shall mean and include any trade, work, business, occupation, or process of manufacture, or any method of carrying on such trade, work, business, occupation, or process of manfacture in which any person may be engaged, except where persons are employed solely in farm, dairy, agricultural, viticutural, or horticultural labor, in poultry or stock raising or in household domestic service.

(3) The term "employer" shall mean and include every person, firm, voluntary association, corporation, officer, agent, manager, representative or other person having control or custody of any employment, place of employment or of any employee.

(4) The term "employee" shall mean and include every person who may be required or directed by any employer, in consideration of direct or indirect gain or profit, to engage in any employment, or to go to work or be at any time in any place of employment.

(5) The term "order" shall mean and include any decision, rule, regulation, direction, requirement or standard of the commission or any other determination arrived at or decision made by such commission under the safety provisions of this act.

(6) The term "general order" shall mean and include such order made, under the safety provisions of this act, as applies generally throughout the State to all persons, employments or places of employment, or all persons, employments or places of employment of a class under the jurisdiction of the commission. All other orders of the commission shall be considered special orders.

(7) The term "local order" shall mean and include any ordinance, order, rule, or determination of any board of supervisors, city council, board of trustees or other governing body of any county, city and county, city or of any school district or other public corporation, or an order or direction of any other public official or board or department upon any matter over which the industrial accident commission has jurisdiction.

(8) The terms "safe" and "safety" as applied to an employment or a place of employment shall mean such freedom from danger to the life or safety of employees as the nature of the employment will reasonably permit.

(9) The terms "safety device" and "safeguard" shall be given a broad interpretation so as to include any practicable method of mitigating or preventing a specific danger.

SEC. 52. Every employer shall furnish employment which shall be safe for the employees therein and shall furnish a place of employment which shall be safe for employees therein, and shall furnish and use such safety devices and safeguards, and shall adopt and use such practices, means, methods, operations and processes as are reasonably adequate to render such employment and place of employment safe, and

Misrepresen

tations.

Definitions.

Duties of employer as to safety.