Calif. Labor Rate Survey Bill Amended

Order Reprints

July 10, 2018—A California labor rate survey bill has been amended and re-referred to the California Senate Insurance Committee.

The committee voted recently to advance Assembly Bill 2276, with the purpose to supplement the auto body labor rate survey laws and clarify conditions.

The bill is being opposed by the California Autobody Association in addition to caution from the California Department of Insurance.

AB 2276 requirements include surveying a minimum of 30 auto body repair shops or 30 percent of auto body repair shops, whichever is greater. The insurer or auto body repair shop could negotiate a labor rate that is higher or lower than the prevailing auto body repair labor rate. 

Amendments to the bill include that "the bill would eliminate a rebuttable presumption that the insurer has attempted, in good faith, to effectuate a fair and equitable labor rate or adjustment of the labor rate component of a written estimate, as specified, if the survey complies with specified regulations."

According to the amended bill:

Market conditions means various local economic factors, including, but not limited to, labor costs, rent, land prices, and local laws and regulations.

An auto body repair labor rate survey shall cover the boundaries of local workforce development areas established by the Employment Development Department that are in effect on January 1 of the surveyed year. A geographic area for this purpose shall not be larger than a county.

Furthermore, speciality repair rates may be negotiated on an individual basis by considering evidence of regularly charged rates, degree of specialty, training, equipment, local market, and other relevant factors.

"This section shall not be construed to require an insurer to include in the calculation of the prevailing auto body repair labor rate a survey response that exceeds the posted labor rate for the work performed performed, provided the insurer has evidence on file showing the auto body repair shop’s posted labor rate. An insurer may request additional reasonable information to substantiate responses received from the survey. The insurer shall notify the auto body repair shop if a response is not included in the calculation, and shall include an explanation for the exclusion."

The full amended text of the bill can be found here.

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