Using an out-of-state bank to issue California workers' compensation indemnity payments is:

• A. Acceptable
• B. Unacceptable
• C. Ground for a 4650 penalty
• D. Acceptable, if the checks are immediately negotiable at some established place of business in the state.

Answer: (D)

Indemnity payments in California can come from an out‑of‑state bank as long as the payment instrument is immediately negotiable in California. The key idea is that the employee must be able to cash or deposit the check promptly at a California-based location, so there’s no undue delay in receiving benefits. When a check is drawn on an out‑of‑state bank, it’s still acceptable if, at an established place of business in the state, the check can be negotiated right away (funds available without a lengthy hold). This ensures timely payment while allowing flexibility in the banking arrangement.

So, it is not automatically unacceptable to use an out‑of‑state bank, nor does it automatically trigger a 4650 penalty; the condition that makes it permissible is the immediate negotiability of the checks in California. If that condition is met, the arrangement aligns with how California seeks to ensure prompt access to indemnity funds.