BILL ANALYSIS
SB 1254
Page 1
SENATE THIRD READING
SB 1254 (Leno)
As Amended April 8, 2010
Majority vote
SENATE VOTE :34-0
BUSINESS & PROFESSIONS 11-0 APPROPRIATIONS 12-5
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|Ayes:|Hayashi, Conway, Eng, |Ayes:|Fuentes, Bradford, |
| |Hernandez, | |Huffman, Coto, Davis, De |
| |Hill, Ma, Nava, Niello, | |Leon, Gatto, Hall, |
| |Ruskin, | |Skinner, Solorio, |
| |Smyth, Logue | |Torlakson, Torrico |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
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SUMMARY : Authorizes the Contractors State License Board (CSLB)
to issue a stop work order when a contractor fails to provide
adequate workers' compensation coverage for employees.
Specifically, this bill :
1)Authorizes CSLB to issue a stop work order, effective
immediately, prohibiting licensed and unlicensed contractors
from using employee labor if they fail to provide adequate
workers' compensation insurance coverage for employees.
2)Requires contractors to compensate employees affected by a
work stoppage for lost time, up to 10 days.
3)Makes it a misdemeanor for any employer, officer, or
supervising person to fail to observe a stop order issued and
served, and failure to do so is punishable by imprisonment in
the county jail up to 60 days or a fine up to $10,000, or
both.
4)Allows an employer to protest a stop order by filing a written
request with the CSLB registrar for a hearing within 20 days
after a stop order has been served, and requires the hearing
to be held within five days of the request. The registrar
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must notify the employer of the hearing date and time by mail.
5)Requires the CSLB registrar to immediately affirm or dismiss
the stop work order at the conclusion of a hearing, and to
issue and serve all parties to the hearing by registered or
certified mail a written notice of findings within 24 hours of
the conclusion of the hearing.
6)Increases the number of peace officers the Department of
Consumer Affairs (DCA) may designate to the CSLB special
investigations unit from three to 12.
7)Allows appeal of the ruling to the superior court within 45
days after the mailing of the notice of findings.
FISCAL EFFECT : According to the Assembly Appropriations
Committee:
1)One-time costs in excess of $120,000 for 2010-11 for
reclassifying and training new peace officers (Contractors
License Fund).
2)On-going annual costs in the range of $85,000 per year for the
increased number of peace officers assigned to CSLB and the
workload associated with administering the stop work orders
(Contractors License Fund).
3)Negligible, non-reimbursable costs for prosecution and/or
incarceration offset by fine revenue, for misdemeanor
violations of provisions associated with failing to comply
with the stop work order.
COMMENTS : According to the author, "Under this bill, the
registrar of CSLB will have the authority to issue
administrative stop work orders to both licensed and unlicensed
contractors that fail to provide workers' compensation
insurance?. In addition to this new authority, SB 1254 will
allow CSLB to request nine additional peace officer positions
through the normal budget process to ensure enforcement and
compliance with this new provision of law."
California law requires all employers to carry workers'
compensation insurance, even if they have only one employee or a
temporary employee. This allows employees to receive covered
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medical treatment for on-the-job injuries or illnesses.
Workers' compensation insurance provides six basic benefits:
medical care, temporary disability benefits, permanent
disability benefits, supplemental job displacement benefits,
vocational rehabilitation, and death benefits. Insurance
carriers charge employers premiums to provide workers'
compensation insurance that factor in the company's industry
classification, history of work-related injuries, and payroll
history.
Contractors must submit proof of their workers' compensation
insurance coverage in the form of a Certificate of Workers'
Compensation Insurance or Certification of Self-Insurance, along
with their license number and specified information, to CSLB.
CSLB must receive this proof of coverage within 90 days of the
contractor hiring an employee. If a contractor does not have
employees, he or she can fill out an Exemption from Workers'
Compensation form.
Current law requires contractors to have workers' compensation
insurance when a project breaks ground (after a project has been
awarded). This bill would authorize CSLB to issue a stop work
order and impose civil penalties against a contractors who fails
to provide adequate workers' compensation coverage. Existing
law makes it a misdemeanor for a contractor to fail to provide
workers' compensation insurance. This bill would enhance
penalties against contractors who fail to provide adequate
workers' compensation insurance by adding a cause of action
(stop work order), that if ignored, renders the contractor
subject to criminal prosecution. CSLB believes that this
penalty enhancement will deter unscrupulous activity.
While existing law provides that CSLB can take disciplinary
action against licensed contractors for failure to provide
workers' compensation insurance coverage for employees, any
disciplinary action against a licensee would have to follow the
rules of the Administrative Procedures Act and would take
months. In addition, the language in this bill authorizes CSLB
to take action against unlicensed contractors on workers'
compensation coverage laws, which CSLB currently does not have
authority over.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
SB 1254
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319-3301
FN: 0005964