BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 397
Author: Monning (D), et al.
Amended: As introduced
Vote: 21
SENATE BUSINESS, PROF & ECON DEVELOP COMM : 8-0, 06/06/11
AYES: Price, Emmerson, Corbett, Correa, Hernandez, Negrete
McLeod, Vargas, Wyland
NO VOTE RECORDED: Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 60-0, 04/14/11 - See last page for vote
SUBJECT : Workers compensation insurance: contractors
SOURCE : Contractors State License Board
DIGEST : This bill requires a licensed contractor with an
exemption for workers compensation insurance to recertify
the exemption upon license renewal or provide proof of
workers' compensation insurance coverage.
ANALYSIS : Existing law:
1.Licenses and regulates more than 300,000 contractors
under the Contractors State License Law by the
Contractors State License Board (CSLB) within the
Department of Consumer Affairs. The CSLB is under the
direction of the registrar of contractors.
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2.Requires private employers to secure the payment of
compensation by obtaining and maintaining workers'
compensation insurance or to self-insure as an individual
employer or as one employer in a group of employers.
3.Requires every licensed contractor to have on file at all
times with the CSLB a current and valid Certificate of
Workers' Compensation Insurance or Certification of
Self-Insurance; allows all specialty and general
contractors to claim exemption from the requirement to
have workers compensation insurance if the contractor
certifies it does not have any employees or is otherwise
exempt from having workers' compensation insurance.
4.Provides that failure of a licensed contractor to obtain
or maintain workers' compensation insurance coverage, if
required under the Contractors State License Law, shall
result in the automatic suspension of the license by
operation of law. The suspension shall be effective on
the earlier of the date that the workers' compensation
insurance coverage lapses or the date that workers'
compensation coverage is required to be obtained.
5.Authorizes the Registrar to grant retroactive renewal of
a license if the licensee requests the retroactive
renewal in a petition, as specified.
This bill:
1.Requires, at the time of renewal, all active licensees of
the CSLB with an exemption for workers' compensation
insurance on file with the CSLB to recertify the
exemption by completing a recertification statement on
the license renewal form provided by CSLB, or to provide
a current and valid Certificate of Workers' Compensation
Insurance or Certificate of Self-Insurance, whichever is
applicable.
2.Prohibits license from being renewed unless the licensee
meets the above requirements.
3.Provides for retroactive renewal if the licensee meets
the above requirements within 30 days after notification
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by the CSLB of renewal rejection.
Background
Each of the more than 300,000 licensed contractors must
carry workers' compensation insurance and file proof of
coverage with the CSLB. This proof can be in either of two
forms: A Certificate of Workers' Compensation Insurance
issued and filed by an insurer licensed to write workers'
compensation insurance in California; or, a Certification
of Self-Insurance issued and filed by the Director of
Industrial Relations.
Contractors who meet the following conditions are not
required to carry workers' compensation insurance:
The contractor has no employees and files a
statement with the CSLB certifying that he or she has
no employees and is not otherwise required to provide
for workers' compensation insurance coverage; and
The contractor does not hold a C-39 roofing
classification license.
Failure to comply results in automatic license suspension,
and reinstatement can be made at any time by showing proof
of compliance. The CSLB must retroactively reinstate a
license if certification is received within 90 days of the
certification's effective date, or if the licensee
demonstrates that failure to have a certificate on file was
due to circumstances beyond the licensee's control.
While license renewal occurs every two years, the
certification of exemption from workers' compensation
requirements is filed only once.
The CSLB indicates that approximately 60 percent of its
licensees have exemptions on file. The CSLB is concerned
that a number of contractors could have started business
with an exemption, but subsequently expanded their business
and added employees without knowing about or obtaining
required workers' compensation coverage.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
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Local: No
SUPPORT : (Verified 6/27/11)
Contractors State License Board (source)
California Chamber of Commerce
California Chapter of the American Fence Association
California Fence Contractors' Association
California Landscape Contractors Association
California Professional Association of Specialty
Contractors
Construction Industry Legislative Council
Engineering Contractors' Association
Flasher Barricade Association
Golden State Builders Exchanges
Insurance Brokers and Agents of the West
Marin Builders' Association
National Association of the Remodeling Industry of Greater
Sacramento
National Association of the Remodeling Industry of San
Diego
Northern California Tile Industry Labor Management
Cooperation Committee
Spa and Pool Industry Education Council
ARGUMENTS IN SUPPORT : According to the Contractors State
License Board, there are currently no provisions for the
active maintenance of workers' compensation exemption
certifications. A contractor's license could have an
exemption certification on file for years without needing
to confirm that it is still an accurate representation of
the licensee's status. The Sponsor believes that requiring
recertification will help clarify the existing requirement
for worker's compensation insurance and help ensure that
licensees are aware of the requirement at the time of
license renewal.
ASSEMBLY FLOOR : 60-0, 04/14/11
AYES: Achadjian, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Campos, Carter, Cedillo, Chesbro,
Cook, Davis, Dickinson, Donnelly, Eng, Fletcher, Fong,
Fuentes, Furutani, Gatto, Gordon, Hagman, Halderman,
Hall, Hayashi, Roger Hernández, Hill, Huber, Hueso,
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Huffman, Jeffries, Lara, Bonnie Lowenthal, Ma, Miller,
Mitchell, Monning, Nestande, Nielsen, Norby, Pan, Perea,
V. Manuel Pérez, Portantino, Silva, Skinner, Smyth,
Solorio, Swanson, Torres, Valadao, Wieckowski, Yamada,
John A. Pérez
NO VOTE RECORDED: Alejo, Butler, Charles Calderon, Conway,
Feuer, Galgiani, Garrick, Gorell, Grove, Harkey, Jones,
Knight, Logue, Mansoor, Mendoza, Morrell, Olsen, Wagner,
Williams, Vacancy
JJA:nl 6/27/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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