BILL ANALYSIS Ó
AB 878
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 878 (Bill Berryhill)
As Amended August 16, 2011
Majority vote
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|ASSEMBLY: |75-0 |(May 26, 2011) |SENATE: |34-0 |(August 22, |
| | | | | |2011) |
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Original Committee Reference: B.,P. & C.P.
SUMMARY : Requires a workers' compensation insurer to report to
the Contractors' State License Board (CSLB) a licensed
contractor whose insurance policy it cancels, as specified.
The Senate amendments :
1)Delete the requirement that a workers' compensation insurer
report to CSLB a licensed contractor whose workers'
compensation insurance policy it cancels for any of the
following reasons:
a) Failure to pay a workers' compensation premium when due;
b) Failure to report payroll or submit a payroll audit;
c) Material misrepresentation by a policyholder or its
agent; or,
d) Failure to cooperate with the insurer in a claim
investigation.
2)Exempt from disclosure under the California Public Records
Act, information reported by workers' compensation insurers to
CSLB of a licensed contractor whose insurance it cancels under
specified conditions.
3)Make legislative findings and declarations related to the
confidentiality of the workers' compensation policy
cancellations of licensed contractors.
4)Make technical and clarifying changes.
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EXISTING LAW :
1)Provides for the licensing and regulation of insurance brokers
and agents by the Department of Insurance.
2)Establishes the Division of Workers' Compensation under the
Department of Industrial Relations to monitor the
administration of workers' compensation claims and provide
administrative and judicial services to resolve claim
disputes.
3)Provides for the licensing and regulation of contractors by
CSLB.
4)Requires employers to carry workers' compensation insurance
and post notices on workers' compensation coverage at the work
site.
5)Imposes civil penalties against employers for failure to carry
workers' compensation insurance, including fines,
imprisonment, and stop work notices.
6)Requires a licensed contractor's workers' compensation
insurer, including the State Compensation Insurance Fund
(SCIF), to report to CSLB the name, license number, policy
number, dates that coverage is scheduled to commence and
lapse, and cancellation date if applicable.
7)Requires contractors to include their license numbers in all
construction contracts, subcontracts, bids, and
advertisements.
8)Requires the automatic suspension of a contractors' license by
operation of law if the licensee fails to obtain or maintain
workers' compensation insurance.
9)Authorizes CSLB to take disciplinary action against a
contractor who fails to provide workers' compensation
insurance.
AS PASSED BY THE ASSEMBLY , this bill required a workers'
compensation insurer to report to CSLB a licensed contractor
whose insurance policy it cancels, as specified.
FISCAL EFFECT : According to the Senate Appropriations
AB 878
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Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS : 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 medical treatment for on-the-job injuries or
illnesses. Contractors must submit proof to CSLB 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
additional specified information.
Workers' compensation fraud occurs when the employer
misrepresents the number of employees that need to be insured,
or does not fully provide coverage for employees. The author's
office claims that SCIF indicated that CSLB can receive
approximately 600 referrals of licensed contractors engaging in
fraudulent workers' compensation activity, if referrals are
restricted to completed audits that will not be referred for
criminal prosecution, failure to reimburse the insurer, or
policy cancellation. In 2009, CSLB received 38 complaints
against licensees related to workers' compensation violations.
This bill, as amended in the Senate, is consistent with Assembly
actions.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0001852