BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 560|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 560
Author: Monning (D)
Amended: 4/6/15
Vote: 21
SENATE BUS, PROF. & ECON. DEV. COMMITTEE: 9-0, 4/13/15
AYES: Hill, Bates, Berryhill, Block, Galgiani, Hernandez,
Jackson, Mendoza, Wieckowski
SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8
SUBJECT: Contractors
SOURCE: Contractors State License Board
DIGEST: This bill authorizes the Contractors State License
Board's enforcement representatives to issue a written notice to
appear before a court to unlicensed individuals who fail to
secure workers' compensation insurance.
ANALYSIS:
Existing law:
1) Provides for the licensure and regulation of more than
300,000 contractors under the Contractors State License Law
(Contractors Law) by the Contractors State License Board
(CSLB) within the Department of Consumer Affairs (DCA). The
CSLB is under the direction of the registrar of contractors.
(Business and Professions Code (BPC) § 7000 et seq.)
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2) Establishes an enforcement division in the CSLB and requires
the unit to rigorously enforce the Contractors Law
prohibiting all forms of unlicensed activity. (BPC § 7011.4
(a))
3) Provides that persons employed as enforcement representatives
in the enforcement division and designated by the Director of
DCA are not peace officers, are not entitled to safety member
retirement benefits, and do not have the power of arrest.
However, they may issue a written notice to appear in court
for misdemeanor violations of the Contractors Law. (BPC §
7011.4 (b))
4) Exempts from licensure and regulation those who perform work
with an aggregate contract price under $500, but does not
exempt those who split work into multiple contracts to avoid
the $500 limit. (BPC § 7048)
5) Authorizes an unlicensed contractor to advertise for
construction work only if the advertisement states that he or
she is not licensed. (BPC § 7027.2)
6) Makes it a misdemeanor for an unlicensed contractor to
advertise for construction or work of improvements or act in
the capacity of a contractor. Imposes specified civil
penalties, including fines and imprisonment against the
unlicensed contractor and authorizes CSLB to cite the
unlicensed contractor. (BPC § 7028)
7) Provides that it is a misdemeanor for a person to engage in
the business or act in the capacity of a contractor if he or
she has a suspended license for failure to pay a civil
penalty, to comply with an order of correction, or to resolve
all outstanding liabilities, as specified. (BPC § 7028).
8) Requires CSLB to initiate a disciplinary action against a
licensee within 180 days of receipt of a certified copy of
the Labor Commissioner's finding of a willful or deliberate
violation of the Labor Code by a licensee. (BPC § 7110.5)
9) Authorizes CSLB enforcement division to have free access to
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all places of labor when participating in the enforcement
activities of the Joint Enforcement Strike Force on the
Underground Economy (JESF). (BPC § 7011.4 (c))
10)Establishes the JESF to coordinate efforts in targeting tax
evasion and cash-pay violations, and authorizes the sharing
of investigative and enforcement capabilities between JESF
participants. (Unemployment Insurance Code § 329)
This bill authorizes the CSLB Enforcement Division to
additionally issue written notices to unlicensed contractors to
appear in court for failure to secure workers' compensation
insurance.
Background
Unlicensed contractors are part of a $60 to $140 billion annual
underground economy that takes money away from healthcare,
roads, and schools. To combat unlicensed activity, CSLB
developed the Statewide Investigative Fraud Team (SWIFT). This
team seeks to identify and shut down unlicensed operators in the
construction industry by setting up stings throughout the state.
The unit has the authority to visit any job site without
evidence, and ask contractors to produce proof of licensure in
good standing, citing those who are not properly licensed.
Between July 2013 to October 2014, SWIFT performed 414 sting and
sweep days, which resulted in over 2,000 legal actions.
Specifically, 930 suspects received notice to appear citations
for contracting without a license, illegal advertising, and
workers compensation insurance violations. The number of
convictions and arrests are unknown. SWIFT investigators mostly
use Craigslist to locate suspected illegal contractors in areas.
They invite suspects to the home to submit bids for jobs that
sometimes include tree removal, a cement patio, an ornamental
fence, painting, and tile work for floors and countertops.
SWIFT investigators visit the job site and take appropriate
action, which may include the issuance of a notice to appear, a
stop order, an administrative citation, and/or an accusation.
However, while CSLB's SWIFT enforcement representatives are able
to issue written notices to appear when it is found that a
contractor is operating without a license, they do not have the
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authority to issue one when it is discovered that the unlicensed
contractor does not have workers' compensation insurance.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
SUPPORT: (Verified 4/29/15)
Contractors State License Board (source)
Air Conditioning Sheet Metal Association
Air-Conditioning & Refrigeration Contractors Association
California Chapters of the National Electrical Contractors
Association
California Legislative Conference of the Plumbing, Heating, and
Piping Industry
California Professional Association of Specialty Contractors
Construction Employers' Association
Finishing Contractors Association of Southern California
United Contractors
Western Line Constructers
OPPOSITION: (Verified 4/29/15)
None received
ARGUMENTS IN SUPPORT: The Contractors State License Board,
the sponsor of this bill, states that, "Under existing law,
CSLB's enforcement representatives can issue a written notice to
appear to individuals who are caught contracting without a
license. This occurs during CSLB's undercover sting operations
which are set up to target unlicensed contractors. Oftentimes,
these unlicensed contractors show up to a sting site with an
employee. In those cases, the unlicensed contractor generally
does not carry WC insurance. This bill would allow CSLB to
additionally cite for that violation, so that it becomes part of
the case that is forwarded to the local district attorney for
prosecution. Failure to adequately insure employees against
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work-related injuries is a significant component of the
underground economy. This bill provides CSLB an additional tool
to help address this problem."
Prepared by:Mark Mendoza / B., P. & E.D. / (916) 651-1868
4/29/15 16:07:35
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