BILL ANALYSIS                                                                                                                                                                                                    

                                                                     SB 560  

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          Date of Hearing:   August 19, 2015


                                 Jimmy Gomez, Chair

          SB 560  
          (Monning) - As Amended August 17, 2015

          |Policy       |Business and Professions       |Vote:|14 - 0       |
          |Committee:   |                               |     |             |
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          |             |Insurance                      |     | 13 -0       |
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          Urgency:  No  State Mandated Local Program:  NoReimbursable:  No

          SUMMARY:  This bill:

          1)Prohibits a licensing board from processing an application for  
            an initial license unless the applicant provides his or her  
            social security number, individual taxpayer identification  
            number, or federal employer identification number where  


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            requested on the application.

          2)Requires a licensing board, including the State Bar and the  
            Bureau of Real Estate, to provide personal information  
            regarding licensees to the Employment Development Department  
            (EDD) upon request. 

          3)Authorizes the Contractors State License Board's (CSLB)  
            Enforcement Division to issue a written notice to appear  
            before a court, to unlicensed individuals who fail to secure  
            workers' compensation insurance.
          FISCAL EFFECT:

          1)Minor and absorbable costs to the licensing boards to provide  
            information to EDD.  Existing law requires licensing boards to  
            provide this information to the Franchise Tax Board.

          2)Minor and absorbable costs to CSLB to enhance their  
            enforcement activities.


          1)Purpose.  This bill is sponsored by CSLB. According to the  
            author, "[This bill] would expand the jurisdiction of CSLB's  
            Enforcement Division to include ensuring payment for adequate  
            workers' compensation.  Including workers' compensation  
            violations in the Notice to Appear will streamline the  
            referral of these cases to local district attorneys and place  
            an emphasis on the importance of obtaining workers'  

          2)Background. CSLB's enforcement division, the Statewide  
            Investigative Fraud Team, enforces the prohibition against  


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            unlicensed contracting activity.  According to the CSLB's 2014  
            Sunset Review Report, the enforcement division consists of  
            enforcement representatives, peace officers, and enforcement  
            supervisors.  When the CSLB suspects serious or repeat  
            violations for unlicensed activity, it will assign the case to  
            one of its enforcement representatives or peace officers for  
            formal investigation.  The cases are subject to review by  
            enforcement supervisors. 

          If an investigation uncovers evidence of a possible violation of  
            unlicensed activity, the CSLB may issue a warning letter,  
            issue a citation, or refer the case to the District Attorney  
            for criminal prosecution (issue a notice to appear).  However,  
            the CSLB's enacting statute only permits the CSLB, when acting  
            alone, to take action for violations specific to the licensure  
            of contractors, which does not include the general obligation  
            to carry workers' compensation insurance under the Labor Code.  
             This bill will grant this additional authority.

          3)Workers' Compensation Insurance Laws.  In California, the  
            Division of Labor Standards Enforcement (DLSE) is authorized  
            to enforce the state's workers' compensation insurance laws.   
            When the DLSE suspects that an employer does not carry  
            workers' compensation, it will issue a stop order.  The order  
            prohibits the employer from using employee labor until the  
            employer obtains coverage.  A violation of the order is a  
            misdemeanor-punishable by imprisonment in the county jail for  
            up to 60 days and/or a fine of up to $10,000.  

            The DLSE assesses a penalty of $1,000 per employee on the  
            payroll at the time the stop order is issued and served, up to  
            $100,000.  The DLSE may also elevate the citation to a  
            misdemeanor notice to appear in egregious cases.


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          4)Prior Legislation. 

             a)   AB 2554 (Berryhill), Chapter 85, Statutes of 2012,  
               provided CSLB enforcement representatives the authority to  
               issue a notice to appear for violations of contracting  

             b)   SB 691 (Lieu), Chapter 832, Statutes of 2012, added CSLB  
               to the list of agencies approved to receive payroll  
               information from Employment Development Department.

          Analysis Prepared by:Jennifer Swenson / APPR. / (916)