BILL ANALYSIS                                                                                                                                                                                                    



                                                                  AB 2390
                                                                  Page  1

          Date of Hearing:   May 19, 2010

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                  AB 2390 (Buchanan) - As Amended:  April 28, 2010 

          Policy Committee:                              Business and  
          Professions  Vote:                            7-3

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:               

           SUMMARY  

          This bill requires that, for state and local public works  
          contracts, contractors must:

             1)   Possess a contractors' license at the time they submit a  
               bid, rather than at the time of award of a contract.

             2)   Possess current, valid workers' compensation insurance  
               at the time of bidding on public works projects. 

             3)   Include the license number and proof of current valid  
               workers' compensation insurance of subcontractors who will  
               perform work for the prime contractor in a public works  
               bid.

           FISCAL EFFECT  

          Cost for state agencies to require and receive the additional  
          information from contractors at the time of bid should be minor.  
           If a low-bidder was to submit erroneous or incomplete  
          information regarding subcontractors, resulting in contract  
          being awarded to the next lowest bidder or being rebid, costs  
          would increase.  

          Under current law, however, and under the bill, public entities  
          can provide contractors with up to 24 hours after submission of  
          bids to submit information about subcontractors other than name  
          and business location, which should ameliorate the potential  
          problem mentioned above.

           COMMENTS  








                                                                  AB 2390
                                                                  Page  2


              1)   Purpose  . California law requires all employers to carry  
               workers' compensation insurance, even if they have only one  
               employee or a temporary employee. Current law requires  
               contractors to have workers' compensation insurance when a  
               project breaks ground (after a project has been awarded).  
               This bill requires contractors and subcontractors to have  
               workers' compensation insurance when bidding on a project.  
               In 2009, the Contractors' State License Board (CSLB)  
               received 38 complaints against licensees related to  
               workers' compensation violations. According to the sponsor  
               (California State Council of Laborers), "While this measure  
               may not end workers' compensation fraud, it will provide  
               more security to awarding agencies by giving them a better  
               view of a contractor's experiences and giving enforcement  
               agencies more information on who is bidding on public  
               works." 

              2)   Related Legislation  . SB 1254 (Leno), which recently  
               passed the Senate, authorizes CSLB to issue a stop order to  
               any licensed or unlicensed contractor who has failed to  
               secure workers' compensation insurance coverage for his or  
               her employees. 

           Analysis Prepared by  :    Chuck Nicol / APPR. / (916) 319-2081