BILL ANALYSIS
AB 2390
Page 1
ASSEMBLY THIRD READING
AB 2390 (Buchanan)
As Amended April 28, 2010
Majority vote
BUSINESS & PROFESSIONS 7-3 APPROPRIATIONS 11-5
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|Ayes:|Hayashi, Eng, Hernandez, |Ayes:|Fuentes, Hill, Bradford, |
| |Hill, Ma, | |Charles Calderon, Coto, |
| |Nava, Ruskin | |Davis, Hall, Skinner, |
| | | |Solorio, Torlakson, |
| | | |Torrico |
|-----+--------------------------+-----+--------------------------|
|Nays:|Conway, Niello, Smyth |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Norby |
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SUMMARY : Requires contractors to include the license number and
proof of current valid workers' compensation insurance of their
subcontractors in a public works bid. Specifically, this bill :
1)Requires contractors to 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.
2)Requires contractors to possess current, valid workers'
compensation insurance when bidding on public works projects.
3)Expands the information contractors must provide on all
subcontractors, to include the license number and proof of
workers' compensation insurance.
EXISTING LAW :
1)Establishes the Division of Workers' Compensation under the
Department of Industrial Relations (DIR) to monitor the
administration of workers' compensation claims and provide
administrative and judicial services to resolve claim
disputes.
2)Requires employers to carry workers' compensation insurance
and post notices on workers' compensation coverage at the work
AB 2390
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site.
3)Imposes civil penalties against employers for failure to carry
workers' compensation insurance, including fines,
imprisonment, and stop work notices.
4)Requires contractors to include their license numbers in all
construction contracts, subcontracts, bids, and
advertisements.
5)Requires the automatic suspension of a contractor's license by
operation of law if the licensee fails to obtain or maintain
workers' compensation insurance.
6)Authorizes the Contractors State License Board (CSLB) to take
disciplinary action against a contractor who fails to provide
workers' compensation insurance.
7)Requires contractors to provide the name and business location
of subcontractors who will perform work or labor or render
service to the prime contractor, or a licensed subcontractor
who specially fabricates or installs a portion of the work
according to plan specifications in an amount in excess of
0.5% of the prime contractor's total bid, or in the case of
streets, highways, or bridges, in excess of 0.5% of the prime
contractor's total bid or $10,000, whichever is greater.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis, 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 : According to the author's office, "Currently, there
are no requirements for a contractor to possess valid workers'
compensation insurance at the time the contractor makes a bid or
AB 2390
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offer for a public works contract. This bill seeks to require
the contractor to possess workers' compensation insurance at the
time of the bid to ensure the contractor provides for workers'
compensation insurance."
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.
Workers' compensation insurance provides six basic benefits:
medical care, temporary disability benefits, permanent
disability benefits, supplemental job displacement benefits,
vocational rehabilitation, and death benefits. Insurance
carriers charge employers premiums to provide workers'
compensation insurance that factor in the company's industry
classification, history of work-related injuries, and payroll
history.
Contractors must submit proof 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 specified information, to CSLB.
CSLB must receive this proof of coverage within 90 days of the
contractor hiring an employee. If a contractor does not have
employees, he or she can fill out an Exemption from Workers'
Compensation.
Current law requires contractors to have workers' compensation
insurance when a project breaks ground (after a project has been
awarded). This bill would require contractors and
subcontractors to have workers' compensation insurance when
bidding on a project. In 2009, CSLB received 38 complaints
against licensees related to workers' compensation violations.
Analysis Prepared by : Joanna Gin / B.,P. & C.P. / (916)
319-3301
FN: 0004393