BILL ANALYSIS
SB 1254
Page 1
Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1254 (Leno) - As Amended: April 8, 2010
Policy Committee: Business and
Professions Vote: 11 - 0
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill authorizes the Contractors' State License Board (CSLB)
to issue a stop work order to any licensed or unlicensed
contractor who has failed to obtain workers' compensation
insurance for his or her employees. Specifically, this bill:
1)Authorizes CSLB to issue a stop work order, effective
immediately, if a contractor is using employees and has not
obtained workers' compensation insurance.
2)Makes failure to comply with a stop work order a misdemeanor
punishable by imprisonment in the county jail not exceeding 60
days or by a fine not exceeding ten thousand dollars
($10,000), or both.
3)Requires contractors to compensate affected employees for up
to 10 days of lost work time.
4)Increases the number of peace officers the Department of
Consumer Affairs (DCA) may designate to the CSLB special
investigation unit from three to 12.
FISCAL EFFECT
1)One-time costs in excess of $120,000 for 2010-11 for
reclassifying and training new peace officers (Contractors
License Fund).
2)On-going annual costs in the range of $85,000 per year for the
increased number of peace officers assigned to CSLB and the
workload associated with administering the stop work orders
SB 1254
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(Contractors License Fund).
3)Negligible, non-reimbursable costs for prosecution and/or
incarceration, offset by fine revenue, for misdemeanor
violations of provisions associated with failing to comply
with the stop work order.
COMMENTS
1)Rationale . This bill provides a tool for the CSLB to help
ensure that contractors provide workers' compensation
insurance for their employees by allowing the CSLB to issue a
stop work order for any contractor that has not obtained the
insurance. In addition, this bill makes it a misdemeanor crime
to ignore the stop work order, punishable by up to 60 days in
jail and/or a fine of up to $10,000.
According to the CSLB, contractors who do not obtain the
insurance have an economic, but illegal, advantage over
contractors who follow the law by obtaining workers'
compensation insurance. In addition, they note that property
owners could be held liable for any injuries if a contractor
does not have the required insurance.
2)Related Legislation . AB 2390 (Buchanan) of 2010 requires
contractors to include the license number and proof of current
valid workers' compensation insurance of their subcontractors
in a public works bid. That bill is currently pending in the
Senate Governmental Organization Committee.
AB 2332 (Eng), also in this session, authorizes the Board of
Equalization (BOE) to request that the Contractors
State License Board (CSLB) suspend or deny a contractor's
license to a licensee who has outstanding liabilities. That
bill failed passage in the Senate Business and Professions
Committee and is currently awaiting reconsideration.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081