BILL ANALYSIS �
AB 397
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Date of Hearing: March 22, 2011
ASSEMBLY COMMITTEE ON BUSINESS, PROFESSIONS AND CONSUMER
PROTECTION
Mary Hayashi, Chair
AB 397 (Monning) - As Introduced: February 14, 2011
SUBJECT : Workers' compensation insurance: contractors.
SUMMARY : Requires an active contractor licensee with an
exemption for workers' compensation insurance to recertify the
exemption upon license renewal or provide proof of workers'
compensation insurance coverage. Specifically, this bill :
1)Requires, at the time of renewal, all active licensees of the
Contractors State License Board (CSLB) with an exemption for
workers' compensation insurance on file with the CSLB to
recertify the exemption by completing a recertification
statement on the license renewal form, as provided by the
board, or to provide a current and valid Certificate of
Workers' Compensation Insurance or Certificate of
Self-Insurance, whichever is applicable.
2)Prohibits license renewal unless the licensee meets the above
requirements.
3)Provides for retroactive renewal if the licensee meets the
above requirements within 30 days after notification by the
CSLB of renewal rejection.
EXISTING LAW :
1)Requires private employers to secure the payment of
compensation by obtaining and maintaining workers'
compensation insurance or to self-insure as an individual
employer or as one employer in a group of employers.
2)Requires, under the Contractors' State License Law, every
licensed contractor to have on file at all times with the
Contractors' State License Board a current and valid
Certificate of Workers' Compensation Insurance or
Certification of Self-Insurance, or a statement certifying
that he or she has no employees and is not required to obtain
or maintain workers' compensation insurance coverage.
AB 397
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FISCAL EFFECT : Unknown
COMMENTS :
Purpose of this bill. According to the author's office, "There
are currently no provisions for the active maintenance of
workers' compensation exemption certifications. A license could
have an exemption certification on file for years without
needing to confirm that it is still an accurate representation
of the licensee's status. In many cases, when a licensee is
questioned about his/her employee status by CSLB, it turns out
that the licensee does have employees and has a workers'
compensation insurance policy, but has just not filed it with
the CSLB."
Background. The CSLB within the Department of Consumer Affairs
(DCA) licenses and regulates more than 300,000 contractors under
the Contractors State License Law.
All licensed contractors must carry workers' compensation
insurance and file proof of coverage with the CSLB. This proof
can be in two forms: A Certificate of Workers' Compensation
Insurance issued and filed by an insurer licensed to write
workers' compensation insurance in California; or, a
Certification of Self-Insurance issued and filed by the Director
of Industrial Relations.
Contractors who meet the following conditions are not required
to carry workers' compensation insurance:
1) The contractor has no employees and files a statement with
the CSLB certifying that he or she has no employees and is not
otherwise required to provide for workers' compensation
insurance coverage; and
2) The contractor does not hold a C-39 roofing classification
license.
Failure to comply results in automatic license suspension, and
reinstatement can be made at any time by showing proof of
compliance. The CSLB must retroactively reinstate a license if
certification is received within 90 days of the certification's
effective date, or if the licensee demonstrates that failure to
have a certificate on file was due to circumstances beyond the
licensee's control.
AB 397
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While license renewal occurs every two years, the certification
of exemption from workers' compensation requirements is filed
only once.
The CSLB, sponsor of this bill, notes that approximately 60% of
their licensees have exemptions on file. The board is concerned
with the number of contractors that might have started business
with an exemption, but subsequently expanded and added employees
without knowing about or obtaining required workers'
compensation coverage.
This bill does not appear to create any undue burden on
contractors, as the recertification statement would be included
on the license renewal form that contractors already have to
submit to the CSLB. The bill also provides a 30-day "grace"
period for contractors to comply after they receive notice from
the CSLB that their renewal application has been rejected.
Related legislation.
AB 2305 (Knight), Chapter 423, Statutes of 2010, extends the
sunset date, from January 1, 2011, to January 1, 2016, on
existing law requiring a roofing contractor to obtain and
maintain workers' compensation insurance, even if he or she has
no employees, and extends the parallel sunset date requiring the
Department of Insurance to report on this effect.
SB 313 (DeSaulnier), Chapter 640, Statutes of 2009, restructures
the laws governing penalties to be assessed on employers who do
not provide workers' compensation benefits, and increases the
per-employee penalty for the lack of workers compensation
coverage from $1000 to $1500.
AB 881 (Emmerson), Chapter 38, Statutes of 2006, requires all
licensed roofers to have workers compensation insurance,
authorizes the registrar of contractors to remove the roofing
classification from a contractor license for failure to maintain
workers' compensation insurance, and requires insurers who issue
workers compensation policies to roofing contractors to perform
annual audits of these policyholders.
REGISTERED SUPPORT / OPPOSITION :
Support
AB 397
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Contractors State License Board (sponsor)
California Chamber of Commerce
California Chapter of the American Fence Association
California Fence Contractors' Association
California Landscape Contractors Association
California Professional Association of Specialty Contractors
Construction Industry Legislative Council
Engineering Contractors' Association
Flasher Barricade Association
Golden State Builders Exchanges
Insurance Brokers and Agents of the West
Marin Builders' Association
National Association of the Remodeling Industry of Greater
Sacramento
National Association of the Remodeling Industry of San Diego
Northern California Tile Industry Labor Management Cooperation
Committee
Spa and Pool Industry Education Council
Opposition
None on file.
Analysis Prepared by : Angela Mapp / B.P. & C.P. / (916)
319-3301