BILL ANALYSIS                                                                                                                                                                                                    �



                                                                  AB 878
                                                                  Page  1

          Date of Hearing:   May 18, 2011

                        ASSEMBLY COMMITTEE ON APPROPRIATIONS
                                Felipe Fuentes, Chair

                AB 878 (Bill Berryhill) - As Amended:  April 25, 2011 

          Policy Committee:                              Business and 
          Professions  Vote:                            9 - 0 

          Urgency:     No                   State Mandated Local Program: 
          No     Reimbursable:              

           SUMMARY  

          This bill requires a workers' compensation insurer to report to 
          the Contractors' State License Board (CSLB) when the insurer 
          cancels the insurance policy of a licensee. Specifically, this 
          bill:  

          1)Requires that a workers' compensation insurer report to the 
            CSLB when a licensee's insurance is cancelled due to failure 
            to pay the premium, failure to report payroll, material 
            misrepresentation by the policy holder, or failure to 
            cooperate with the insurer in a claim investigation.

          2)States that willful or deliberate disregard and violations of 
            workers' compensation insurance laws constitutes a cause for 
            disciplinary action. 


           FISCAL EFFECT  

          Costs associated with this legislation would be minor and 
          absorbable within existing resources. 

           COMMENTS  

           1)Rationale  . This legislation, sponsored by CSLB, is intended to 
            reduce premium insurance fraud and address construction 
            employers engaged in fraudulent activity, but not to the level 
            that warrants a felony prosecution.  According to the author, 
            under current law many violators are sanctioned by the 
            cancellation of their insurance policy but they are not 
            subject to any disciplinary action by the CSLB.  The author 








                                                                  AB 878
                                                                  Page  2

            hopes this bill will allow CSLB to take disciplinary action in 
            cases where licensees have their insurance policies cancelled 
            due to willful activity on their part. 

           2)Related Legislation  . AB 2305 (Knight; Chapter 423, Statutes of 
            2010) extended the sunset date, from January 1, 2011 to 
            January 1, 2013, on existing law requiring a roofing 
            contractor to obtain and maintain workers' compensation 
            insurance, even if he or she has no employees.  This bill also 
            extended the parallel sunset date requiring DOI to report on 
            this effect and required automatic license suspension for 
            licensees without proof of insurance, as specified.    

            AB 2390 (Buchanan) of 2010 would have required contractors to 
            include the license number and proof of current valid workers' 
            compensation insurance of their subcontractors in a public 
            works bid.  This bill was held on the Senate Floor. 

            SB 1254 (Leno; Chapter 643, Statutes of 2010) authorized 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  :    Julie Salley-Gray / APPR. / (916) 
          319-2081