BILL NUMBER: AB 1794 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 25, 2012
AMENDED IN ASSEMBLY APRIL 9, 2012
INTRODUCED BY Assembly Member Williams
FEBRUARY 21, 2012
An act to amend Section 7125.4 of the Business and
Professions Code, and to amend Section 11665 1088.5
of the Unemployment Insurance Code, relating to
contractors employers .
LEGISLATIVE COUNSEL'S DIGEST
AB 1794, as amended, Williams. Contractors: worker's
compensation insurance reporting. Unemployment
insurance: use of employer reports: reporting and payroll:
enforcement.
(1) Existing law provides for the payment of unemployment
compensation benefits to eligible unemployed individuals, and
requires the Employment Development Department to implement and
administer the unemployment insurance system in the state. Existing
law requires each employer to file with the department a report of
wages paid to his or her workers and to furnish to each employee a
written statement showing, among other things, the total amount of
wages, and total wages subject to personal income tax, as provided.
Existing law also requires each employer to file with the department
specified information on new employees, and authorizes the use of
that information for specified purposes including, among other
things, administration of the law regarding unemployment compensation
benefits. Existing law provides that a person who knowingly
accesses, uses, or discloses confidential information without
authorization is guilty of a misdemeanor.
This bill would also authorize the Employment Development
Department to provide the specified new employee information to the
Joint Enforcement Strike Force on the Underground Economy, the
Contractors' State License Board, and the State Compensation
Insurance Fund, as provided. By expanding the crime of knowingly and
wrongfully accessing, using or disclosing specified information, this
bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
(2) Existing law imposes specified regulatory and enforcement
responsibilities relating to employers on the Employment Development
Department, the Contractors' State License Board, and the State
Compensation Insurance Fund.
This bill would require the Employment Development Department, the
Contractors' State License Board, and the State Compensation
Insurance Fund to execute, on or before July 1, 2013, a memorandum of
understanding regarding the administration and enforcement of
reporting and payroll duties relating to contractors.
(1) Existing law, the Contractor's State License Law, provides for
the licensing and regulation of contractors.
Existing law makes it a misdemeanor for a licensed contractor or a
qualifier for a license to file a worker's compensation insurance
exemption certificate that is false.
This bill would also make it a misdemeanor and a cause for
disciplinary action for a licensed contractor to fail to notify his
or her worker's compensation insurance carrier within 20 days of
hiring an employee.
(2) Existing law, until January 1, 2013, requires an insurer who
issues a workers' compensation insurance policy to a roofing
contractor holding a C-39 license from the Contractors State License
Board to perform an annual payroll audit for the contractor.
This bill would also require an insurer who issues a workers'
compensation insurance policy to any contractor to require that the
contractor report the hiring of new workers within 20 days and would
extend these provisions until January 1, 2015.
Because this bill would create a new crime, it would impose a
state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1088.5 of the
Unemployment Insurance Code is amended to read:
1088.5. (a) In addition to information reported in accordance
with Section 1088, effective July 1, 1998, each employer shall file,
with the department, the information provided for in subdivision (b)
on new employees.
(b) Each employer shall report the hiring of any employee who
works in this state and to whom the employer anticipates paying
wages.
(c) (1) This section shall not apply to any department, agency, or
instrumentality of the United States.
(2) State agency employers shall not be required to report
employees performing intelligence or counterintelligence functions,
if the head of the agency has determined that reporting pursuant to
this section would endanger the safety of the employee or compromise
an ongoing investigation or intelligence mission.
(d) (1) Employers shall submit a report as described in paragraph
(4) within 20 days of hiring any employee whom the employer is
required to report pursuant to this section.
(2) Notwithstanding subdivision (a), employers transmitting
reports magnetically or electronically shall submit the report by two
monthly transmissions not less than 12 days and not more than 16
days apart.
(3) For purposes of this section, an employer that has employees
in two or more states and that transmits reports magnetically or
electronically may designate one state in which the employer has
employees to which the employer will transmit the report described in
paragraph (4). Any employer that transmits reports pursuant to this
paragraph shall notify the Secretary of Health and Human Services in
writing as to which state the employer designates for the purpose of
sending reports.
(4) The report shall contain the following:
(A) The name, address, and social security number of the
employees.
(B) The employer's name, address, state employer identification
number (if one has been issued), and identifying number assigned to
the employer under Section 6109 of the Internal Revenue Code of 1986.
(C) The first date the employee worked.
(5) Employers may report pursuant to this section by submitting a
copy of the employee's W-4 form, a form provided by the department,
or any other hiring document transmitted by first-class mail,
magnetically, or electronically.
(e) For each failure to report the hiring of an employee, as
required and within the time required by this section, unless the
failure is due to good cause, the department may assess a penalty of
twenty-four dollars ($24), or four hundred ninety dollars ($490) if
the failure is the result of conspiracy between the employer and
employee not to supply the required report or to supply a false or
incomplete report.
(f) Information collected pursuant to this section may be used for
the following purposes:
(1) Administration of this code , including for the
administrative purposes of the Joint Enforcement Strike Force on the
Underground Economy pursuant to Section 329 .
(2) Locating individuals for purposes of establishing paternity
and establishing, modifying, and enforcing child support obligations.
(3) Administration of employment security and workers'
compensation programs.
(4) Providing employer or employee information to the Franchise
Tax Board and the State Board of Equalization for the purpose of tax
or fee enforcement.
(5) Verification of eligibility of applicants for, or recipients
of, the public assistance programs listed in Section 1320b-7(b) of
Title 42 of the United States Code.
(6) Providing employer or employee information to the Contractors'
State License Board and the State Compensation Insurance Fund for
the purpose of workers' compensation payroll reporting.
(g) For purposes of this section, "employer" includes a labor
union hiring hall.
(h) This section shall become operative on July 1, 1998.
SEC. 2. On or before July 1, 2013, the Employment
Development Department, the Contractors' State License Board, and the
State Compensation Insurance Fund shall execute a memorandum of
understanding to share information and coordinate enforcement actions
against contractors that fail to report new employees to the
Employment Development Department and accurate payroll to the State
Compensation Insurance Fund.
SECTION 1. Section 7125.4 of the Business and
Professions Code is amended to read:
7125.4. (a) The filing of the exemption certificate prescribed by
this article that is false, or the employment of a person subject to
coverage under the workers' compensation laws after the filing of an
exemption certificate without first filing a Certificate of Workers'
Compensation Insurance or Certification of Self-Insurance in
accordance with the provisions of this article, or the employment of
a person subject to coverage under the workers' compensation laws
without maintaining coverage for that person, constitutes cause for
disciplinary action.
(b) Any qualifier for a license who, under Section 7068.1, is
responsible for ensuring that a licensee complies with the provisions
of this chapter, is also guilty of a misdemeanor for committing or
failing to prevent the commission of any of the acts that are cause
for disciplinary action under this section.
(c) It shall be a misdemeanor and a cause for disciplinary action
for a licensee to fail to notify his or her workers' compensation
insurance carrier within 20 days of hiring an employee. The remedy
provided for by this section shall be in addition to, and not limited
upon, the authority referenced in Sections 11760 and 11880 of the
Insurance Code for underreporting employees in order to lower workers'
compensation insurance premiums.
SEC. 2. Section 11665 of the Insurance Code is
amended to read:
11665. (a) An insurer who issues a workers' compensation
insurance policy to a contractor holding a license from the
Contractors State License Board shall require the reporting of
workers within 20 days of hire and perform an annual payroll audit
for the contractor. The insurer may impose a surcharge on each
policyholder audited under this subdivision in an amount necessary to
recoup the reasonable costs of conducting the annual payroll audits.
(b) The commissioner shall direct the rating organization
designated as his or her statistical agent to compile pertinent
statistical data on those holding C-39 licenses, as reported by the
appropriate state entity, on an annual basis and provide a report to
him or her each year. The data shall track the total annual payroll
and loss data reported on those holding C-39 licenses in accordance
with the standard workers' compensation insurance classifications
applicable to roofing operations. The report shall also be provided
to the Legislature, in compliance with Section 9795 of the Government
Code. Reports required under this section for the 2008 and 2009
calendar years shall be filed by March 1, 2012.
(c) This section shall remain in effect only until January 1,
2015, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2015, deletes or extends
that date.
SEC. 3. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.