BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2219|
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THIRD READING
Bill No: AB 2219
Author: Knight (R), et al.
Amended: 8/6/12 in Senate
Vote: 21
SENATE BUSINESS, PROF. & ECON. DEV. COMM. : 8-0, 7/2/12
AYES: Price, Corbett, Correa, Hernandez, Negrete McLeod,
Strickland, Vargas, Wyland
NO VOTE RECORDED: Emmerson
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/29/12 - See last page for vote
SUBJECT : Contractors workers compensation insurance
coverage
SOURCE : Roofing Contractors Association
DIGEST : This bill deletes the sunset date, thereby
extending indefinitely the existing law requiring roofing
contractors who hold a C-39 classification to maintain
workers' compensation insurance, whether or not they have
employees, and makes additional changes to law regarding
C-39 contractors.
ANALYSIS :
Existing law:
CONTINUED
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1. Licenses and regulates more than 300,000 contractors,
including C-39 roofing classification contractors, under
the Contractors State License Law by the Contractors
State License Board (CSLB) within the Department of
Consumer Affairs (DCA). The CSLB is under the direction
of the registrar of contractors (Registrar). (Business
and Professions Code (BPC) Section 7000 et seq.)
2. 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. (Labor Code Section 3700 et seq.)
3. Requires every licensed contractor to have on file at
all times with the CSLB a current and valid Certificate
of Workers' Compensation Insurance or Certification of
Self-Insurance, and allows all specialty and general
contractors to claim exemption from the requirement to
have workers compensation insurance if the contractor
certifies it does not have any employees or is otherwise
exempt from having workers' compensation insurance.
(BPC Section 7125)
4. Provides that failure of a licensed contractor to obtain
or maintain workers' compensation insurance coverage, if
required under the Contractors State License Law, shall
result in the automatic suspension of the license by
operation of law. The suspension shall be effective on
either the date that the workers' compensation insurance
coverage lapses or the date that workers' compensation
coverage is required to be obtained. (BPC Section
7125.2)
5. Until January 1, 2013, requires the following regarding
licensees who hold a C-39 roofing classification:
A. Requires the Registrar to remove the C-39
classification from any license that, on January 1,
2011, is active and includes a C-39 classification in
addition to any other classification unless a valid
certification of workers' compensation insurance or
certification of self-insurance is submitted to the
Registrar.
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B. Requires automatic suspension of a license for any
licensee whose license, after January 1, 2011, is
active and has had the C-39 classification removed
and who is found to have employees and who does not
have the required workers' compensation coverage.
6. Until January 1, 2013, requires a workers' compensation
insurer who provides a policy to a contractor with a
C-39 classification to perform an annual payroll audit
for the contractor, and allows the insurer to place a
surcharge on the policy holder to recoup reasonable
costs of the audit. (Insurance Code Section 11665 (a))
7. Until January 1, 2013, requires the Insurance
Commissioner, through the Workers' Compensation
Insurance Rating Bureau (WCIRB), to annually compile
statistical data on those holding C-39 licenses.
(Insurance Code Section 11665 (b))
This bill:
1. Requires the Registrar to remove the C-39 classification
from any contractor license that, on January 1, 2013,
includes a C-39 classification in addition to any other
classification, unless a valid certification of workers'
compensation insurance or certification of
self-insurance is submitted in the applicant's or
licensee's business name.
2. Requires automatic license suspension for any contactor
license that, after January 1, 2013, has had the C-39
classification removed and who is found to have
employees and who does not have the required workers'
compensation coverage.
3. Requires the annual payroll audits for C-39 roofing
contractors, which are performed by their insurers, to
include an in-person visit to the place of business of
the contractor to verify whether the number of employees
reported by the contractor is accurate
4. Requires statistical data on contractors holding C-39
licenses, which is compiled by the Insurance
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Commissioner, to include the number of employers, total
payroll, total losses, and the losses per $100 of
payroll by the employers' annual payroll at certain
intervals, as specified.
5. Deletes the January 1, 2013 sunset date, on current
provisions of law amended by #1 through #4 above, thus
extending those provisions indefinitely.
Background
The CSLB licenses and regulates California's construction
industry. Anyone performing construction work in
California that totals $500 or more in labor and materials
must be licensed by CSLB. There are more than 300,000
licensed contractors in the state, in 43 different
licensing classifications, including almost 4800 active
C-39 licenses. A C-39 roofing contractor is certified to
install products and repair surfaces that seal, waterproof
and weatherproof structures.
Existing law, which requires all C-39-licensed roofers in
California to maintain workers compensation insurance
policies, sunsets on January 1, 2013. Insurers are
required to complete an annual audit of their California
policyholders, with the costs of the audit included as a
portion of the insurer's customary basic underwriting
charge. Finally, The Workers Compensation Insurance
Ratings Bureau (WCIRB) is directed by the Department of
Insurance (CDI) to gather annual statistical data for the
California roofing industry and provide a written report
each year to CDI.
Data from the first two years of implementation of the
insurance mandate reflects the effectiveness of the
legislation in that 436 more roofing contractors were
insured at the end of 2008 than were insured in 2000,
despite fewer roofing contractors in business due to
economic attrition.
Workers' compensation insurance . California law requires
all employers to carry workers' compensation insurance,
even if they have only one employee or a temporary
employee. Every licensed contractor must report, in
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writing, the name and address of the insurer carrying
workers' compensation on his or her employees to the
Registrar within 90 days after any policy of insurance is
issued. The contractor must send a copy of this report to
the insurer. Failure to follow this reporting requirement
is a misdemeanor. If a contractor does not have employees,
he or she can fill out an exemption from workers'
compensation.
Because of the relatively widespread history of fraud and
abuse by some in the roofing industry, special rules have
been put into place to ensure better compliance, and to
ensure a level playing field for honest roofing
contractors. This bill retains and expands these special
rules.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/6/12)
Roofing Contractors Association (source)
Associated Roofing Contractors of the Bay Area Counties
Associated Roofing Contractors of Northern California
Best Contracting Services
California Labor Federation
American Subcontractors Association - California
California Building Industry Association
Construction Industry Legislative Council
Eberhard Complete Roofing & Waterproofing
Northern California Tile Industry
Reinhardt Roofing
State Building and Construction Trades Council of
California
Troyer Contracting Co.
Union Roofing Contractors Association
United Union of Roofers, Waterproofers and Allied Workers
Vance & Associates Roofing
ARGUMENTS IN SUPPORT : According to the author, "The
roofing industry in California has among the highest
workers compensation rates of all industries in the state.
The nature of the work requires considerable investment in
order to ensure the protection and safety of industry
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workers and contractors. However, a high incidence of
payroll reporting fraud has also contributed to these
exorbitant costs, as many roofing contractors under-report
their payroll in order to secure lower workers compensation
premiums. When roofing companies under report their
payroll and carry substandard levels of workers
compensation insurance, their employees are put at an even
higher risk without appropriate insurance coverage in
place, homeowners are unwittingly subjected to liability if
a worker is injured, and honest roofing companies must
subsidize the premiums of dishonest companies."
ASSEMBLY FLOOR : 76-0, 5/29/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Grove, Hagman,
Halderman, Harkey, Hayashi, Roger Hern�ndez, Hill, Huber,
Hueso, Huffman, Jeffries, Jones, Knight, Lara, Logue,
Bonnie Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell,
Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan,
Perea, V. Manuel P�rez, Portantino, Silva, Skinner,
Smyth, Solorio, Swanson, Torres, Valadao, Wagner,
Wieckowski, Williams, Yamada, John A. P�rez
NO VOTE RECORDED: Cedillo, Fletcher, Gorell, Hall
JJA:m 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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