Tim Grayson

Existing law, the Contractors State License Law, establishes the Contractors State License Board within the Department of Consumer Affairs and sets forth its powers and duties relating to the licensure and regulation of contractors. Existing law authorizes the board to appoint committees and make rules and regulations, as specified.

Existing law generally requires, as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, a licensed contractor or applicant for licensure to have on file at all times with the board a current and valid Certificate of Workers' Compensation Insurance or Certification of Self-Insurance in the applicant's or licensee's business name, as specified. Existing law generally makes a violation of these provisions a misdemeanor. Existing law exempts from this requirement an applicant or licensee who has no employees, provided that they file a statement with the board before the issuance, reinstatement, reactivation, or continued maintenance of a license certifying that they do not employ any person, as specified, and who does not hold a specified license issued by the board, including a C-8 license, as defined. Existing law repeals these provisions on January 1, 2028.

Existing law, commencing January 1, 2028, removes the above-specified exemptions, and instead exempts from the above-described filing requirement an applicant or licensee organized as a joint venture that has no employees, provided that they file a statement with the board before the issuance, reinstatement, reactivation, or continued maintenance of a license certifying that they do not employ any person, as specified.

Existing law requires the board, by no later than January 1, 2027, to establish a process and procedure to verify that applicants or licensees without an employee or employees are eligible for exemption from the workers' compensation insurance requirement, and authorizes the process or procedure to include an audit, proof, or other means, to verify eligibility.

This bill would require that verification process or procedure to include an audit, proof, or other means to obtain evidence to verify eligibility for exemption from the workers' compensation insurance requirement. The bill would also require the board to report its proposed verification process to the Legislature no later than January 1, 2027.

Existing law makes the filing of an exemption certificate for workers' compensation insurance on file with the board 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 specified provisions or without maintaining coverage for that person, cause for disciplinary action.

This bill would include as disciplinary action, among other penalties, a minimum civil penalty of $10,000 per violation for any sole owner licensee found to have employed workers without maintaining workers' compensation coverage, and would make conforming changes. The bill would prohibit the board from renewing or reinstating a license subject to the above-described disciplinary action until the applicant or licensee provides the board a current and valid Certificate of Workers' Compensation Insurance or Certification of Self-Insurance in the applicant's or licensee's business name.

Existing law requires the board to report annually to the Legislature, no later than October 1 of each year, certain statistical information for the prior fiscal year, including, among other things, the number of disciplinary actions taken by the board categorized by type, as specified, and by whether the disciplinary action resulted from an accusation, failure to comply with a citation, or failure to comply with an arbitration award.

This bill would require that the report specify the number of disciplinary actions for violations of specified provisions relating to the filing of a workers' compensation insurance exemption certificate or a certification of self-insurance.

This bill would incorporate additional changes to Section 7099.2 of the Business and Professions Code proposed by SB 779 to be operative only if this bill and SB 779 are enacted and this bill is enacted last.