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SB-216 Contractors: workers’ compensation insurance: mandatory coverage.(2021-2022)

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Date Published: 10/03/2022 09:00 PM
SB216:v95#DOCUMENT

Senate Bill No. 216
CHAPTER 978

An act to amend, repeal, and add Section 7125 of the Business and Professions Code, relating to professions and vocations.

[ Approved by Governor  September 30, 2022. Filed with Secretary of State  September 30, 2022. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 216, Dodd. Contractors: workers’ compensation insurance: mandatory coverage.
(1) Existing law, the Contractors State License Law, provides for the licensure and regulation of contractors by the Contractors State License Board within the Department of Consumer Affairs. Existing law requires every 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, or to file a certificate of exemption certifying that they have no employees and are not required to obtain or maintain workers’ compensation insurance. Under existing law, the failure to file a proper certification constitutes cause for disciplinary action, and the failure of a qualifier for a license, as defined, to ensure compliance with these provisions, as specified, is a crime. Existing law requires a roofing contractor holding a C-39 license to obtain and maintain workers’ compensation insurance even if that contractor has no employees, and requires the suspension of any license that is active and has had the C-39 roofing classification removed, if the licensee is found by the registrar of contractors to have employees and to lack a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance.
This bill, until January 1, 2026, would require concrete contractors holding a C-8 license, warm-air heating, ventilation and air-conditioning (HVAC) contractors holding a C-20 license, asbestos abatement contractors holding a C-22 license, or tree service contractors holding a D-49 license to also obtain and maintain workers’ compensation insurance even if that contractor has no employees. After July 1, 2023, and if the registrar finds the licensee has employees and lacks the proper valid certification, the bill would require the suspension of any license that is active and has a C-8, C-20, C-22, or D-49 classification removed. The bill would provide that a joint venture, as specified, that files a certificate of exemption is not required to obtain workers’ compensation insurance. As of January 1, 2026, the bill would require all licensed contractors or applicants for licensure, regardless of classification, to obtain and maintain workers’ compensation insurance unless they are organized as a joint venture and file a certificate of exemption.
(2) Because this bill would expand the provisions for which qualifiers for a license have to ensure compliance, thus expanding the scope of an existing crime, the 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

The people of the State of California do enact as follows:


SECTION 1.

 Section 7125 of the Business and Professions Code, as amended by Section 25 of Chapter 615 of the Statutes of 2021, is amended to read:

7125.
 (a) Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name. A Certificate of Workers’ Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers’ compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b) This section does not apply to an applicant or licensee who meets both of the following conditions:
(1) Has no employees provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers’ compensation laws of California or is not otherwise required to provide for workers’ compensation insurance coverage under California law.
(2) Does not hold a C-8 license, as defined in Section 832.08 of Title 16 of the California Code of Regulations, a C-20 license, as defined in Section 832.20 of Title 16 of the California Code of Regulations, a C-22 license, as defined in Section 832.22 of Title 16 of the California Code of Regulations, a C-39 license, as defined in Section 832.39 of Title 16 of the California Code of Regulations, or a D-49 license, a subcategory of a C-61 license, as defined in Section 832.61 of Title 16 of the California Code of Regulations.
(c) This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files the statement prescribed by subparagraph (1) of subdivision (b).
(d) A Certificate of Workers’ Compensation Insurance, Certification of Self-Insurance, or exemption certificate is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(e) (1) The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2) A workers’ compensation insurer shall also report to the registrar a licensee whose workers’ compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A) The insurer has completed a premium audit or investigation.
(B) A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C) No reimbursement has been paid by the insured to the insurer.
(3) Willful or deliberate disregard and violation of workers’ compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(f) (1) For any license that, on January 1, 2013, is active and includes a C-39 classification in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-39 classification from the license unless a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2) For any licensee whose license, after January 1, 2013, is active and has had the C-39 classification removed as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(g) (1) For any licensee whose license, after July 1, 2023, is active and includes a C-8, C-20, C-22, or D-49 classification, in addition to any other classification, the registrar shall, in lieu of the automatic license suspension otherwise required under this article, remove the C-8, C-20, C-22, or D-49 classification from the license unless a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is received by the registrar.
(2) For any licensee whose license, after July 1, 2023, is active and has had the C-8, C-20, C-22, or D-49 classification removed, as provided in paragraph (1), and who is found by the registrar to have employees and to lack a valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance, that license shall be automatically suspended as required under this article.
(h) The information reported pursuant to paragraph (2) of subdivision (e) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(i) This section shall remain in effect only until January 1, 2026, and as of that date is repealed, unless a later enacted statute that is enacted before January 1, 2026, deletes or extends that date.

SEC. 2.

 Section 7125 is added to the Business and Professions Code, to read:

7125.
 (a) Except as provided in subdivision (b), the board shall require as a condition precedent to the issuance, reinstatement, reactivation, renewal, or continued maintenance of a license, that the applicant or licensee have on file at all times a current and valid Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance in the applicant’s or licensee’s business name. A Certificate of Workers’ Compensation Insurance shall be issued and filed, electronically or otherwise, by an insurer duly licensed to write workers’ compensation insurance in this state. A Certification of Self-Insurance shall be issued and filed by the Director of Industrial Relations. If reciprocity conditions exist, as provided in Section 3600.5 of the Labor Code, the registrar shall require the information deemed necessary to ensure compliance with this section.
(b) This section does not apply to an applicant or licensee organized as a joint venture pursuant to Section 7029 that has no employees, provided that the applicant or licensee files a statement with the board on a form prescribed by the registrar before the issuance, reinstatement, reactivation, or continued maintenance of a license, certifying that the applicant or licensee does not employ any person in any manner so as to become subject to the workers’ compensation laws of California or is not otherwise required to provide for workers’ compensation insurance coverage under California law.
(c) A Certificate of Workers’ Compensation Insurance or Certification of Self-Insurance is not required of a holder of a license that has been inactivated on the official records of the board during the period the license is inactive.
(d) (1) The insurer, including the State Compensation Insurance Fund, shall report to the registrar the following information for any policy required under this section: name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable.
(2) A workers’ compensation insurer shall also report to the registrar a licensee whose workers’ compensation insurance policy is canceled by the insurer if all of the following conditions are met:
(A) The insurer has completed a premium audit or investigation.
(B) A material misrepresentation has been made by the insured that results in financial harm to the insurer.
(C) Reimbursement has not been paid by the insured to the insurer.
(3) Willful or deliberate disregard and violation of workers’ compensation insurance laws constitutes a cause for disciplinary action by the registrar against the licensee.
(e) The information reported pursuant to paragraph (2) of subdivision (d) shall be confidential, and shall be exempt from disclosure under the California Public Records Act (Division 10 (commencing with Section 7920.000) of Title 1 of the Government Code).
(f) This section shall become operative on January 1, 2026.

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.