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Contractors State License Board Update

Today, the Contractors State License Board provided an update on the following.

Workers Compensation Insurance Plan

To maintain an active California contractor license, licensees are required to have on file with the Contractors State License Board either a Certificate of Workers Compensation Insurance or a Certificate of Self-Insurance issued by the Department of Industrial Relations. The CSLB Enforcement Division previously reported that studies had revealed that 59% of contractors that perform outdoor construction, specifically Concrete, Earthwork/Paving, Landscaping, and Tree Trimming, had false workers’ compensation exemptions on file with CSLB. In response, at the Enforcement Committee meeting on November 3, 2017, a two person Advisory Committee comprised of Kevin Albanese and Ed Lang was established to develop strategies to address workers’ compensation insurance avoidance. Strategies the Advisory Committee will consider include collaborating with other state agencies and implementation of the future strategies that follow.

  • Employment Development Department – Responsible for employment tax compliance and chairs the Joint Enforcement Task Force, which provides for sharing of information among designated state agencies to combat the underground economy.
  • California Occupational Safety & Health Administration – Responsible for employment work conditions, and may be able to assist in identifying contractors without workers’ compensation insurance that have an injured worker.
  • Division of Labor Standards Enforcement – Responsible for ensuring that workers receive wages owed and that employers carry a valid workers’ compensation insurance policy.
  • California Department of Insurance – Responsible for investigating workers’ compensation insurance premium fraud, and also for funding the prosecution of violators.
  • State Compensation Insurance Fund – Provides fairly-priced workers’ compensation insurance, helps make workplaces safer, and restores injured workers.

On January 25, 2018, Advisory Committee members Albanese and Lang and CSLB staff met with SCIF management. Participants explored the feasibility of expanding the requirement that certain classifications of licensees who perform work likely to require more than one employee must obtain workers’ compensation policies. The meeting resulted in the strategic approaches discussed below.

  • Request a Joint Enforcement Strikeforce Subcommittee meeting to discuss information-sharing opportunities, including how to utilize the Workers Compensation Insurance Rating Bureau to identify licensees who did not cooperate in an insurance audit for possible issuance of a CSLB advisory notice.
  • Implement a process within the CSLB Intake and Mediation Centers whereby a Letter of Admonishment will be issued when a licensee is subject to the workers’ compensation suspension program. This will serve as a flag to insurance carriers that the licensee has been found to employ workers without a workers’ compensation policy.
  • Provide feedback to State Compensation Insurance Fund as it relates to the auditing process.
  • Discuss potential legislative proposals with the Workers Compensation Advisory Committee, CSLB staff, and stakeholders (including the Department of Insurance) to add a workers’ compensation requirement for a limited number of other licensees.
  • Submit a legislative proposal that would preclude licensees from filing a new workers’ compensation exemption with CSLB for a period of one year if they are found to have violated Labor Code Section 3700 (employed workers without a workers’ compensation insurance policy.)

Enforcement Objective

  • Formalize strategy to identify licensee misuse of workers compensation insurance requirement exemption: Target Date June 2018
  • In conjunction with the CSLB Public Affairs Office, develop an education and enforcement program targeted at licensees who employ workers while having a workers’ compensation exemption on file with CSLB.

Active License Workers Compensation Status – As of December 31, 2017

Classification                           Swimming Pool

Exemptions on File                 1,090

WC Policies on File                 1,283

Total Policies & Exemptions    2,373

% of Total w/ Exemptions        46%