Governor Newsom has signed AB-336 (Cervantes) (D-Riverside), a bill which may help address employer premium fraud in the California construction industry.
Previously, contractor license applicants were required as a condition of initial licensure, reinstatement, reactivation, renewal or continued maintenance of a license to provide a valid current certificate of workers compensation insurance or Self-Insurance coverage (unless they came within certain specified exemptions).
AB-336 adds a requirement that the employer certify on the license renewal form the three workers’ compensation classification codes for which the highest estimated payroll is reported on the policy.
While the CLSB (the contractor licensing board) will not be required to verify or investigate the accuracy of the information provided, the class code information provided will be detailed on the CLSB website.
The bill is to be implemented January 1, 2024.
As the California Senate analysis notes:
” By providing the classification codes related to workers’ compensation coverage, the CSLB along with other regulatory entities, and members of the public, including industry stakeholders would be able to determine if the classification code and workers’ compensation insurance match the current work offered by the licensee in an effort to ensure that employers have the appropriate coverage for the type of construction work being performed in California.”
When dishonest contractors cheat on workers’ comp premiums by misrepresenting class codes, they get an unfair advantage over honest contractors.
This bill will make it more risky for cheating contractors.
Sponsors and supporters included the District Council of Iron Workers of California, American Subcontractors Association-California, California Labor Federation, AFL-CIO, the International Union of Operating Engineers, Cal-Nevada Conference, and the State Building and Construction Trades Council of CA.
A link to the bill text and legislative analysis can be found here:
Stay tuned as the Governor decides whether to sign or veto a handful of remaining workers’ comp bills.