BILL NUMBER: AB 1794AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 9, 2012 INTRODUCED BY Assembly Member Williams FEBRUARY 21, 2012 An act to amend Section 7125.4 of the Business and Professions Code, and to amend Section 11665 of the Insurance Code, relating to contractors. LEGISLATIVE COUNSEL'S DIGEST AB 1794, as amended, Williams. Contractors: worker's compensation insurance reporting. (1) Existing law, the Contractor's State License Law, provides for the licensing and regulation of contractors. Existing law makes it a misdemeanor for a licensed contractor or a qualifier for a license to file a worker's compensation insurance exemption certificate that is false. This bill would also make it a misdemeanor and a cause for disciplinary action for a licensed contractoror a qualifier for a licenseto fail to notify his or her worker' s compensation insurance carrier within1520 days of hiring an employee. (2) Existing law, until January 1, 2013, requires an insurer who issues a workers' compensation insurance policy to a roofing contractor holding a C-39 license from the Contractors State License Board to perform an annual payroll audit for the contractor. This bill would also require an insurer who issues a workers' compensation insurance policy to any contractor to require that the contractor report the hiring of new workers within1520 days and would extend these provisions until January 1, 2015. Because this bill would create a new crime, it 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. State-mandated local program: yes. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 7125.4 of the Business and Professions Code is amended to read: 7125.4. (a) The filing of the exemption certificate prescribed by this article 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 the provisions of this article, or the employment of a person subject to coverage under the workers' compensation laws without maintaining coverage for that person, constitutes cause for disciplinary action. (b) Any qualifier for a license who, under Section 7068.1, is responsible for ensuring that a licensee complies with the provisions of this chapter, is also guilty of a misdemeanor for committing or failing to prevent the commission of any of the acts that are cause for disciplinary action under this section.(c) A licensee, or a qualifier for a license who, under Section 7068.1 is responsible for ensuring that a licensee complies with the provisions of this chapter is also guilty of a misdemeanor for failing to notify his or her worker's compensation insurance carrier within 15 days of hiring an employee.(c) It shall be a misdemeanor and a cause for disciplinary action for a licensee to fail to notify his or her workers' compensation insurance carrier within 20 days of hiring an employee. The remedy provided for by this section shall be in addition to, and not limited upon, the authority referenced in Sections 11760 and 11880 of the Insurance Code for underreporting employees in order to lower workers' compensation insurance premiums. SEC. 2. Section 11665 of the Insurance Code is amended to read: 11665. (a) An insurer who issues a workers' compensation insurance policy to a contractor holding a license from the Contractors State License Board shall require the reporting of workers within1520 days of hire and perform an annual payroll audit for the contractor. The insurer may impose a surcharge on each policyholder audited under this subdivision in an amount necessary to recoup the reasonable costs of conducting the annual payroll audits. (b) The commissioner shall direct the rating organization designated as his or her statistical agent to compile pertinent statistical data on those holding C-39 licenses, as reported by the appropriate state entity, on an annual basis and provide a report to him or her each year. The data shall track the total annual payroll and loss data reported on those holding C-39 licenses in accordance with the standard workers' compensation insurance classifications applicable to roofing operations. The report shall also be provided to the Legislature, in compliance with Section 9795 of the Government Code. Reports required under this section for the 2008 and 2009 calendar years shall be filed by March 1, 2012. (c) This section shall remain in effect only until January 1, 2015, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2015, deletes or extends that date. 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.