California Assembly Bill AB1794 Amended / Bill

 BILL NUMBER: AB 1794AMENDED BILL TEXT AMENDED IN ASSEMBLY MAY 25, 2012 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   1088.5  of the  Unemployment  Insurance Code, relating to  contractors   employers  . LEGISLATIVE COUNSEL'S DIGEST AB 1794, as amended, Williams.  Contractors: worker's compensation insurance reporting.   Unemployment insurance: use of employer reports: reporting and payroll: enforcement.   (1) Existing law provides for the payment of unemployment compensation benefits to eligible unemployed individuals, and requires the Employment Development Department to implement and administer the unemployment insurance system in the state. Existing law requires each employer to file with the department a report of wages paid to his or her workers and to furnish to each employee a written statement showing, among other things, the total amount of wages, and total wages subject to personal income tax, as provided. Existing law also requires each employer to file with the department specified information on new employees, and authorizes the use of that information for specified purposes including, among other things, administration of the law regarding unemployment compensation benefits. Existing law provides that a person who knowingly accesses, uses, or discloses confidential information without authorization is guilty of a misdemeanor.   This bill would also authorize the Employment Development Department to provide the specified new employee information to the Joint Enforcement Strike Force on the Underground Economy, the Contractors' State License Board, and the State Compensation Insurance Fund, as provided. By expanding the crime of knowingly and wrongfully accessing, using or disclosing specified information, this 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.   (2) Existing law imposes specified regulatory and enforcement responsibilities relating to employers on the Employment Development Department, the Contractors' State License Board, and the State Compensation Insurance Fund.   This bill would require the Employment Development Department, the Contractors' State License Board, and the State Compensation Insurance Fund to execute, on or before July 1, 2013, a memorandum of understanding regarding the administration and enforcement of reporting and payroll duties relating to contractors.   (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 contractor to fail to notify his or her worker's compensation insurance carrier within 20 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 within 20 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 1088.5 of the   Unemployment Insurance Code   is amended to read:  1088.5. (a) In addition to information reported in accordance with Section 1088, effective July 1, 1998, each employer shall file, with the department, the information provided for in subdivision (b) on new employees. (b) Each employer shall report the hiring of any employee who works in this state and to whom the employer anticipates paying wages. (c) (1) This section shall not apply to any department, agency, or instrumentality of the United States. (2) State agency employers shall not be required to report employees performing intelligence or counterintelligence functions, if the head of the agency has determined that reporting pursuant to this section would endanger the safety of the employee or compromise an ongoing investigation or intelligence mission. (d) (1) Employers shall submit a report as described in paragraph (4) within 20 days of hiring any employee whom the employer is required to report pursuant to this section. (2) Notwithstanding subdivision (a), employers transmitting reports magnetically or electronically shall submit the report by two monthly transmissions not less than 12 days and not more than 16 days apart. (3) For purposes of this section, an employer that has employees in two or more states and that transmits reports magnetically or electronically may designate one state in which the employer has employees to which the employer will transmit the report described in paragraph (4). Any employer that transmits reports pursuant to this paragraph shall notify the Secretary of Health and Human Services in writing as to which state the employer designates for the purpose of sending reports. (4) The report shall contain the following: (A) The name, address, and social security number of the employees. (B) The employer's name, address, state employer identification number (if one has been issued), and identifying number assigned to the employer under Section 6109 of the Internal Revenue Code of 1986. (C) The first date the employee worked. (5) Employers may report pursuant to this section by submitting a copy of the employee's W-4 form, a form provided by the department, or any other hiring document transmitted by first-class mail, magnetically, or electronically. (e) For each failure to report the hiring of an employee, as required and within the time required by this section, unless the failure is due to good cause, the department may assess a penalty of twenty-four dollars ($24), or four hundred ninety dollars ($490) if the failure is the result of conspiracy between the employer and employee not to supply the required report or to supply a false or incomplete report. (f) Information collected pursuant to this section may be used for the following purposes: (1) Administration of this code  , including for the administrative purposes of the Joint Enforcement Strike Force on the Underground Economy   pursuant to Section 329  . (2) Locating individuals for purposes of establishing paternity and establishing, modifying, and enforcing child support obligations. (3) Administration of employment security and workers' compensation programs. (4) Providing employer or employee information to the Franchise Tax Board and the State Board of Equalization for the purpose of tax or fee enforcement. (5) Verification of eligibility of applicants for, or recipients of, the public assistance programs listed in Section 1320b-7(b) of Title 42 of the United States Code.  (6) Providing employer or employee information to the Contractors' State License Board and the State Compensation Insurance Fund for the purpose of workers' compensation payroll reporting.  (g) For purposes of this section, "employer" includes a labor union hiring hall. (h) This section shall become operative on July 1, 1998.  SEC. 2.   On or before July 1, 2013, the Employment Development Department, the Contractors' State License Board, and the State Compensation Insurance Fund shall execute a memorandum of understanding to share information and coordinate enforcement actions against contractors that fail to report new employees to the Employment Development Department and accurate payroll to the State Compensation Insurance Fund.   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) 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 within 20 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.