The Legislature is scheduled to adjourn for the remainder of 2011 on September 9th. SPEC's top priority issue for 2011 has been to continue legislative and regulatory efforts to address noncompliant contractors and the underground economy. SPEC has supported two bills on this topic that are very close to being sent to the Governor for signature.
The first bill, AB 397 (Monning), requires all licensed contractors to recertify for an exemption for workers' compensation when they renew their license. Under current law, a contractor who claims an exemption from workers' compensation is only required to make that filing at the time he or she receives their initial contractor's license. Approximately 60% of all licensed contractors on the Contractors State License Board (CSLB) website claim this exemption. Although it may make sense that many contractors do not have employees they need to cover for workers' compensation at the time they first obtain their license, AB 397 would require every licensed contractor to recertify this claim for an exemption from workers' compensation coverage every two years.
The second bill is AB 878 (Berryhill). This bill would require a workers' compensation insurer to report to the CSLB when they cancel a workers' compensation policy of a licensed contractor, after an audit reveals that the contractor has made material misrepresentations that resulted in financial harm to the insurer such as premium fraud. This bill also provides that the willful or deliberate disregard and violation of workers' compensation insurance laws by a contractor constitutes a cause for discipline action.
In addition to supporting these two important bills, SPEC is a member and supporter of the Construction Enforcement Coalition (CEC), a growing group of some 60 businesses, trade associations and labor representatives. The CEC is focused on effective and fair enforcement of key California laws and regulations regarding construction with the goal of providing public protection and to level the playing field for law-abiding contractors. This group has conducted regular meetings in 2011 with the CSLB as well as representatives of the Department of Labor and Workforce Development; the Employment Development Department; the Department of Insurance; the Franchise Tax Board; the Department of Industrial Relations; and, the Federal Bureau of Investigation.
The purpose of these meetings has been to develop coordinated efforts at attacking the underground economy and noncompliant contractors, urge state agencies to unify their efforts to address this problem and to identify how the contractor industry trade associations can provide assistance. A key component of the Coalition's efforts was a Legislative Day held in the State Capitol where 100 attendees lobbied legislators and staff with regard to the serious nature of cheaters in the construction industry.
Another major pocketbook issue for SPEC members is related to possible additional fees and taxes. The previous six months of this legislative session was mostly committed to the Governor and Legislators trying to resolve the state's $26 billion budget deficit. On the table were proposals to expand the state's sales tax to the service industry, authorize local governments and school districts to impose local income taxes and taxes on other items such as alcohol and cigarettes, and yet another proposal to require those who hire independent contractors to withhold 3% of amounts due to be credited toward state income taxes. Fortunately, none of these proposals were ultimately included in the final budget deal. The proposal to expand taxing authority to local governments was still alive, even after the budget passed, however, Senate President Pro Tempore Darrell Steinberg recently announced that he will shelve the proposal for the year.
The full text of SPEC's Legislative Update can be found at www.calspec.org.
