Workers Compensation Laws Changed

Contractors License Workers Compensation Laws ChangedWorkers Compensation laws changed earlier this year, thanks to AB 2883.

And here’s how it’s affecting California contractors and applicants.

This new law, as stated in-part below, requires that corporations carry workers comp if they have officers that own less than 15% ownership in the company.

How does this affect contractors and license applicants?

If you’re a current corporate contractors license holder and you have officers who are listed on the contractors license but not on the corporate record with the Secretary of State (SOS), you should be carrying workers comp for those officers who are not listed on the SOS record.  Or you would need to add those officers to the SOS record*.

If you’re applying for a corporate contractors license for the first time (or changing from a sole owner to a corporation) and are using someone other than yourself as your RMO qualifier, that person must also be listed on your corporate record with the SOS.

Sound simple enough?  Maybe not.  What if the positions of President, Secretary, Treasurer, and Director (PSTD) have all been filled by other personnel besides the RMO qualifier?  Then what?  The SOS only wants to see the names of those individuals, PSTD.  You can always add another Director to the list.  But what if you don’t want your RMO to be on the Board of Directors?  Then what?  Exactly! Then what?!?!  Phone a friend?  Buy a vowel?  Take your ball and go home?

I reached out to the Contractors State License Board to get their input.  Their reply was “The Contractor’s State License Law provides that a licensee must file a certificate of workers’ compensation if they employ anyone who would be subject to the workers’ compensation laws of a California, or they may file a Certificate of Exemption from those laws if they don’t.”  But I know they are not requiring applicants to prove that officers listed on the application have at least 15% ownership.  So the CSLB doesn’t care about workers compensation laws??  It’s very black and white with them… if the license has an RME.. it needs works comp.  That’s it.  Nothing about the other officers listed on the application and how much of the company they own.

Here’s a scenario…

A corporate license application has an RMO qualifier who states he owns 30% of the company and his title is VP.  Additional officers include the President, a Secretary, and a Treasurer.   When the CSLB processes the app, they’re only looking to see if the named President on the app matches the named President on the SOS record.  So, let’s say they match.  The CSLB is then not asking for proof of ownership levels of the other two officers!  Now let’s say that those other two officers, who may or may not be listed on the corporation with the SOS, each own only 10% of the company.  What then?  Well, according to AB 2883, they are in violation of the law for not carrying workers comp!

To go a step further…

Let’s say this corporation attempts to buy a workers compensation policy.  The Pres/CEO will have to sign a waiver form for his officers stating that they each own at least 15% of the company… including the RMO.  But wait, he already owns 30%!  Yes, but if you look at the CSLB website, it only states that the RMO owns “at least 10%”!  State Fund, the workers comp underwriter, doesn’t know that the RMO owns 30% because the CSLB says he only owns at least 10%.  Government working together at its best!

*What if those other officers (Sect./Tres) only own 5% each, and the Pres/CEO and/or Board of Directors is not willing to increase their ownership to 15% EACH?!  Then State Fund will rate their salaries based on the type of construction services the license provides…. increasing your workers comp rates exponentially!

Bottom line…. your workers comp rates will not be through the roof… they’ll be through the stratosphere!

This is nothing but a money-making scheme produced by over paid legislators.  It’s just one more thing to drive businesses out of California!!

AB 2883 States, in part:
Existing law defines an employee, for purposes of the laws governing workers’ compensation, to include, among other persons, officers and members of boards of directors of quasi-public or private corporations while rendering actual service for the corporations for pay. Existing law excludes from that definition, among other persons, officers and directors of a private corporation who are the sole shareholders of the corporation and working members of a partnership or limited liability company, as specified, unless they elect to come under the compensation provisions of the laws governing workers’ compensation.
This bill would revise those exceptions from the definition of an employee to apply to an officer or member of the board of directors, as specified, if he or she owns at least 15% of the issued and outstanding stock of the corporation, or an individual who is a general partner of a partnership or a managing member of a limited liability company, and that person elects to be excluded by executing a written waiver of his or her rights under the laws governing workers’ compensation, stating under penalty of perjury that he or she is a qualifying officer or director, or a qualifying general partner or managing member, as applicable. The bill would specify the effective date of the waivers.





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2014 California Construction Law Update

2014 California Construction Law Update

by Garret Murai

2014 California Construction Law Update

Approximately 2,000 bills were introduced in the California State Legislature during the 2013-2014 legislative session. Of these, 896 bills made it to Governor Browns desk and 800 were signed into law.Looking back, 2013 could be called the year of the labor unions. Strong Democratic majorities controlled both the Assembly and Senate. Democratic Governor Brown, enjoying record high approval ratings, surpassed Republican Earl Warren as the longest-serving governor in Californias history. And, 2014 being a primary election year, incumbents are under pressure to show their supporters what theyve done for them lately.The stars aligned, labor unions saw the passage of legislation restricting the ability of charter cities to avoid prevailing wage laws, new laws expanding the authority of the California Labor Commissioner, and tighter…

Read the entire article here: via [New post] 2014 California Construction Law Update.

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CSLB Application Processing Procedures & Stats

CSLB Application Processing Procedures were discussed at a recent meeting.

Below is part of a powerpoint presentation given at the 10/21/13 Licensing Committee Meeting where they discuss their “new” cslb application processing procedures. It seems to me that the more they try to explain away their decision to profile certain applicants and trades, the more it seems like they are failing at covering their backsides.

There are now 8 classifications that they have determined to be “critical.” Thus, triggering their new application processing procedures. They are: A-Gen Eng, B-Gen Building, C-10 Electrical, C-16 Fire Protection, C-20 HVAC, C-36 Plumbing, C-38 Refrigeration, and C-57 Water Well Drilling.

cslb application processing procedures

But Wait, there’s more!

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Contractor Adversiting Rules 5/15/2013​

I was recently asked if a corporate license using a DBA can advertise with just the DBA. My answer was yes. As long as the public can find your license information on the CSLB website by searching the DBA, you are in compliance with the rule. Remember, your license number must be included in ALL advertising. Including on your vehicles. Every time I see a contractors rig, I ALWAYS look for their number. 98% of the time it’s listed. That means that 2% of you are not in compliance. And with the CSLB on an enforcement binge, you shouldn’t take the chance of receiving a citation.​

advertising sign

Here are the laws that pertain to advertising:​

7027. Advertising as contractor

Any person who advertises or puts out any sign or card or other device that would indicate to the public that he or she is a contractor, or who causes his or her name or business name to be included in a classified advertisement or directory under a classification for construction or work of improvement covered by this chapter is subject to the provisions of this chapter regardless of whether his or her operations as a builder are otherwise exempted.

7027.4. Advertising as insured or bonded; Requirements; Cause for discipline

(a) It is a cause for discipline for any contractor to advertise that he or she is “insured” or has insurance without identifying in the advertisement the type of insurance, including, for example, “commercial general liability insurance” or “workers’ compensation insurance” that is carried by the contractor. The contractor may abbreviate the title of the type of insurance.

(b) It is cause for discipline for a contractor to advertise that he or she is “bonded” if the reference is to a contractor’s license bond required pursuant to Section 7071.6 or to a disciplinary bond required pursuant to Section 7071.8.

(c) “Advertise,” as used in this section, includes, but is not limited to, the issuance of any card, sign, or device to any person, the causing, permitting, or allowing of any sign or marking on or in any building or structure or business vehicle or in any newspaper, magazine, or by airwave or any electronic transmission, or in any directory under a listing for construction or work of improvement covered by this chapter, for the direct or indirect purpose of performing or offering to perform services that require a contractor’s license.

7071.13. Reference to bond in advertising, soliciting, or other presentments as ground for suspension of license

Any reference by a contractor in his advertising, soliciting, or other presentments to the public to any bond required to be filed pursuant to this chapter is a ground for the suspension of the license of such contractor.

7029.5. Display of name, business address and business license number on commercial vehicles.

Every C-36 plumbing contractor, C-45 sign contractor, and C-57 well-drilling contractor licensed under this chapter shall have displayed on each side of each motor vehicle used in his or her business, for which a commercial vehicle registration fee has been paid pursuant to Article 3 (commencing with Section 9400) of Chapter 6 of Division 3 of the Vehicle Code, his or her name, permanent business address, and contractor’s license number, all in letters and numerals not less than 1½ inches high. The identification requirements of this section shall also apply to any drill rig used for the drilling of water wells. Failure to comply with this section constitutes a cause for disciplinary action.

7029.6. Display of business name and contractors’ license number

Except for contractors identified in Section 7029.5, every contractor licensed under this chapter shall have displayed, in or on each motor vehicle used in his or her construction business, for which a commercial vehicle registration fee has been paid pursuant to Article 3 (commencing with Section 9400) of Chapter 6 of Division 3 of the Vehicle Code, his or her business name and contractors’ license number in a clearly visible location in print type of at least 72-point font or three-quarters of an inch in height and width.

7030.5. Inclusion of license number in contracts, bids, and advertising

Every person licensed pursuant to this chapter shall include his license number in: (a) all construction contracts; (b) subcontracts and calls for bid; and (c) all forms of advertising, as prescribed by the registrar of contractors, used by such a person.

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