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BBB reminds contractors: CSLB-Sponsored Workers' Comp Enforcement Law among those Taking Effect in 2011
December 07, 2010
Beginning January 1, 2011, the Contractors State License Board (CSLB) will be able to issue a "stop work" order to any licensed or unlicensed contractor who fails to carry workers' compensation insurance coverage for his or her employees a valuable tool for combating the underground economy. The new law will give CSLB unprecedented authority, enabling CSLB enforcement representatives to more effectively stop unlicensed, uninsured activity, and aid in the state's efforts to assure a level playing field for licensees who follow workers' compensation laws.

Failure to comply with the stop work order will be a misdemeanor, punishable by up to 60 days in jail and/or a fine up to $10,000. The stop work orders take effect immediately, but may be appealed by a written hearing request submitted within 20 days of the order being issued. The law requires the stoppage to be affirmed or denied immediately following the hearing, and all parties notified within 24 hours. Employees affected by the work stoppage would be entitled to up to 10 days' pay for lost time. The bill allows CSLB to increase peace officer positions from three to twelve, if approved by the Director of the Department of Consumer Affairs.

Following are additional laws related to the construction industry and CSLB that were passed during the 2009-2010 legislative session, most taking effect January 1, 2011 (Laws effective on dates other than January 1, 2011 are noted in bold italics.):

Other Workers' Compensation

SB 313 (DeSaulnier) Labor Code Section 3722 amended
This bill, signed in 2009, increases the potential penalty for failure to have a workers' compensation policy from $1,000 to $1,500 for each employee not covered. Fines are administered by the director of the Department of Industrial Relations. (Amended Stats 2009 ch 640 § 1, effective January 1, 2011.)

AB 2305 (Knight) Business and Professions Code Section 7125 and Insurance Code Section 11665 amended
The bill extends the requirement for C-39 Roofing contractors to carry a workers' compensation policy, even if he or she has no employees until 2013. It also requires providers of such policies to conduct annual payroll audits and submit the data to the Department of Insurance until January 1, 2013, unless another bill deletes or extends these provisions. (Amended Stats 2010 ch 423 §, 2 and 3, effective January 1, 2011.)

Mechanic's Liens

AB 457 (Monning) Civil Code Sections 3084 and 3146 amended
This CSLB-sponsored bill stipulates that the definitions of "claim of lien" and "mechanic's lien" are the same. It also requires that a Notice of Mechanic's Lien be served on the owner or person believed to be the owner of the property or on the construction lender or original contractor, and that a "proof of service affidavit" to the above individual(s) be completed and signed by the person serving the Notice of Mechanic's Lien. Failure to serve the mechanic's lien and confirm a proof of service affidavit will cause the mechanic's lien to be unenforceable. (Amended Stats 2009 ch 109 § 1 and 2, effective January 1, 2011.)

SB 189 (Lowenthal) Business and Professions Code Sections 7034, 7071.5, 7071.10, 7159, 7159.1, 7159.5, 7159.14 and 7164 amended
This law revises existing mechanic's lien law. It enacts separate provisions governing public and private improvement works. (Amended Stats 2010 ch 697 § 1 through 8, effective January 1, 2011.)

Public Contracts

AB 635 (Committee on Accountability and Administrative Review) Public Contract Code Article 1 added to Part 1, Chapter 3, Division 2
This bill requires contractors, engineers or architects engaged in roofing projects for public schools or community colleges, to disclose financial relationships connected to those entities and sign certification stating that he or she will not receive or give financial incentives in connection with the bid being awarded. Knowingly providing false information or failure to disclose a financial relationship is subject to a civil fine of up to $1,000. This law took effect immediately upon signing and chaptering on September 29, 2010. (Amended Stats 2010 ch § 1,effective September 29, 2011.)

AB 2036 (Bill Berryhill) Public Contract Code Sections 10111.2 and 20103.7 added. This law will require state departments and local agencies to make electronic copies of project plans available at no charge to a contractor plan room upon request of a contractor plan service. (Amended Stats 2010 ch 371 § 1 through 3, effective January 1, 2011.)

AB 2184 (Arambula) Public Contract Code Section 22037 amended
This bill amends current law to include electronic notification by public agencies for notices inviting formal bids for contracts. The new law requires agencies to submit notification by fax or electronic mail, if available, to trade journals at least 15 calendar days before the opening date of bids. The 30-day requirement for mailed notification remains in the law. (Amended Stats 2010 ch 62 § 1, effective January 1, 2011.)

Criminal

AB 2372 (Ammiano) Penal Code Section 487 amended
This law changes the threshold from $400 to $950 to charge the crime of grand theft for stealing money, labor, real or personal property. (Amended Stats 2010 ch 693 § 1 and 2, effective January 1, 2011.)

Environmental

AB 1343 (Huffman) Public Resources Code Chapter 5 added to Part 7, Division 30
This law requires manufacturers of architectural paint to submit a plan for paint recycling to the Department of Resources, Recycling and Recovery that could include an assessment on the sale of architectural paint. The plan will include contractor and consumer outreach and education about this plan. (Amended Stats 2010 ch 420 § 1 and 2,effective April 1, 2012.)

AB 2398 (John A. Perez) Public Resources Code Section Chapter 20 added to Part 3, Division 30 and Section 42980 repealed
This law will require carpet manufacturers to develop a recycling plan about which they will be required to educate carpet installation contractors. Carpet manufacturers must charge an assessment of one-half cent per square yard on the purchase price to pay for the program. (Amended Stats 2010 ch 681 § 1 and 2,effective July 1, 2011.)

CSLB/Consumer Board Operations

SB 294 (Negrete McLeod) Business and Professions Code Sections 7000.5 and 7011 amended
This bill extends CSLB's operations as a board from January 1, 2011 to January 1, 2012. ( Amended Stats 2010 ch 695 § 37 and 38, effective January 1, 2011.)

SB 392 (Florez) Business and Professions Code Sections 7025, 7028.5, 7029, 7065, 7065.1, 7065.5, 7068, 7068.1, 7068.2, 7069, 7071, 7071.1, 7071.8, 7071.9, 7071.11, 7071.17, 7072.5, 7075.1, 7076, 7076.2, 7085.6, 7090, 7090.1, 7096, 7121, 7121.1, 7121.5, 7121.6, 7122, 7122.1, 7122.2, 7122.5, 7137, 7138, 7152, 7159 and 7159.10 and 7071.6.5 and 7071.19 added; Corporations Code Section 22037 amended
This bill authorizes the issuance of a contractor license to a Limited Liability Corporation beginning January 1, 2012. The LLC would be required to maintain liability insurance of between $1,000,000 and $5,000,000 and post a $100,000 surety bond as a condition of licensure. In the case of suspension of the license, each member, officer, director or responsible managing officer of the company is personally liable for up to $1,000,000 each for damages resulting from the company's performance. (Amended Stats 2010 ch 698 § 1 through 43,effective January 1, 2012.)

SB 1491 (Committee on Business, Professions and Economic Development) Business and Professions Code Sections 7028.6, 7028.7, 7028.9 and 7058.5 amended
This bill makes minor changes to current B&P Code relative to the construction industry, including that a citation for acting as a contractor or salesperson without a license or registration be issued within four years, or 18 months of a complaint for the violation, whichever is later. The bill also allows for contractors applying for an original license to complete and return the required open book exam about asbestos electronically. (Amended Stats 2010 ch 415 § 17, 18 and 19, effective January 1, 2011.)

AB 1659 (Huber) Government Code Section 9147.7 added
This law abolishes the Joint Committee on Boards, Commissions and Consumer Protection and replaces it with the Joint Sunset Review Committee. CSLB's sunset review process remains unchanged. (Amended Stats 2010 ch 666 § 1, effective January 1, 2011.)

AB 2130 (Huber) Business and Professions Code Section 22 amended and Section 101.1 and Division 1.2 repealed
This law is a companion bill to AB 1659, replacing the Joint Committee on Boards, Commissions and Consumer Protection and replacing it with the Joint Sunset Review Committee. ( Amended Stats 2010 ch 670 § 1 through 3, effective January 1, 2011.)

AB 2500 (Hagman) Business and Professions Code Section 114 amended and Section114.5 repealed
The bill amends current law that allows an individual licensed by Department of Consumer Affairs' boards and bureaus to reinstate their license without examination or penalty if serving in the California National Guard or United States Military during a period of war. The new law repeals the section defining war. It also extends the reinstatement provision for licensees who can prove they were serving on active, military duty, provided their request comes not more than one year after discharge or the end of active duty. (Amended Stats 2010 ch 389 § 1 and 2, effective January 1, 2011.)

These changes in the law will be explained further in the 2011 edition of CSLB's California Contractors License Law & Reference Book scheduled for release in early January, which can be accessed on the CSLB website.