SB 560
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Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 560 (Monning) – As Amended August 17, 2015
Policy Committee:
Business and Professions
Insurance
Urgency: No
State Mandated Local Program: No
Vote:
14 - 0
13 -0
Reimbursable: No
SUMMARY: This bill:
1) Prohibits a licensing board from processing an application for an initial license unless the
applicant provides his or her social security number, individual taxpayer identification
number, or federal employer identification number where requested on the application.
2) Requires a licensing board, including the State Bar and the Bureau of Real Estate, to provide
personal information regarding licensees to the Employment Development Department
(EDD) upon request.
3)
Authorizes the Contractors State License Board’s (CSLB) Enforcement Division
to issue a written notice to appear before a court, to unlicensed individuals who fail to secure
workers’ compensation insurance.
FISCAL EFFECT:
1) Minor and absorbable costs to the licensing boards to provide information to EDD. Existing
law requires licensing boards to provide this information to the Franchise Tax Board.
2) Minor and absorbable costs to CSLB to enhance their enforcement activities.
COMMENTS:
1) Purpose. This bill is sponsored by CSLB. According to the author, “[This bill] would
expand the jurisdiction of CSLB’s Enforcement Division to include ensuring payment for
adequate workers’ compensation. Including workers’ compensation violations in the Notice
to Appear will streamline the referral of these cases to local district attorneys and place an
emphasis on the importance of obtaining workers’ compensation."
2) Background. CSLB’s enforcement division, the Statewide Investigative Fraud Team,
enforces the prohibition against unlicensed contracting activity. According to the CSLB’s
2014 Sunset Review Report, the enforcement division consists of enforcement
representatives, peace officers, and enforcement supervisors. When the CSLB suspects
serious or repeat violations for unlicensed activity, it will assign the case to one of its
enforcement representatives or peace officers for formal investigation. The cases are subject
to review by enforcement supervisors.
If an investigation uncovers evidence of a possible violation of unlicensed activity, the CSLB
SB 560
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may issue a warning letter, issue a citation, or refer the case to the District Attorney for
criminal prosecution (issue a notice to appear). However, the CSLB’s enacting statute only
permits the CSLB, when acting alone, to take action for violations specific to the licensure of
contractors, which does not include the general obligation to carry workers’ compensation
insurance under the Labor Code. This bill will grant this additional authority.
3) Workers’ Compensation Insurance Laws. In California, the Division of Labor Standards
Enforcement (DLSE) is authorized to enforce the state's workers’ compensation insurance
laws. When the DLSE suspects that an employer does not carry workers' compensation, it
will issue a stop order. The order prohibits the employer from using employee labor until the
employer obtains coverage. A violation of the order is a misdemeanor—punishable by
imprisonment in the county jail for up to 60 days and/or a fine of up to $10,000.
The DLSE assesses a penalty of $1,000 per employee on the payroll at the time the stop order
is issued and served, up to $100,000. The DLSE may also elevate the citation to a
misdemeanor notice to appear in egregious cases.
4) Prior Legislation.
a) AB 2554 (Berryhill), Chapter 85, Statutes of 2012, provided CSLB enforcement
representatives the authority to issue a notice to appear for violations of contracting laws.
b) SB 691 (Lieu), Chapter 832, Statutes of 2012, added CSLB to the list of agencies
approved to receive payroll information from Employment Development Department.
Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081