Rules, Regulations, Reminders
CSLB is enhancing its broad enforcement efforts in 2010 with more focus on workers’ compensation, mechanic’s lien, and building permit violators. Now, more than ever, licensed contractors need to follow state contracting laws.
Workers’ Compensation
“We understand that businesses need to cut expenses, but cheating on workers’ compensation insurance is illegal,” says Steve Sands, CSLB Registrar. “Employees are left unprotected if they get hurt, and contractors who break the law have an unfair business advantage over those who follow the rules. Fraud also drives up the price of insurance for all of us.”
CSLB is conducting stings in 10 counties, working with the Department of Insurance’s (DOI) Premium Insurance Fraud Task Force (which includes local district attorneys and law enforcement) to combat unlawful insurance practices. This enforcement is in response to a significant increase in the number of workers’ compensation complaints against licensed contractors. The contractor stings are designed to uncover workers’ compensation insurance fraud, such as under-reporting employees, uninsured employees, premium fraud, cash pay, and unlicensed activity.
Contractors are required to carry workers’ compensation insurance to cover permanent and temporary employees with job-related injuries. Additionally, all Roofing (C-39) licensees are required to carry workers’ compensation insurance, even if they do not have employees.
Contractors must submit proof of workers’ compensation insurance coverage to CSLB by filing a Certificate of Workers Compensation Insurance from the insurer or Certificate of Self-Insurance from the Department of Industrial Relations. Additionally, contractors must provide proof of workers’ compensation insurance to CSLB within 90 days of the contractor hiring an employee. Contractors with no employees must provide CSLB with an Exemption from Workers’ Compensation form.
Penalties for not carrying workers’ compensation insurance are steep. A first offense results in a $10,000 fine and up to one year in county jail, as well as possible stop orders on work projects with fines of $1,000 per employee on the payroll at that time, up to $100,000. Contractors are also liable for workers’ compensation claims filed by uncovered employees, and associated penalties, including possible civil litigation. Lack of workers’ compensation insurance may result in the suspension of a contractor’s business license. Work performed after the suspension of a license is considered unlicensed activity.
Mechanic’s Liens
New mechanic’s liens laws will become effective on January 1, 2011. Contractors who don’t comply could face fines or jail time. These new laws are especially important in light of an accelerating trend of contractors placing mechanic’s liens on each other’s businesses.
The new law, created by Assembly Bill 457, requires that contractors, subcontractors, and suppliers serve a Notice of Mechanic’s Lien on the owner of the property and furnish a proof of service affidavit signed by the person serving the notice. Failure to serve the lien notice and confirm proof of service will cause the mechanic’s lien to be unenforceable.
Building Permits and Energy Efficiency Enforcement
CSLB is renewing its statewide enforcement of building permit and Title 24 requirements in partnership with local building officials. Members of the industry are encouraged to obtain permits, and CSLB will share information with contractors on how to apply for a building permit online.
Building permits offer protection to consumers by maintaining current building and safety standards. Contractors without the required building permit are financially liable for injuries related to their project. Additionally, local building officials may issue a “Stop Work” notice and fine the property owner – a fee that the contractor may be liable to pay. Civil penalties include up to $5,000 per citation and/or suspension or revocation of the contractor’s license.
Internet Resources
Contractors can get information on workers’ compensation insurance, mechanic’s liens, and building permits on the CSLB Web site, at www.cslb.ca.gov. Additionally, information on purchasing workers’ compensation insurance is available on the California Department of Insurance Web site at www.insurance.ca.gov.
If you have trouble finding an insurance company willing to cover you, visit the State Compensation Insurance Fund at www.statefundca.com. Information on self-insurance is available from the California Department of Industrial Relations at www.dir.ca.gov.
- from the Contractors State License Board
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