We’re always hearing stories from former clients and current contractors that they’re seeing frequent violations of new contractor laws that just came into effect this year, in 2023.
There are a ton of new laws that are – to be frank – absolutely critical to know as a contractor, no matter your classification, location, or size. Any violation of these new laws carries serious penalties – including time in jail for repeat offenders.
Arm yourself with the knowledge and take the steps necessary to protect your business by becoming familiar with the following pieces of new legislation.
Senate Bill 216 (Dodd)
If you’re a concrete, HVAC, Asbestos or Tree Service contractor in California – listen up!
Senate Bill 216 (SB216), which amends the Business and Professions Code (BPC) Section 7125, is a piece of legislation that requires 5 Class “C” contractors to carry workers’ compensation insurance, even without employees.
This mandate means that contractors with a C-8 Concrete, C-20 Heating, Warm-Air Ventilating and Air-Conditioning, C-22 Asbestos Abatement, or D-49 Tree Service license must have valid workers’ compensation insurance by January 1, 2023.
And as a note to all contractors of all classifications: by January 1, 2026, all contractors must have valid workers’ compensation insurance, irrespective of whether or not they have employees.
The only exception to the new CSLB workers’ comp requirements is joint ventures without employees. Anyone with this structure of business is exempt from SB 216’s workers’ comp requirements.
Senate Bill 607 (Min)
In another insurance-related move, the California Senate passed Bill 607 (SB 607), which marks another important change in the requirements to hold a CSLB license. It updates numerous sections of the BPC – with one huge change in bond amounts.
SB 607 mandates that the CSLB qualifier, license, and minimum disciplinary bonds be raised from $12,500 and $15,000, respectively, to $25,000 for all three bonds as of January 1, 2023.
As a bonus for the families of military members looking to become licensed contractors, SB 216 also requires the Department of Consumer Affairs (DCA) boards and bureaus (including the CSLB) to waive application and license fees for military family members.
What if I Don’t Have Workers’ Compensation Insurance Or My Bond Amount Is Insufficient?
If you are currently in one of the above classifications and you do not have workers’ comp or a sufficient bond amount…well, we’ve got bad news for you: your license is surely suspended.
Don’t panic – just stop doing work entirely if you are still doing it. This is critical as you can face serious legal consequences for working without a license.
Next, you should immediately begin the process of getting the necessary workers’ compensation insurance and/or increasing your bond amount. Once that is sorted out, you can re-apply for your license.
If you’re unsure or don’t remember if you have workers’ compensation insurance, you should immediately check your license status.
Senate Bill 1237 (Newman)
Huzzah for troops-turned-contractors – SB 1237 is here to waive any renewal fees!
Senate Bill 1237 (SB 1237) updates the current law that requires DCA boards, including the CSLB, to waive renewal fees for a licensee who is called to active duty as a member of the U.S. Armed Forces or California National Guard.
This applies if the licensee or registrant is stationed outside of California. The new law expands the definition of “called to active duty” and extends it to licensees on active duty during a “state of insurrection” or a “state of extreme emergency.”
Assembly Bill 2105 (Smith)
In another move that will have veteran contractors excited, Assembly Bill 2105 (AB 2105) mandates a 50% fee reduction for an initial license or registration fee for all veterans!
All you have to do is provide paperwork proving you are a veteran who has served as an active-duty member of the United States Armed Forces, including the National Guard or Reserve components and was not dishonorably discharged.
For HIS contractors, this still applies to you as well! This applies to all initial license fees for anyone acquiring a CSLB license.
Assembly Bill 1747 (Quirk)
Assembly Bill 1747 (AB 1747) increases the civil penalty from $8,000 to $30,000 for every violation of BPC Section 7110 (savvy legal contractors will know these are building code violations) and amends Section 7099.2 (how much in penalties violators will pay).
This bill expands BPC 7110 to include failure to comply with certain health and safety laws, water laws, safe excavation requirements, pest control requirements, illegal dumping, and other state laws related to building and insurance requirements.
Assembly Bill 2374 (Bauer-Kahan)
Bad news for litterbug contractors: your time is up.
Assembly Bill 2374 (AB 2374) amends Penal Code Section 374.3 and now requires courts to notify CSLB or other DCA boards or bureaus when a licensee is convicted of an illegal dumping crime. This is so the board can publish the conviction on their website.
The bill also increases the fines a court may impose for this crime, which is great for everyone everywhere. In a double-swoop of awesome for contractors who like to do the entire job right, it also requires the court to order a person convicted of dumping commercial quantities of waste to remove or pay for the removal of, the waste matter that was illegally dumped. Which, again, is an absolute win for everyone involved.
Assembly Bill 2916 (McCarty)
Assembly Bill 2916 (AB 2916) amends BPC Section 7124.6 and modifies the CSLB Letter of Admonishment (LOA) program to allow CSLB to determine whether it should be issued for one or two years, rather than the current one-year limitation.
In making that determination, CSLB is required to consider the gravity of the violation, the good faith of the licensee or applicant being charged, and the history of previous violations.
This is a pretty technical bill and to be honest, it remains to be seen how it will affect contractors. It seems to really only affect disciplinary actions, which affect only a small number of contractors. We’ll keep you posted on how it develops.
Stay Compliant…Or Else!
These new laws have serious consequences for any contractor that is non-compliant and remember: Ignorantia juris non excusat – ignorance of the law does not mean you are free from the consequences of violating it.
And in the CSLB’s case – the punishments are extremely severe for anyone violating contractor law in California. So don’t do it!