New California Laws Fight Illegal Contracting

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The governor of California has signed two bills, AB 397 and AB 878, into law that should impact the problem of illegal contracting in the golden state.

AB 397 requires all licensed contractors to recertify every two years in order to maintain their exemption for workers compensation insurance. Under the old law, a contractor would claim exemption from workers’ compensation only when filing for their initial contractor’s license. Now that status must be reaffirmed every two years.

AB 878 stipulates that workers’ compensation insurers must report to the Contractors State License Board (CSLB) when they cancel the worker’s compensation policy of a licensed contractor due to misrepresentation in an attempt to reduce workers’ compensation liability.

Both laws are intended to help stop contractors from evading their responsibility to provide worker’s compensation insurance for employees.

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