Suspended Corporate License & Worker’s Compensation Update

Like the tide lifting all boats, trouble with a corporate license can also ‘suspend’ an individual’s personal work.  New California law will make no distinction in the size of a contractor’s business when it comes to providing compensation insurance coverage for employees on the job…

Q: As indicated in the attached CSLB notice, my son’s license will be suspended next month because of an issue involving my corporate license.  I understand that although a VP is an Officer and part of the corporation this position isn’t required to be listed with the Secretary of State or Contractors Board.  I am the Responsible Managing Officer (RMO)/President, Secretary & Treasurer and my son has no authority to control license events. Wouldn’t I be solely responsible for any CSLB actions…?

The basic question would be – What is the least painful way to remove him from the claim troubles on my license?  Please advise.
A:  I cannot say if you’re “solely responsible” for all CSLB actions.  However, I can tell you the CSLB is giving your son the opportunity to remove himself from your license so his Sole Owner license will not be suspended.  I recommend that he file a Notice of Disassociation with the CSLB effective immediately, which in turn will remove him from the corporate license and lift the pending suspension on his personal license.

Q:   I read in one of your columns months ago about a new law that will affect small contractors like myself.  It had to do with Worker’s Compensation.  Could you let me know which law this was and how I can get more information?

A: I believe I referenced Assembly Bill 397 a number of months ago.  This bill was passed by the Legislature and signed by the Governor in October and will impact all contractors large and small.  The new law which took effect January 1st, requires a contractor who has previously certified that he/she has no employees and is exempt from carrying a Worker’s Compensation policy to submit a new certification, or proof of employee insurance coverage.

The new law states:  “At the time of renewal, all active licensees with an exemption for Worker’s Compensation insurance on file with the board, submitted pursuant to subdivision (b) of Section 7125, (of the Business and Professions Code) shall either recertify the licensee’s exemption by completing a recertification statement on the license renewal form, as provided by the board, or shall provide a current and valid Certificate of Worker’s Compensation Insurance or Certificate of Self-Insurance, whichever is applicable.”

There are many contractors who certified they were exempt from Worker’s Compensation when their license was first issued; however, some now have employees.  If a contractor, under penalty of perjury, must recertify they are exempt or produce the required Certification of Workers Comp, this will put them on record, either way.  With this new re-certification requirement, contractors will produce the necessary Worker’s Comp Certificate; obtain Worker’s Comp if required; or at least eliminate any questions should they be found in violation of this statute.

A second bill (AB 878), also signed into law last October, requires a Workers’ Compensation insurer to report to the Registrar of Contractors any licensee whose Worker’s Compensation insurance policy is canceled by the provider if the insurer has completed a premium audit or investigation.