Governor Newsom has signed AB-336.

Current law does not require the Contractors State License Board (CSLB) to publicly post which of three workers’ compensation classifications their licensee contractors are in. According to the bill author, this lack of transparency incentivizes intentional misclassification by unscrupulous contractors so they can purchase workers’ compensation insurance that is not appropriate for the kind of work that their employees do.

This could provide these bad actors with a competitive advantage over contractors who play by the rules.

This new law requires all contractor licensees to report to the CLSB their workers’ compensation classification code as a condition of licensure. It also requires CSLB to post each licensee contractor’s classification code on its website. This will ensure that licensee contractors provide their employees with the proper level of workers’ compensation insurance, and create a level playing field for contractors that no longer rewards bad actors.

Classification codes for specific occupations, industries, or businesses are assigned by WCIRB and approved by the Insurance Commissioner. Insurance companies have an option to create their own classification system and submit it to CDI for approval, but typically use the WCIRB’s classifications.

Insurance companies do, however, assign a specific rate to each classification code, subject to approval by the Insurance Commissioner. The classification codes and related rates are used to calculate the base rate of the workers’ compensation insurance premium.

Insurance companies are currently required to provide CSLB with specific information about an applicant’s or licensee’s workers’ compensation insurance policy, including the name, license number, policy number, dates that coverage is scheduled to commence and lapse, and cancellation date if applicable. This information is available on CSLB’s website.

The law provides that the board is not required to verify or investigate the accuracy of the licensee’s classification codes and would prohibit the board from being held liable for any misreported classification codes.

The law will require the board, when it updates the public license detail on its internet website for an active renewal, to include the classification codes certified by the licensee.

The provisions of this new law are operative on July 1, 2024. Because the bill would expand the scope of a crime under the Contractors State License Law and expand the crime of perjury.

AB 2894 (Cooper) of 2022 was substantially similar to this bill. Held on the Senate Appropriations Committee Suspense File.This new law was sponsored by the District Council of Iron Workers of California.