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New California Laws Discourage Illegal Contracting Practices

January 8, 2012 By

California contractor laws

The changes in California law are intended to protect honest contractors.

The California State Assembly recently passed two measures intended to end the practice of what has come to be known as “black market contracting.” According to Aqua Magazine online, these laws specifically target contractors who “skirt workers compensation insurance.”

The first measure, AB 397, “requires contractors claiming workers’ compensation exemptions to recertify their status or supply proof of insurance whenever they renew their licenses.” The second measure, AB 878, “requires insurers to report client companies underreporting salaries to the Contractors State License Board (CSLB).”

Both laws are intended to address illegal contracting practices that have hurt consumers as well as “law-abiding contractors who have struggled to compete against those who cut corners by not properly insuring workers.” They also come at a time when the CSLB is cracking down on unlicensed contractors through sting operations. Aqua Magazine reports that in November, the Statewide Investigative Fraud Team (SWIFT) unit of the CSLB “arrested eight illegal contractors [in] Murrieta” and that “similar operations netted 113 violators in eight other cities.”

California is, of course, not the only state to face this dilemma, nor is the problem endemic to just one industry: “illegal contracting practices have [plagued a variety of] markets all over the country.” The recession that began in 2008 has only made the situation worse, especially in unstable economic climates like the one that has characterized the Golden State.

If you are a California contractor who is unsure if your own liability coverage meets the requirements, contact the experts at Statewide Insurance. They’ll help you understand the changes so that you can take care of your workers—and ultimately, your business—the right way.

Call Statewide Insurance Brokers at (888) 258-0272 today for fast, free quotes on contractor’s insurance.

California Independent Contractor Classification Law

November 14, 2011 By

Do you operate a business in California that retains independent contractors? If so, you need to be aware of a new state law that, according to the Monterey Herald.com, “penalizes businesses that ‘willfully misclassify’ employees as independent contractors.”

California workers comp

Knowing California independent contractor laws includes acquiring the proper liability insurance and workman's comp insurance if needed.

Under current law, businesses that engage in this kind of misclassification “are subject to consequences, including liability for payroll taxes, unpaid unemployment insurance contributions and penalties for failure to secure workers’ compensation coverage.” Moreover, “because the misclassified individuals have not been paid pursuant to wage and hour laws,” they are often entitled to overtime pay as well as compensation for “missed meal and rest periods.”

Many business owners believe that if they have an independent contractor agreement with the worker, they are in compliance with law. However, such an agreement alone does not necessarily determine whether a worker is an independent contractor. As the Monterey Herald.com further reports, “the most important factor is whether the business has control or the right to control worker as to the work done and the manner and means in which it is performed.”

Under Senate Bill 459, which will go into effect on January 1, businesses will be subject to hefty fines ranging from $5000 to $25,000 per violation if they:

  • willfully misclassify a worker as an independent contractor or
  • charge a person who has been “willfully misclassified as an independent contractor a fee or make any deductions for compensation.”

This new law interprets “willful misclassification” as “voluntarily and knowingly misclassifying” an individual as an independent contractor.

The message behind Senate Bill 459 is simple. If your California business uses independent contractors, be careful how your categorize them in your records: misclassification could cost you a bundle.

If you have independent contractors or operate a business yourself, be sure you are in compliance and secure the proper general liability insurance or workers compensation as needed. Call Statewide Insurance Brokers at 888-258-0272 for a fast, free quote!

Keeping it Safe, Steps You Can Take To Avoid Work Place Injuries

July 13, 2011 By

California workers compensation insurance statewide insurance brokers

California requires workers compensation, so making your work place safe will save you money

Californians work in all sorts of environments, from the daunting heat of the SoCal sun to the cold and windy areas of the Bay Area. The elements, combined with human error, can, and at times does, result in work place accidents. California requires that businesses provide workers compensation insurance. Therefore, reducing injuries will benefit all involved, and work place accidents can be reduced by having employees follow a few safety guidelines:

Employee Training
All employees should be subject to regular training sessions. New employees should be fully briefed on all aspects of the business they can potentially come into contact with. They should be given a robust training session on workplace safety, including information on where first-aid supplies are located and who to contact in the case of an emergency. Supplemental training sessions should be held at least once a year to refresh everyone’s memory on good safety standards. Training sessions should also be conducted whenever new equipment is brought on-site or when new chemicals are being introduced into the workplace.

Proper Clothing and Shoes
All employees should wear clothing and shoes that offer them the maximum amount of protection for their job. This includes closed toed shoes, reinforced with steel if they are using or around heavy machinery. Clothing should offer the maximum amount of protection, such as thick jeans and long sleeved shirts for those working around flying debris. It is the job of the supervisor to make sure that employees are properly clothed for work and if they are not, they should be sent home to change.

Competent Supervision
There should be enough supervisors present to adequately oversee workers. There should always be someone on site supervising the project to ensure that everyone is working up to safety standards. Supervisors can help to catch mistakes that employees miss and prevent accidents before they occur. When there are too few supervisors it is easy for mistakes to be made. Supervisors should also be trained in safety standards and procedures and given follow up, refresher training courses annually.

Rules to Live By
Create a set of safety rules and have them posted. It is easy to forget safety procedures and standards once you leave the training room. Having them posted throughout the workplace and in the employee lounge will help them not to be so forgettable. You should also ensure that there are consequences for not following the rules. For example, sending employees home to change if they are not in proper safety work attire will cost them pay for the day.

Safety Goals
Give your employees safety goals to meet. Having incentives, such as days off with pay and gift certificates to local restaurants, will give employees extra incentive to be accident free. Meeting your safety goals will mean that you will have few chances to use your California workers compensation insurance, which means that you will be saving money as you keep your workers, and workplace, accident free.

If you need to provide workers compensation insurance in California, contact Statewide Insurance Brokers at 888-258-0272.