California, October 10, 2025
News Summary
California’s Senate Bill 291 introduces stricter compliance measures and penalties for contractors regarding workers’ compensation insurance. The law, effective from 2027, mandates valid insurance certificates for licensing and imposes hefty fines on non-compliance. This marks a significant step towards ensuring contractor accountability and protecting workers’ rights. Additional requirements include a verification process for exemption claims and annual legislative reporting by the Contractors State License Board.
California has enacted Senate Bill 291, which strengthens workers’ compensation compliance and penalties for contractors across the state. Enrolled by the California Legislature on September 12, the bill was introduced by Senator Tim Grayson and successfully passed by both the Senate and Assembly in early September. This legislative change aims to improve oversight of contractors’ compliance with workers’ compensation insurance requirements and to heighten scrutiny on exemption claims.
Under the provisions of Senate Bill 291, California contractors must maintain a valid Certificate of Workers’ Compensation Insurance or a Certification of Self-Insurance in order to obtain or maintain a license. Previously, contractors who did not employ workers could claim an exemption from this requirement under certain conditions. However, pending changes to these exemptions were set for 2028, limiting them to joint ventures without employees. SB 291 accelerates this process by establishing stricter verification requirements.
Specifically, the Contractors State License Board is mandated to develop a verification process for exemption claims by January 1, 2027. This verification must include audits, proof, or other means to gather evidence to confirm the legitimacy of exemption claims. Furthermore, the Contractors State License Board is required to report its proposed verification process to the legislature by the same deadline.
The new bill imposes increased civil penalties for contractors who employ workers without adequate coverage. Sole owner licensees will now face a minimum civil penalty of $10,000 per violation for not maintaining workers’ compensation coverage. Limited liability companies, partnerships, corporations, or tribal business licensees will incur a minimum penalty of $20,000 per violation. Subsequent infractions can result in additional fines of up to $30,000 for every occurrence.
Moreover, the Contractors State License Board is prohibited from renewing or reinstating a contractor’s license until valid workers’ compensation insurance is provided. This emphasizes the seriousness of ensuring compliance with insurance obligations.
Annually, the Contractors State License Board must report to the legislature regarding enforcement actions tied to workers’ compensation exemptions, further enhancing the focus on compliance. Senate Bill 291 specifically targets workers’ compensation insurance, making it clear that health or life insurance requirements remain outside its scope. Insurance professionals will need to pay closer attention to clients’ documentation and adherence to compliance standards as a result of this bill, which introduces a more rigorous framework for contractor accountability.
As Senate Bill 291 has been fully enrolled, contractors and insurance professionals in California must prepare for the adjustments in compliance standards coming ahead, which are designed to mitigate negligence regarding insurance obligations and uphold the integrity of the workers’ compensation system within the construction industry.
FAQ
What is Senate Bill 291?
Senate Bill 291 is a law enacted in California that strengthens workers’ compensation compliance and penalties for contractors.
What are the new requirements for contractors under Senate Bill 291?
Contractors must maintain a valid Certificate of Workers’ Compensation Insurance or a Certification of Self-Insurance to hold a license.
What are the penalties for not complying with workers’ compensation insurance requirements?
Sole owner licensees will face a minimum civil penalty of $10,000 per violation, while partnerships, corporations, LLCs, or tribal business licensees will face a minimum penalty of $20,000 per violation. Subsequent violations can incur additional penalties up to $30,000.
When does the verification process for exemption claims need to be established?
The verification process must be created by the Contractors State License Board by January 1, 2027.
Key Features of Senate Bill 291
| Feature | Description |
|---|---|
| Effective Date | Set for implementation as outlined in its provisions. |
| Verification Process | Must be developed by January 1, 2027, including audits and proof requirements. |
| Civil Penalties | Minimum $10,000 for sole owners, $20,000 for corporations/LLCs, with up to $30,000 for subsequent violations. |
| License Renewal | Licenses cannot be renewed or reinstated without valid workers’ comp insurance. |
| Annual Reporting | Contractors State License Board must report on enforcement actions annually. |
Deeper Dive: News & Info About This Topic
- Insurance Business: California Cracks Down on Contractor Workers’ Comp Insurance Violations
- Business Insurance: California Court Says Board Lacks Jurisdiction Over Claim from Former NFL Player
- Property Casualty 360: How New California Workers’ Comp Bill Could Impact Aging Workforce
- Wikipedia: Workers’ Compensation
- Google Search: Workers Compensation California
Author: STAFF HERE HUNTINGTON BEACH
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