2012 California Construction Law Update – Part 1

Number 1 KeyAre we at the end of 2011 already?  With the end of the year quickly approaching and the start of a new year just around the corner not only comes New Year’s resolutions, but new laws as well.  Over the next several weeks, interspersed with new case updates as they occur, I will be writing about some of the new laws affecting the construction industry in 2012.  To start, there are several new laws affecting licensees:

Workers Compensation

Beginning January 1, 2012, licensees who have certified that they have no employees and are exempt from carrying workers compensation insurance must submit a new certification or proof of workers compensation insurance or self-insurance each time their license comes up for renewal.  C-39 roofing contractors are still required to carry workers compensation insurance irrespective of whether they have any employees, a requirement which first came into effect on January 1, 2007.

Also beginning January 1, 2012, works compensation insurers will be required to report to the California Contractor’s State License Board (“CSLB”) if a licensees policy is cancelled as a result of a premium audit or investigation, which reveals that a material misrepresentation has been made by the insured that results in financial harm to the insurer, and no reimbursement has been paid by the insured to the insurer.  The new law also provides that a licensee’s willful or deliberate disregard and violation of the workers’ compensation insurance law constitutes cause for disciplinary action by the CSLB.

RMO and RME Disassociations

Beginning January 1, 2012, licensees must notify the CSLB within 90 days of the disassociation of a Responsible Managing Officer (“RMO”) or Responsible Managing Employee (“RME”).  Licensees who are unable to replace the RMO or RME within 90 days of the RMO or RME’s disassociation may petition the CSLB for a one-time 90 day extension upon a showing of good cause.  Good cause is limited to the following: (1) the licensee is disputing the date of disassociation; (2) the RMO or RME has died; or (3) there has been a delay in processing the licensee’s application to replace the RMO or RME that is out of the licensee’s control and the delay is caused by the CSLB or another state or federal agency involved in the application process.

Sales and Use Tax Liabilities

Beginning January 1, 2012, the CSLB may refuse to issue, reinstate, reactive or renew a license or may suspend a license if the licensee fails to resolve outstanding final liabilities for sales and use taxes assessed by the California State Board of Equalization “(BoE”).  The new law adds the BoE to the list of state agencies, which includes the California Franchise Tax Board, California Employment Development Department, and California Department of Industrial Relations, in which the CSLB may refuse to issue, reinstate, reactive or renew a license or may suspend a license based on a licensee’s failure to resolve outstanding liabilities.

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