SBE News

GSBE Business Update 01/27/2020

Atkins reroutes SB 50, swerving around key committee roadblock

The most high-profile measure facing the Jan. 31 legislative deadline is SB 50, a plan to force cities to approve taller, denser housing near public transportation and job centers (up-zoning).  On one side: A desire to alleviate California’s housing shortage and meet the state’s climate goals. On the other: California’s inherent love of backyards and local control.

Senate leadership announced plans Friday (today) to pull the contentious housing legislation back to the chamber’s Rules Committee, a move designed to circumvent a hostile chairman who blocked the bill last year. Moving the bill back to the rules panel may allow it to sidestep Portantino and send it to the Senate floor, where the author claims he has the votes to pass the measure.

New Budget Unveiled

Last Friday, Governor Newsom unveiled a $222.2 billion state spending plan that includes a projected $7 billion surplus. The budget proposes to spend $84 billion in K-12 education and is focused largely on the state’s growing homeless crisis, including $750 million to create a new California Access to Housing and Services Fund and includes making state property and facilities available by the end of this month for emergency housing for the homeless. Also, the budget includes $83 million to support apprenticeships and in recognition of the difficulties of starting a small business in California, a first-year exemption of the franchise tax. The budget also provides  The budget summary can be read here.

CSLB Convenes Industry Stakeholder Meeting

Earlier this week, CSLB Registrar, David Vogt, and Commissions Albanese and Layton, convened a stakeholder meeting at the state Capitol to discuss potential policy issues that the CSLB is interested in pursuing in 2021 (NOT this year). Please see attached agenda.

The general theme of the meeting is that CSLB, which has approximately 285K licensees is looking at various ways to increase their rolls to over 300K; reduce and eventually eliminate Workers Comp (WC) exemptions for all categories of licensing; and to align (by raising) fines for repeat offenders who misclassify a WC exemption.

According to CSLB, 55% of C-8 Concrete, C-20 HVAC, D-49 Tree Service, claim an WC exemption, which are services that rarely self-employed enterprises. As an example, C-36 have over 8,700 licensees claiming that they are exempt.

Part of the challenge is trying to offset an increase to premiums because of new claims when not all in the industry are complying with the law. In practice, paying employers are subsidizing uninsured causing upward pressure on rates which may cause some downward pressure on mods for employers (good actors).

Accordingly, CSLB is considering phasing out three licensees (C-8, C-20 and D-49) followed by another batch who would loose their ability to claim a WC exemption with potentially 2025 as the “cut-off” date where no WC exemptions would be authorized.

In addition, the CSLB is looking into increasing the $5K cap penalties on WC violations for repeat offenders. We were informed that the statute had not been updated for several decades and that the costs associated with fighting an appeal for CSLB is $9k, thereby causing a loss. Accordingly, CSLB is considering raising the cap for repeat offenders and continue to employ administrative citations and letters of admonishment with correctional actions plans as the preferred method to notify and correct non-compliance.