Two new bills, both of which impact contractors, have passed the California Senate. The first bill, SB 607, increases the required amount for contractor’s license bonds to $25,000 effective January 1, 2023. This increase includes all three contractor’s bond types: license, license for qualifying individual, and disciplinary.
SB 607 adds additional licensing fees, as well as increases some existing fees, effective January 1, 2022. The bill also differentiates between entity type, charging higher initial license and renewal fees for partnerships, LLC’s, corporations, or joint ventures. You can find a Contractors State License Board bulletin with the new fee schedule here. Also, effective July 1, 2022, application and license fees for military family members will be waived.
The second bill, SB 727, makes changes to labor code §218.7 that impact contractor liability. Under the current law, a general contractor is responsible for unpaid wages and benefits for all subcontractor workers on both public and private jobs. SB 727 extends this liability to include penalties, liquidated damages, unemployment insurance, and worker’s compensation. In addition, SB 727 removes the limit of liability for contracts entered into on or after January 1, 2022. Any claim requires a 30-day notice be sent to the contractor and subcontractor.
How Can Contractor’s Avoid the Repercussions of SB 727?
There are a few ways Contractors can mitigate the potential consequences of the new law. First, stay up to date with subcontractor paperwork and periodically review payroll records. Additional options include holding retention and requiring that subcontractors sign releases. Contractors should also consider requiring subcontractors to provide performance and payment bonds, which would mitigate that portion of the liability.
If you have any questions or need assistance with a bond, please reach out to us, we’re here to help.
