Contractors: workers' compensation insurance.

The document was reformatted from the official authenticated chaptered layout (with 'STATE OF CALIFORNIA AUTHENTICATED ELECTRONIC LEGAL MATERIAL' header, page numbers, and two-column formatting) to the web-based bill text format used on the California Legislature website, adding navigation elements, a version history list, and sidebar links while preserving all legal content identically.

The legislative counsel's digest was corrected from 'renewing or restating a license' to 'renewing or reinstating a license' to align with the operative statutory text in Section 7125.4(c).

The bill was reformatted from an amended-in-assembly layout (with line numbers and amendment history) to an enrolled layout (with passage dates, Secretary of the Senate and Chief Clerk signatures, Governor's receipt block, and approval line).

New Section 2.1 creates a temporary version of Section 7099.2 effective until July 1, 2026, establishing minimum civil penalties of $500 (general violations) and $1,500 (violations of Sections 7110, 7114, or 7118), with maximums of $8,000 and $30,000 respectively. Previously the bill only set maximum penalty amounts.

New Section 2.2 creates a permanent version of Section 7099.2 operative July 1, 2026, with the same penalty ranges plus an inflation adjustment provision allowing the board to adjust all minimum civil penalties every five years based on the Consumer Price Index, with rounding rules (multiples of $100 for penalties up to $1,000; multiples of $1,000 above that).

The original Section 2 amendment to 7099.2 now lists only Sections 7110, 7114, or 7118 for the $30,000 penalty cap (removing the reference to 7125.4 from that specific list), as 7125.4 violations are now handled through the separate minimum penalty structure in Sections 2.1 and 2.2.

New Section 5 adds a coordination provision with SB 779. Sections 2.1 and 2.2 of this bill only become operative if both bills are enacted by January 1, 2026, this bill amends Section 7099.2 while SB 779 amends/repeals/adds it, and this bill is enacted after SB 779. In that scenario, Section 2 of this bill and Section 4 of SB 779 would not become operative.

Removed the requirement that the board periodically review and consult with the Legislature to update the $2,000 construction project value threshold to account for inflation. The threshold will now remain fixed at $2,000.

Added new Section 7125.7 requiring the board to establish a process and procedure by January 1, 2027 that includes an audit, proof, or other means to obtain evidence verifying that an applicant or licensee without employees is eligible for exemption from workers' compensation insurance. The board must also report its proposed verification process to the Legislature no later than January 1, 2027.

Added a sunset provision making the reporting requirement in new Section 7125.7 inoperative on January 1, 2030, and requiring compliance with Government Code Section 9795 for report submission.

The bill's scope expanded to include an amendment to Section 7125.7 of the Business and Professions Code, in addition to the previously listed sections 7017.3, 7125, 7125.4, and 7125.5.

The state-mandated local program designation changed from 'yes' to 'no,' and the digest language about expanding the crime of perjury was removed, indicating the bill no longer triggers that fiscal note category.

All amendments to Section 7125 were removed, including changes to the workers' compensation insurance requirement, the exemption for licensees without employees, joint venture exemptions, C-8/C-20/C-22/C-39/D-49 classification removal provisions, and the January 1, 2027 repeal date.

The bill's scope changed from amending Sections 7017.3, 7125, 7125.4, and 7125.5 to amending Sections 7017.3, 7099.2, 7125.4, and 7125.7, reflecting the removal of the insurance requirement restructuring and addition of penalty assessment rules.

All amendments to Section 7125.5 were removed, including the open book examination on workers' compensation laws, the requirement for licensees to state under penalty of perjury that they have no employees, and the retroactive renewal provision for late-submitted documentation.

New Section 7099.2 requires the board to promulgate regulations for assessing civil penalties, considering the gravity of the violation, good faith of the licensee, and history of previous violations.

Section 7099.2 caps general civil penalties at $8,000 but allows up to $30,000 for violations of Sections 7110, 7114, 7118, or 7125.4 (which covers false exemption certificates and employment without workers' compensation coverage).

The state-mandated local program designation changed from 'yes' to 'no,' and the reimbursement provision was removed, consistent with the elimination of the perjury-based renewal certification requirement.

New Section 7017.3 requires the Contractors State License Board to report annually to the Legislature by October 1 with detailed statistics on complaints (by source, type, closure reason), citations issued and vacated, disciplinary actions (including those for violations of Section 7125.4 specifically), case aging data at each enforcement stage, cost recovery amounts, and interim suspension orders.

The repeal date for the existing workers' compensation exemption provisions in Section 7125 is moved up from January 1, 2028 to January 1, 2027, accelerating the transition to the new compliance regime by one year.

The small-project exemption (for those with no employees and projects under $2,000) now explicitly states that the $2,000 threshold applies to a single work or operation and cannot be circumvented by dividing contracts into amounts under $2,000 to evade the requirement.

The joint venture exemption is tightened: instead of requiring only that the joint venture has no employees and files a statement, it now requires that ALL individual licensees that formed the joint venture comply with the workers' compensation filing requirement.

Applicants seeking the workers' compensation exemption must now complete and submit an open book examination on workers' compensation laws before the issuance of a license, not just at renewal. This extends the exam requirement from renewals to initial licensing.