CSLB staff recommends workers’ compensation enforcement unit and fee to fund audits under SB291
April 03, 2026 | Contractors State License Board, Other State Agencies, Executive, California
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CSLB staff on March 19 presented a draft report prepared to satisfy SB291 that recommends creating a dedicated enforcement unit to verify and monitor workers' compensation insurance exemptions for contractors.
Registrar Folk told the board that roughly 100,000 licensees currently have exemptions on file and that staff estimates about 9–10% of licensees might legitimately qualify for a limited exemption. He said the draft proposes an application process including an assessment form and an audit program to verify exemption eligibility prior to approval and to perform post-approval reviews.
On funding, staff said the exemption application should carry a filing fee to support the proposed unit. "If we had ten percent and a $500 fee, that would generate about $2.7 million," Rebecca May said; staff estimated the unit would require about 17 dedicated positions and roughly $2.5 million annually to operate. Registrar Folk and board staff said joint enforcement with State Fund and the Department of Insurance would be part of the audit and enforcement model.
Staff framed the proposal as balancing public protection and licensing access: the exemption would be narrowly tailored (for example, sole owners performing limited types of work) and would include documentation requirements so prosecutors and regulators can show a contractor "knew" the workers' compensation requirements. "We want to offer legitimate sole owners an ability to stay licensed and follow the rules," Rebecca May said.
Board members and staff raised implementation questions: how to audit applicants, the burden on staff, the distribution of vacancies across regions, and the political feasibility of asking the Legislature to fund 17 positions via fee revenue. Staff repeatedly noted that, without dedicated positions, the exemption process could not be audited or enforced effectively.
What happens next: staff recommended submitting the SB291 report to the Legislature by the statutory deadline and seeking an author to introduce implementing legislation; additional details, including final fee level, staffing plan and interagency MOU terms, would be developed with stakeholder input before any bill introduction.
No formal vote to adopt implementing legislation was recorded in the transcript during this discussion.
Registrar Folk told the board that roughly 100,000 licensees currently have exemptions on file and that staff estimates about 9–10% of licensees might legitimately qualify for a limited exemption. He said the draft proposes an application process including an assessment form and an audit program to verify exemption eligibility prior to approval and to perform post-approval reviews.
On funding, staff said the exemption application should carry a filing fee to support the proposed unit. "If we had ten percent and a $500 fee, that would generate about $2.7 million," Rebecca May said; staff estimated the unit would require about 17 dedicated positions and roughly $2.5 million annually to operate. Registrar Folk and board staff said joint enforcement with State Fund and the Department of Insurance would be part of the audit and enforcement model.
Staff framed the proposal as balancing public protection and licensing access: the exemption would be narrowly tailored (for example, sole owners performing limited types of work) and would include documentation requirements so prosecutors and regulators can show a contractor "knew" the workers' compensation requirements. "We want to offer legitimate sole owners an ability to stay licensed and follow the rules," Rebecca May said.
Board members and staff raised implementation questions: how to audit applicants, the burden on staff, the distribution of vacancies across regions, and the political feasibility of asking the Legislature to fund 17 positions via fee revenue. Staff repeatedly noted that, without dedicated positions, the exemption process could not be audited or enforced effectively.
What happens next: staff recommended submitting the SB291 report to the Legislature by the statutory deadline and seeking an author to introduce implementing legislation; additional details, including final fee level, staffing plan and interagency MOU terms, would be developed with stakeholder input before any bill introduction.
No formal vote to adopt implementing legislation was recorded in the transcript during this discussion.
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