California Enacts Senate Bill 291 for Contractor Compliance

California, October 10, 2025

News Summary

California has signed into law Senate Bill 291, aimed at enhancing workers’ compensation regulations for contractors. The legislation requires contractors to maintain a valid Certificate of Workers’ Compensation Insurance, eliminating the previous exemptions for those without employees. The bill also mandates a verification process by the Contractors State License Board by 2027, introduces increased civil penalties for non-compliance, and strengthens oversight of exemption claims. These changes are designed to ensure accountability among contractors in the construction industry.

California has enacted Senate Bill 291, a significant piece of legislation aimed at strengthening compliance with workers’ compensation regulations among contractors. The bill was officially enrolled by the California Legislature on September 12 and has now been passed by both the Senate and Assembly earlier this month. It was introduced by Senator Tim Grayson and amends several sections of the state’s Business and Professions Code, focusing on enhancing oversight for contractors operating in the state.

Under the new law, contractors in California must maintain a valid Certificate of Workers’ Compensation Insurance or a Certification of Self-Insurance to hold a license. Previously, contractors without any employees could claim exemption from this requirement under specific circumstances. However, this exemption was set to undergo changes in 2028, allowing only joint ventures without employees to claim it.

The legislation requires the Contractors State License Board (CSLB) to establish a verification process for exemption claims by January 1, 2027. This process must include audits and proof or other means to obtain evidence of compliance. Furthermore, the CSLB must report its proposed verification process to the Legislature by the same date, reinforcing the commitment to ensure that only eligible contractors receive exemptions.

In addition to the verification process, SB 291 significantly increases civil penalties for contractors who employ workers without workers’ compensation coverage. Sole owner licensees will now face a minimum civil penalty of $10,000 per violation for failing to maintain coverage. Meanwhile, partnerships, corporations, limited liability companies (LLCs), or tribal business licensees could incur a minimum penalty of $20,000 per violation. Subsequent violations may lead to even higher penalties, reaching up to $30,000 per occurrence.

Moreover, a major stipulation of the new law states that the Contractors State License Board cannot renew or reinstate a contractor’s license until valid workers’ compensation insurance is verified. In a further effort to improve compliance, the board must report annually to the Legislature regarding enforcement actions related to workers’ compensation exemptions.

These legislative changes are aimed at heightening scrutiny over contractor compliance with workers’ compensation insurance standards, ensuring that only qualified contractors can claim exemption. This put additional responsibilities on insurance professionals, who will need to provide more vigilant attention to clients’ documentation and compliance with the new rigorous standards.

It is important to note that Senate Bill 291 focuses strictly on workers’ compensation insurance and does not extend to health or life insurance issues. The bill has been fully enrolled and will be implemented as detailed in its provisions, aiming to enhance contractor accountability within California’s construction landscape. Insurance professionals are encouraged to prepare for more stringent compliance requirements as the provisions come into effect.

Key Features of SB 291

• Verification Process: To be established by January 1, 2027
• Exemption Claims: Enhanced scrutiny for contractor exemption claims
• Civil Penalties: Increased penalties for non-compliance
• Mandatory Reporting: Annual reports to the Legislature on workers’ comp enforcement actions

Frequently Asked Questions (FAQ)

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Author: STAFF HERE CORONADO

The Coronado Staff Writer represents the experienced team at HERECoronado.com, your go-to source for actionable local news and information in Coronado, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as the Coronado Island Film Festival, productions at Lamb’s Players Theatre, community workshops at John D. Spreckels Center, and iconic celebrations at Hotel del Coronado. Our coverage extends to key organizations like the Coronado Chamber of Commerce and Visit Coronado, plus leading businesses in hospitality, dining, and tourism that drive the local economy. As part of the broader HERE network, including HERESanDiego.com, HEREHuntingtonBeach.com, HERELongBeach.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.