Unfortunately, many employers have minimum policies and only add an injured worker after the injury occurs. Adding an employee retroactively causes workers’ compensation premiums to increase for all employers. This system is especially unfair to employers who legitimately report employees at the correct time.
“All contractors suffer when employers aren’t honest,” said Assemblymember Das Williams. “This law will balance out the scales so that all contractors over time are paying their fair share and honest contractors don’t have to pay two-to-three times as much.”
AB 1794, signed by Gov. Jerry Brown on Sunday, will authorize the Employment Development Department to provide employer or employee information to the Contractors State License Board and the State Compensation Insurance Fund for the purposes of auditing, investigating and prosecuting violations of tax and cash-pay reporting laws.
Contractors will not have to bear any additional costs or reporting responsibilities because the EDD will now be able to share the information.
By allowing the EDD to share new hire information, the new law will also help California capture a portion of the billions of dollars lost in underreported annual payroll taxes.
The new law comes at a time when Williams and California Democrats supported statewide workers’ compensation SB 863, also signed by Gov. Jerry Brown last month, which reduces workers’ compensation costs for California businesses, increases benefits and reduces litigation.