California Enacts SB 291 for Contractor Insurance Compliance

California, October 10, 2025

News Summary

California has passed Senate Bill 291, which strengthens the compliance requirements and penalties for contractors concerning workers’ compensation insurance. The bill mandates that all contractors maintain valid insurance documentation and introduces a new verification process for exemptions. It increases civil penalties for non-compliance and requires the Contractors State License Board to produce annual reports. With an aim to enhance oversight, SB 291 ensures that only eligible contractors can claim exemptions, signaling a shift towards stricter enforcement of insurance obligations in the state.

California has enacted Senate Bill 291, a new legislative measure aimed at strengthening compliance and penalties for contractors regarding workers’ compensation insurance. Enrollment of the bill by the California Legislature took place on September 12, 2023. Sponsored by Senator Tim Grayson, SB 291 amends several sections of the state’s Business and Professions Code and seeks to fortify oversight of the existing workers’ compensation insurance requirements for contractors.

The bill passed both the Senate and Assembly in early September and mandates that all contractors in California must maintain either a valid Certificate of Workers’ Compensation Insurance or a Certification of Self-Insurance to legally hold their licenses. Previously, contractors without employees could claim an exemption from this requirement under specified conditions. However, exemptions are scheduled to change in 2028, allowing only joint ventures without employees to qualify for such exemptions.

With SB 291, the Contractors State License Board is required to develop a verification process for exemption claims by January 1, 2027. This verification process will include audits and may require proof or other means to acquire evidence of exemption eligibility. Additionally, the Contractors State License Board must report its proposed verification process to the Legislature by the deadline.

The new law significantly increases civil penalties for contractors found employing workers without the necessary coverage. Under the updated provisions, sole owner licensees will face a minimum civil penalty of $10,000 for each violation related to not maintaining workers’ compensation coverage. On the other hand, partnerships, corporations, Limited Liability Companies (LLCs), or tribal business licensees will incur a minimum penalty of $20,000 for the same offense. For any subsequent violations, penalties may escalate up to $30,000 for each occurrence.

Moreover, the Contractors State License Board is forbidden from renewing or reinstating a license unless valid workers’ compensation insurance documentation is provided by the contractor. In line with these changes, the board is also mandated to submit annual reports to the Legislature outlining its enforcement actions related to workers’ compensation exemptions.

The legislative revisions introduced by SB 291 aim to enhance scrutiny over exemption claims, ensuring that only eligible contractors can claim such exemptions. This heightened oversight is expected to lead to improved compliance among contractors regarding their insurance obligations. As a result, insurance professionals will need to give greater attention to their clients’ documentation and compliance status. By increasing penalties for non-compliance, the bill acts as a deterrent against neglecting mandatory insurance responsibilities.

It is crucial to note that SB 291 specifically focuses on workers’ compensation insurance, without extending its scope to health or life insurance requirements. The bill has been fully enrolled and is set for implementation in adherence with its stipulated provisions. Insurance professionals are now preparing for a landscape that will require more rigorous compliance standards following the enaction of this bill.

Key Features of Senate Bill 291

• Introduced by Senator Tim Grayson.
• Amends sections of the state’s Business and Professions Code.
• New verification process for exemption claims due by January 1, 2027.
• Increased civil penalties for non-compliance.
• Annual reporting to the Legislature by the Contractors State License Board.

FAQ

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Author: Anaheim Staff Writer

Anaheim Staff Writer The Anaheim Staff Writer represents the experienced team at HEREAnaheim.com, your go-to source for actionable local news and information in Anaheim, Orange 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 major conventions at the Anaheim Convention Center, including NAMM and VidCon, exciting games at Angel Stadium and Honda Center, and developments at Disneyland Resort Our coverage extends to key organizations like the Anaheim Chamber of Commerce and Visit Anaheim, plus leading businesses in hospitality, entertainment, and innovation that power the local economy As part of the broader HERE network, including HERECostaMesa.com, HEREHuntingtonBeach.com, HERESantaAna.com, and HERELosAngeles.com, we provide comprehensive, credible insights into Southern California's dynamic landscape.