Insurance requirements
On public works, workers' compensation is mandatory and you must certify it in writing before you start. Liability and auto limits come from the awarding body's contract. The law also limits what additional insured endorsements must cover and what wrap-up programs must disclose.
Workers' compensation comes first
Every employer in California, except the state, must secure workers' compensation in one of two main ways: buy insurance from a company authorized to write it in California, or get a certificate of consent to self-insure from the Director of Industrial Relations (Labor Code §3700).
Public works add two extra steps. First, the awarding body must put a clause in every public works contract saying the contractor will secure workers' compensation for its employees (Labor Code §1860). Second, each contractor awarded a public works contract must sign and file a certification with the awarding body before performing the work (§1861).
Know this
Labor Code §1861: before starting work, the contractor signs and files a statement that it knows Labor Code §3700 requires workers' compensation insurance or self-insurance, and that it will comply before work begins.
Workers' compensation is also built into DIR registration. To register for public works, you must show coverage for every worker who will do prevailing wage work. A current certificate of workers' compensation insurance or a certification of self-insurance is accepted as proof (Labor Code §1725.5(a)(2)(A)). No coverage means no registration, and no registration means you cannot bid. A subcontractor that is registered separately must show its own coverage for its own workers.
What happens without coverage
- Your CSLB license is suspended automatically on the date the required workers' compensation coverage lapses (B&P Code §7125.2).
- DIR issues a stop order that bans the use of employee labor until you comply. It takes effect as soon as it is served (Labor Code §3710.1).
- Employees affected by the stop order must be paid for lost time, up to 10 days (§3710.1).
- You may protest the stop order by asking for a hearing in writing within 20 days. The hearing is held within 5 days after you file (§3710.1).
Exam trap
The §1861 certification is filed before performing the work, not at bid time and not at the end of the job. Do not confuse it with the payment bond, which is also due before work starts but is a bond, not insurance.
Liability and auto insurance
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