Please allow me to use the mighty soapbox to denounce the machinations of our friends in Sacramento once again.

Gregory Grinberg

Now, I know full well that if I denounce “what they’re doing” in Sacramento, a LOT of things come to mind without narrowing the scope, so feel free to let your imagination run wild.

But since I’ve taken the trouble to write this blog, perhaps you will allow me to impose upon you to finish reading it. In this particular instance of outrage and angst, I rail against proposed Senate Bill 216.

What does SB 216 have to do with workers’ comp, you might ask? Well, everything.

Workers’ compensation insurance is required only for those that have employees (although there are some exceptions, such as roofers). Self-employed individuals can opt out of having insurance, as can business entities without employees. 

Why would anyone want to opt out of having insurance? Well, as I have learned through the process of becoming an adult — and then even more so through the process of becoming a cynical adult — most questions that begin with “why” can be answered with “money.”

If a licensed contractor doesn’t have any employees, the pressure is there to keep costs as low as possible to be as competitive as possible on quotes for services. Being required to purchase workers’ compensation insurance means increasing the cost of bids, rendering the independent contractor less competitive. In a similar vein, requiring a licensed contractor to purchase volcano insurance would have a similar effect.

To be fair, the reasoning for the law is sound: Many licensed contractors claim to have no employees, then hire workers off the books and leave their clients holding the bag when an injury occurs. But the remedy, in this case, appears to be worse than the cure: Adding another “tax” to licensed contractor operations, in this case requiring workers’ compensation insurance when there are no employees, is just going to drive more licensed contractors into the underground economy.

After all, the more expensive the cost of compliance with the law, the more incentive to risk breaking the law, no?

I sincerely hope the Legislature in Sacramento declines to turn this proposal into law.  Navigating California’s business environment is difficult enough, and living in California is expensive enough, without bearing these additional and unnecessary costs. 

Gregory Grinberg is managing partner of Gale, Sutow & Associates’ S.F. Bay South office and a certified specialist in workers’ compensation law. This post is reprinted with permission from Grinberg’s WCDefense CA blog.