Any contractor potentially liable for a subcontractor must receive from the subcontractor's insurer a certificate of insurance which states that the insurer must provide 10 days written notice before cancelling the insurance of the subcontractor. In the case of self-insurance, the Division of Workers' Compensation is required to give 10 days notice of revocation of such status. The bill also changes the provision that requires cities or counties which issue occupational or business licenses to secure from those license applicants a certificate of insurance for workers' compensation coverage. Currently, anyone requesting such a license must supply a certificate of insurance. This bill limits that provision so as to apply only to contractors in the construction industry.
Supporters say that the good contractors already require proof of workers' compensation insurance.
This bill mandates this upon all the rest. The intent is merely to ensure that those who are supposed to have coverage do, indeed, have it. Because fraud will void an exemption, the bill will prevent employers from skirting workers' compensation requirements through sham arrangements, where employees are called independent sub-contractors. Also, requiring cities to secure workers' compensation insurance certificates from everyone applying for a business license has proven to be unnecessary. Making that provision apply only to contractors will save the cities and business a lot of paperwork.