Governor Gavin Newsom signed Senate Bill 291 (SB 291) into law on October 7, 2025. Authored by Senator Tim Grayson (D-Orinda), the bill amends provisions in the California Labor Code related to workers’ compensation insurance requirements for contractors, with a focus on enhancing protections against wage theft and ensuring compliance in high-risk industries like construction.

SB 291 Key Provisions

– – Mandatory Insurance Verification: Contractors must maintain active workers’ compensation insurance coverage for all employees, including subcontractors, and provide proof upon request. This builds on existing requirements but introduces stricter verification processes to prevent unlicensed or uninsured operations that often lead to wage theft (e.g., non-payment of injury-related claims).
– – Penalties for Non-Compliance: Increases fines for violations up to $25,000 per incident for repeat offenders, and allows for immediate stop-work orders by the Department of Industrial Relations (DIR). In cases of wage theft tied to uninsured injuries, contractors face treble damages (three times the owed amount) recoverable by affected workers.
– – Construction-Specific Measures: Targets construction contractors by requiring annual audits for projects over $1 million, integrating with the Contractors State License Board (CSLB) to flag violations. This complements AB 1002 by enabling cross-agency enforcement, where wage theft findings can trigger license reviews.
– – Worker Protections: Establishes a streamlined claims process for workers to report suspected insurance lapses, with DIR required to investigate within 30 days. It also expands eligibility for the state’s Uninsured Employers Benefits Trust Fund to cover more construction-related claims.

Governor Newsom also signed Assembly Bill 1002 (AB 1002) into law on October 10, 2025. Authored by Assemblymember Jesse Gabriel (D-Encino) and sponsored by the California Attorney General, this new law targets wage theft by licensed contractors, including those in the construction industry, by empowering the California Department of Justice (DOJ) to seek suspension or revocation of their Contractors State License Board (CSLB) licenses for violations.

AB 1002 Key Provisions

– – Authority for License Actions: The DOJ can now petition the CSLB to revoke or suspend a contractor’s license if they commit wage theft or related labor violations, such as failing to pay wages owed to workers. This applies to serious or repeat offenders and closes a prior loophole that limited enforcement tools.
– – Focus on Wage Theft: Wage theft includes non-payment or underpayment of earned wages, which disproportionately affects construction workers. The law strengthens accountability in the construction sector, where such violations undermine fair competition and worker dignity.
– – Broader Impact: While not exclusive to construction, it directly addresses “bad actor” licensed contractors in industries like construction, where subcontractors often fail to pay workers. It adds to existing remedies, allowing for faster intervention beyond civil penalties.
– – Effective Date: The law takes effect immediately upon signing, with implementation starting in late 2025.

This new law works in tandem with AB 1002 to create a robust framework against wage theft in construction, emphasizing both licensing and insurance accountability.

New Laws Get Tough on Illegally Uninsured Contractors