A construction boom is coming to California in the wake of the recent devastating wildfires, and it carries significant implications for the state’s workers’ compensation system as communities build back their homes and communities.
The 1994 Northridge earthquake serves as a uniquely similar point of comparison – after a devastating 6.8 magnitude earthquake struck the San Fernando Valley and surrounding areas, countless homes had structural damage. Seemingly endless damage to foundations, framing, and fixtures created infinite demand for general contractors to fix people’s homes.
Having lived through that event, your humble blogger personally observed:
- Reputable and ethical contractors turning away countless jobs because they already had endless work
- Unethical contractors taking $10,000 deposits and disappearing for months, and sometimes never returning at all
- Code enforcement taking forever to review and approve repairs and construction work
- Cost overruns for materials causing contractors to renege on original estimates and demand more money for necessary materials and supplies
- Unlicensed contractors doing shoddy work
With the current estimate of 12,000 structures being lost in January 2025, and hundreds more being lost or damaged in November and December of 2024, a repeat of this scenario seems inevitable.
For us workers’ compensation practitioners, the multi-layered levels of general contractors hiring subcontractors who outsource to even smaller subcontractors creates coverage problems, especially when one of those contractors along the chain 1) has an employee who suffers a work-related injury and 2) that contractor has no coverage. For insurance carriers, it is important to emphasize that your insureds are properly licensed and bonded, and that they will do their due diligence in hiring subcontractors with valid workers’ compensation coverage.
If this all sounds familiar, it’s because the California Legislature recently required licensed contractors to obtain workers’ compensation coverage. The original deadline to obtain coverage was Jan. 1, 2026, but during the last legislative session, lawmakers postponed that deadline until Jan. 1, 2028. Lawmakers also mandated that the Contractors State License Board to create a “process and procedure” by Jan. 1, 2027 that permits an exception to the coverage requirement.
A LEARNING MOMENT
Unprecedented hurricane-force winds of 70-100 mph were an unwelcome surprise to longtime Californians, including your humble blogger. But perhaps we as a society can learn from this extraordinary tragedy and can implement changes for the better.
Over the centuries, horrific fires have prompted beneficial changes to society. Here’s a few quick examples:
- The Triangle Shirtwaist Factory fire of 1911, which sadly killed 146 garment workers, is the tragic event that is credited with the creation of the workers’ compensation system that most states have adopted today.
- Massive fires in municipalities in the 1800s and 1900 were traced back to laundry lint, including the Great Chicago Fire of 1871. This led manufacturers to develop complex and effective lint traps, which quite literally keep our homes from burning down.
- The Yarnell Hill Fire in 2013 killed 19 firefighters in Yarnell, Ariz. Most of the firefighters lived in the community of Prescott, Ariz., where your humble blogger used to live. This fire was the sixth-deadliest firefighter disasters in history, and led to stringent investigation of what went wrong, and how it could have been avoided.
So while the recent horrific wildfires are far from ideal, perhaps we as a society can learn from them and improve public safety in new ways.
TAKEAWAY
As Southern California rebuilds and renews itself from the tragic wildfires, a construction boom is likely on its way. We urge any and all homeowners and contractors to make sure that the parties they hire are licensed, bonded, and have workers’ compensation coverage. After all, the WCIRB’s website (https://caworkcompcoverage.com/) is only one click away!
Got a question about workers’ compensation defense issues? Feel free to contact John P. Kamin. Mr. Kamin is a workers’ compensation defense attorney and partner at Bradford & Barthel’s Woodland Hills location, where he monitors the recent legislative affairs as the firm’s Director of the Editorial Board. Mr. Kamin previously worked as a journalist for WorkCompCentral, where he reported on work-related injuries in all 50 states. Please feel free to contact John at jkamin@bradfordbarthel.com or at (818) 654-0411.
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