California Contractors Corporate Licensing Qualifiers

Can a specialty contractor work outside his licensed trade to complete a specific project? You might be surprised by my answer. Did you know that in some cases, a contractor must replace himself on the same California license? That is just one reason why contractors may be surprised by the rules that govern the use of RMO & RME’s. Another contractor has asked for a review of the differences between the two ‘alphabetic’ qualifiers…

Q: I have a sole proprietorship and want to get a license. I do not have the required experience at this time; however, I have someone who I often work with that is licensed. My question: what is the difference between a RME and RMO. I went on the CSLB web site but am still a bit confused.

A: Thank you for your call. As we discussed, since you’re a sole owner, this individual must be a RME. By definition, a RMO can only qualify a corporation. The RME must be permanently employed and actively engaged in your business operations 32 hours per week or 80% of the total hours per week you are actively working.

Q: We are looking to buy a company, which has a corporate license. We want to convert the existing Responsible Managing Officer (RMO) to a Responsible Managing Employee (RME). Is this possible? If so, which form do we need to file & how long does this take? The RMO has a license of his own which is inactive.

A: Once you purchase the company, the present qualifier can be changed from RMO to a RME. An application For Replacing the Qualifying Individual is needed even though the person is simply replacing himself. Note, if this is an “asset” purchase rather than a “stock” purchase”, you will need to apply for a new license — which requires a totally different application — and will be assigned a new license number. According to a recent industry meeting I attended the CSLB staff announced processing times, to review an application, are now generally taking between two and three weeks.

Q: I have a contractor’s license and often need to do work outside of my specialty. I understand this is okay if the work is incidental and supplemental to my job. Does the Contractors Board define “incidental and supplemental”, specifically as a portion of the overall contract?

A: You’re referring to B&P Code Section 7059, which says a specialty contractor can take a “contract involving the use of two or more crafts or trades”. They can do so if the work outside your primary trade is “incidental and supplemental”. The Board has loosely defined this (in Board rule 831) as “essential to accomplish the work in which the contractor is classified”. The work can be through your employees or you may use a properly licensed subcontractor. While there is no specific percentage used in either the Code section or Board rule, it is safe to say that “incidental and supplemental” can not involve a majority of the work to be performed.

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