RME RMO for California Contractors

Everyone can read the contractor rules and regulations, but understanding what is written, especially when much depends on someone else’s interpretation, is not so easy as our contractor questions illustrate…

Q: I recently found your articles on the Internet and they have helped me out tremendously. I’m in the process of forming a new business and require a qualifier in order to obtain my license. This individual currently holds three licenses and I would like to have all three placed in the name of the business. I have come to understand that because there are multiple licenses, he will not be able to serve as the Responsible Managing Employee (RME) but would need to serve as the Responsible Managing Officer (RMO).

I understand that he will need to serve as the company’s designated person for all matters related to those licenses (please feel free to correct me if I am misstating something). Having said that, am I required to give him equity or ownership in the corporation? I am definitely confused by what the guidebook states and would like to know for certain. Unfortunately, I’ve contacted the CSLB several times and either can’t get through or receive varying responses. Can you help me?

A: Thank you for your kind words. I am glad the ‘keyword’ search for my past columns helped you and truly sorry you have had so many difficulties reaching the Contractors Board.

We need to first define what you mean by “currently holding three licenses”. If you mean, he is the qualifier (RMO) on three contractor licenses then he will not be able to qualify your new business. The CSLB has a “rule of three” which limits the number of licenses one person can qualify in a year. On the other hand, if you’re referring to three license classifications (such as the “B”, “C-10” and “C-36”), then there is no problem placing them all under your new company. There is no limit to the number of classifications someone can qualify.

You’re correct; this RMO will need to serve as the company’s designated (i.e. responsible) person for all matters related to your activities. If this individual wants to qualify his current license as well as your license, he must own 20% or more of each entity. If he will serve as your RME, he must be employed full-time (at least 32 hours per week) but will need to inactivate his current license.

Q: I hold a “B” license which is now Inactive (but not expired). For the past several years I have been working for a construction company but have been approached by another company to become their RMO. The current RMO was allowing the company to use his license but he officially disassociated several weeks ago. I want this position. Should I activate my license first? If I leave in a few years, do I get my sole owner license back? Any guidance would be very much appreciated.

A: When someone with a sole owner license becomes the qualifier (RMO) on a new license he or she does not assign their existing license over to the new company. As we discussed, this corporation was issued a distinct license separate from the sole owner’s license number. Therefore, if you disassociate in a few years, your sole owner license will be right where you left it. Whether you decide to become a RMO or RME, there is no need to reactivate your existing license.

Get to Know Your CSLB Members:

The Governor appointed Lisa Miller-Strunk to CSLB in in November 2007. Since 1991, she has served as president of Shellmaker Incorporated based in Costa Mesa. Ms. Miller-Strunk is an “A” and “B” contractor and is a long time member of the Associated General Contractors (AGC). Her CSLB term continues through June 1, 2010.

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply