Unlicensed Penalties, Suspensions and LLC’s

The new calendar will put a smile on the face of many readers as it brings an ‘Unhappy New Year’ for unlicensed contractors. The ‘mystery’ of an unexpected letter from the CSLB sets a ‘suspense’ story in motion. Another general contractor wants to ‘root out’ some serious problems with his plan of action…

Q: I have an individual contractor’s license that the CSLB advised was suspended last week because a previous (corporate) license that I am associated with was suspended due to unpaid judgments. These were recorded a year ago. The previous license was dissolved (after the judgment) and unfortunately I did not cancel the license with the CSLB. We did not file bankruptcy and I’ve been told it’s too late to do so. How can I get my sole owner license reinstated?

A: Based on the information provided, it would appear that the only way for you to get the CSLB to lift their suspension would be to take care of the unpaid judgment. If Bankruptcy is not an alternative you may be able to work out a payment plan with whomever is owed the money. I am sorry but I do not know of any other way to get your license reinstated.

Q: I have a Class “A” license, but I have never really used it. I’m now starting a plumbing service business and would like to know your opinion about using my license in this business.

I am planning to take the “C-36” (plumbing) test; however, I’m thinking the Class “A” may be appropriate for this business. Most repairs inside buildings are small in size and value, but outdoor sewer line and water line repairs will most likely be the most intensive and higher priced repairs. Wouldn’t a Class “A” be more appropriate for this work?

Also, I formed a Limited Liability Company (LLC) before I noticed the board does not license LLC’s. I updated my license with the new company name and may have even told them it was a Limited Liability Company. Does this mean my LLC offers no protection? I am listed as a sole proprietor on the license and I’m assuming I can’t change it. What do you think?

A: First, you cannot do business as a LLC so it would appear this offers you little or no “protection”. Second, if you notified the Board of a name change using the LLC designation, they would reject it. Third, if you’re registered with the CSLB as a sole owner but actually doing business as a LLC, this could cause you a significant problem.

Finally to handle a plumbing service business you should have a “C-36” classification. The “A” would be proper if only handling outdoor sewer and water line repairs; however, this would not cover indoor residential or commercial plumbing service problems.

Unlicensed contractors caught in the act now face much greater peril in California with passage of new laws to punish them. The Legislature put ‘sharper teeth’ in the law to take a larger ‘bite out of unlicensed contractor’s crimes’ and protect consumers. FIRST offenders now face jail time and/or up to $5000 in fines. Previously, a first offense was considered a misdemeanor with no set penalty or fines. REPEAT offenders also face much greater peril in working unlicensed as jail time and fines go way up. For consumers, anyone hiring an illegal contactor can receive restitution for unfinished work whether they knew the “contractor” was unlicensed or not.

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