Back Up Licenses, Qualifiers and Liens

Would you consider not ‘backing up’ your computer files? What would happen to your contractor’s license if your qualifier quit like an outdated hard drive? I will ‘quantify’ the value of being ‘responsible’ and, finally cry out on another contractor’s ‘taxing’ situation…

Q: Thank you for speaking with me about securing a “back-up” license for our company. As we discussed, I want the license in case our Responsible Managing Officer (RMO) leaves. After we spoke, I thought of two more questions. 1) Our CA license holder has a NV license. Because of reciprocity, we are using the same (“C-20”) classification in California. Will this make a difference in what we are trying to do or will I still need to take the CA exams? 2) Can we have more than one license holder on our license in CA?

A: The “back-up” license is a good idea. I have spoken with a number of companies in the past who have had an officer or employee apply for an individual “back-up” license in case their RMO or Responsible Managing Employee (RME) leaves for any reason. If your current qualifier were to disassociate, the person holding this license could easily become the new qualifier with no further testing or fingerprinting.

Reciprocity would not apply to your situation so both the Law and Trade exams will be required. In answer to you second question, unlike Nevada, California only allows one qualifying individual per classification per license. Hence the need for the second back-up license as opposed to Nevada, which allows multiple qualifiers for each license class.

Q: What is the average rate or fee a Responsible Managing Employee (RME) charges for his/her license? As a RME I will be receiving compensation as an employee and also serving as a Director. I believe I should be paid an additional fee for the use of the license. Is there a web site that would have this kind of information?

A: I am not aware of any web site that deals with this issue. As with any employer/employee relationship you are paid a set rate or compensated by the hour. As the RME you can certainly try to negotiate additional compensation. If you are going to actually be a Director of the corporation, this would make you an “Officer” Responsible Managing Officer rather than an “employee” (RME).

Q: I was hit with a large lien due to unpaid employment taxes. This came as a shock since I had reported all my 1099 to the State and Feds. Apparently since these “employees” were not licensed I should have been withholding the applicable taxes. Now the CSLB has suspended my sole owner license. Someone at a license school told me that all I need to do is form a corporation and start over. I have read your columns for years and recall that it may not be that simple. Please let me know what my options are?

A: OUCH! Being hit with many thousands of dollars in back employment taxes certainly hurts. I am sorry to say that you do not have many options since the State holds all the cards. This license school misinformed you since any new license you apply for will be denied until this tax issue is fully resolved. The CSLB will not release the suspension until told to do so by the Employment Development Dept. (EDD) and EDD has told you that payment is required in full (or at least a history of several months of re-payment must be shown).

A Word of Caution to my readers: If hiring workers make sure they are bona fide employees or licensed contractors. As this example indicated there is little middle ground.

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