Contractors Replacing RMO

The U.S. population broke the 300 million mark last week, and you may think all those people are calling the CSLB when you try to dial in. Ill work out the problems for a contractor replacing his RMO. I also do the heavy-lifting to assist someone who is concerned about pumped up license claims and help all contractors better understand new diesel engine rules which may hit them squarely in the wallet

Q: I filed a form to change the officers on my corporation. This officer change is being made because our renewal is coming up soon and were replacing the RMO. I was told that all new officers (there are three) must be fingerprinted. The application was sent in over a month ago but Ive not received anything from the CSLB. Can you look into this for me and let me know if there is a problem (I can never get through on the phone lines). Thank you.

A: Thank you for your call and email. I did look into your situation and there is a problem but it has nothing to do with your application. Your Officer Change form was filed in mid-September as you indicated and has been scanned into the CSLB computer. However, it is figuratively sitting in a stack waiting to be reviewed (probably this week). Only then will you be sent the fingerprint forms for your three new officers.

All other applications (original license, additional classification, etc.) that trigger fingerprinting are assigned a tracking number and generate the necessary fingerprint mailing within 7-10 days. Board policy treats Officer Change applications differently which means its taking 6 weeks for applicants like you to receive the required Live Scan fingerprinting forms.

The problem is that if these officer changes are necessary to renew a license or change the RMO, this delay can cause you serious problems (I am familiar with incidents where this has happened).

Fortunately, your renewal is not due until the end of November so the delay is unlikely to have any impact on your license. If your license was due to expire in October and the officer change was necessary to renew the licensewell you get the idea.

I received a call recently from a concerned contractor who felt that most concrete-pump operators in his area are unlicensed. Let me know by e-mail if you also think this is a concern that needs to be investigated.

Coincidently, a recent article in the Sacramento Bee Business section sheds light on what may be an even bigger problem for contractors a little known regulation affecting portable diesel-powered engines.

Diesel-powered engine operators including concrete-pumping contractors, crane operators and other related businesses that serve the construction industry have the option of obtaining individual air pollution control and air quality management district permits or can operate with one single permit statewide by participating in the Portable Engine Registration Program (PERP).

PERP was established in 1997 and is administered by the State Air Resources Board (ARB). According to the article it appears a number of contractors were not aware of the program and therefore have not complied. Those who failed to register could face hundreds of dollars in fines or possibly thousands of dollars in costs to replace their present equipment.

Due to an outcry by the industry, the ARB recently issued a compliance-advisory extending some of their registration deadlines. Check out their web site: www.arb.ca.gov/portable/perp/perp.htm or call the PERP Hotline at (916) 324-5869 for more information. (Southern California Contractors Association-SCCA- has been a leader in alerting contractors everywhere about the serious concerns and problems associated with these diesel regulations. Kudos to Editor, Bill Davis!)

Best of Kalb’s Column

I am out of the office but wanted to share some of the best of our Capitol Connection. Im back to work helping contractors sort out real world licensing and other issues next week. David.

From August 2003

One of my greatest pleasures is hearing from readers who often respond to a particular column theyve read. Contractors, attorneys, industry executives and others often follow-up particular questions and answers with more information, their own experience or clarification. I recently received a helpful follow up e -mail from the staff at CSLB

In a recent column your answer to the question on the HAZ CERTIFICATION is not complete. For instance, a General Building (B) contractor could bring a qualifier for the C-36 on board whom also holds/obtains the HAZ MAT for the purpose of installing/removing underground tanks.

I appreciate your clarification. The question I was asked was, could someone come on board with the Hazardous Certification only? They did not want to withdraw as RMO, but also, did not want to take the Haz. exam. Nonetheless, your point is well taken since the above example would certainly be a workable alternative. Thanks for taking time to help us all better understand State law and its ongoing interpretation. As my space is limited, I m often only able to provide answers focused on the exact question the contractor asked.

From April 2004

Q. I understand that our RMO must own 20% of the company. We are starting a new business and this person will have less than 5% ownership. I do not know if it matters, but he has been licensed in the past. What do you suggest?

A. What you may have heard through the sometimes unreliable grapevine is considered by many to be the law. In reality, there is no rule or regulation that requires the Responsible Managing Officer (RMO) to own any stock in the company. The 20% rule applies if your RMO is presently a qualifier for another company and wants to qualify BOTH licenses. Your qualifier appears to have been the RMO for his previous employer but this license expired last year. There should no problem with him being your RMO.

From October 2002

Q: My company is qualified by a Responsible Managing Employee or RME. He is not working out, but I cannot fire him because he has said he’ll take the license when he leaves. He dangles this over me and I feel like I’m being held hostage. Do have any suggestions on what I can do to resolve this situation?

A: I am sorry your qualifier is a. . . problem. However, be assured that when a RME is fired, or leaves your company for any reason, he cannot “take the license”. This license belongs to your corporation, NOT the RME.

You should start by completing a Notice of Disassociation informing the CSLB that your qualifier is no longer employed by the firm. The corporation will then have 90 days to replace him. During this time, the license remains in good standing as if the RME were still listed. Part of the reason this law exists is to insure that a company cannot be “held hostage” and has adequate time to find a new qualifying individual. If it appears it will take longer than 90 days to replace your qualifier, I suggest petitioning the CSLB for additional time.

Attorneys Providing Counsel for the Industry

Among those I assist in navigating the complex rules for contractors are attorneys providing counsel for the industry. Our first inquiry is such, and seeks to determine what might be called the baby bear standard in providing information on a corporate application. Thats not to little, not too much, but just right, especially with new rules on fingerprinting. Second, is a B question and answer. Finally, important notice from the Employment Development Department that every contractor needs to know

Q: It’s been a while since we last touched base. Our client is motivated to submit the application to the CSLB; however, they have one more question.

This is in reference to your attached email regarding an out-of-state corporation with 20+ officers. Does each of them have to be fingerprinted for the application? That seems like an onerous requirement for the larger contractors.

A: Foreign corporations are only required to list the President and qualifying individual. They do NOT need to list all 20 officers unless they want to. Domestic (i.e. California registered) companies need to list the President, Secretary and Treasurer on a contractors license application. While I very much agree that this is an onerous requirement for the larger contractors, everyone listed on the application WILL be required to be fingerprinted.

Q: Im a B contractor and plan on installing cabinets in a new home. This is likely the only trade Ill be handling and want to know if my B license will cover this?

A: A general building (B) contractor can legally take a prime contract or subcontract for framing, finish carpentry or cabinets even if this is the only trade youll be performing. General builder projects must contain 2 or more unrelated trades; however, this is an exception.

Q: I have a C-20 license but regularly handle electrical work as part of the installation process. Do my employees need to be registered with the Division of Apprenticeship Standards (DAS)?

A: Certification with DAS is required only for those persons who perform work as electricians for contractors licensed as C-10 electrical contractors. Certification is not required for persons performing work for contractors licensed as B, C-7 (low voltage systems), C-45 (electric sign) or C-20 (HVAC) contractors as long as the work performed is within the scope of that specific license classification. This includes incidental and supplemental work as defined in Section 7059 of the Business and Professions Code, and according to DAS is regardless of whether the same contractor is also licensed as a Class C-10 contractor.

The Employment Development Dept. (EDD) recently sent out a notice entitled Are you in Construction? Do you use subcontractors? It warns contractors that a misunderstanding about whether a worker is an employee can lead to unexpected tax liabilities.

Subcontractors and construction workers without valid contractor licenses are statutory employees of the contractor who either holds a license or is required to be licensed. If you are a contractor then anyone who works for you (other than someone from a temp service) is either an employee or licensed subcontractor there is no middle ground.

To be an independent contractor, subs and construction workers must possess a valid license for the specific work being performed. If they are not licensed then by definition, they are your employee and would be subject to income tax withholding, unemployment insurance, and workers compensation. For more information call EDD or your tax specialist.