Contractor License Reciprocity, Individual to Corporate California Licenses

‘Getting ahead’ in life is something you often hear. Like life, our work is also about movement. These contractors will all be ‘moved’ by the answers to their inquiries. One will progress from individual to corporate licensing while a second will find a ‘Stop’ sign in his effort to transfer across the border. Unfortunately, my answer to another will move him from a ‘happy’ state to a ‘sad’ one…

Q: We recently incorporated our business and I would like to know what forms I need in order to keep my same contractor’s license for the new company. I downloaded the application entitled Examination Waiver (7065) but it also came with the Certification of Work Experience and the Licensed Sole Owner Applying for Corporate License forms. My question is, do we need the last two forms or do we only send the first three pages of this application? Thanks for any information you can give me.

A: When applying for a new corporate contractor’s license, you have the option of transferring your individual license to the company. This transfer requires that you, as Responsible Managing Officer (RMO), must own 51% or more of the corporation. You will need to file the “Licensed Sole Owner Applying for Corporate License form” and answer ‘yes’ or ‘no’ to the transfer question. Once the transfer is completed, the license number cannot revert back to the individual contractor (it must stay with the corporation).

Since you are already qualified, there is no need to file the Certification of Work Experience page. It’s interesting that you mentioned this because just yesterday I was asked by the CSLB to provide input on potential changes to their license applications. I suggested eliminating this unnecessary page, which is part of the “Examination Waiver (7065)” application, because it can be confusing.

Q: I am looking to reactivate my contractor’s license. This corporation has been inactive for about ten years. You helped me back in the 90’s with another issue. What is the best way to go about doing this?

A: Nice to hear from you after these many years. I am sorry but your license expired in 1999 and therefore cannot be “reactivated” or renewed. In addition, according to my research, the corporation is under suspension with the Secretary of State (SOS) so you could not presently reactivate the license under any circumstances. If you want this license back, first resolve the outstanding issues with the State and then file a new original license application. From my experience, suspensions with the SOS are usually due to non-payment of taxes with the Franchise Tax Board (FTB).

As we discussed, although a company may stop contracting, unless you formally dissolve the corporation with the SOS and FTB, the State continues assessing a minimum tax of $800.00 per year. Add to this an estimated 10 years of interest and penalties, and you may owe up to $20,000.

I am sorry but there is more bad news. Unfortunately, since this license expired over 5 years ago (in 1999), you’ll be required to re-take the law and trade exams to re-qualify this or any other license.

Q: I have a license in the state of Oregon. I will likely be relocating to California in the future. I’m not sure if Oregon has a reciprocal license agreement with your state. If so, I understand this may waive the exam(s).

A: Oregon and California do NOT have a reciprocity licensing agreement. CA only recognizes those contractors who have been licensed in NV, UT, and AZ for the past 5 or more years. Therefore, plan on taking both the law and trade tests.

Solar energy contractors and corporate contractors licensing

Some contractors were ‘shocked’ by a recent answer on who can build solar energy systems. Board interpretation of the current rules have ‘electrified’ an entire class of contractors who feel they may be getting ‘shorted’ on some of this work. When are you ‘a consultant’ and when is a contractor’s license going to be necessary? Those answers, an introduction and more in this “Connection”…

Q: Hi. I’m trying to get a contractor’s license for my corporation. Do the officers of the corporation each have to possess a license for this to work? What testing is required?

A: For a corporation to be issued a contractor’s license in CA, only one individual listed on the license is required to hold the classification. This person can be a Responsible Managing Employee (RME) or Responsible Managing Officer (RMO). If the qualifying individual already has a license, then no further exam is required. If he or she does not hold the proper classification, then testing will be necessary.

Q: My specialty license expired in 2002, over five years ago. I am now looking into obtaining a general license in California. My problem is: I just found out today from the CSLB that I can’t renew my license and I have to retest. Unfortunately, I just received the go-ahead from a company who wants me to fill out a form saying I’m an independent contractor. Am I okay to do the 1099 as a “consultant” until I obtain a new license? Your input would be appreciated.

A: I cannot determine if this is proper because simply stating that you’re a “consultant” does not tell me much about your role in this project. For instance, are you supervising employees or subs? Are you overseeing the work as a project manager? Does your agreement with the company meet the definition of a ‘Contractor’ as indicated in Section 7026 of the B&P Code (i.e. to “construct, alter, repair, add to, subtract from, improve…any building”)?

If you answer YES to any of the above you’re likely a contractor and would need a license.

Q: The CSLB has told us we cannot use the word “solar” in our business name since we do not hold a “C-46” license. We have a “C-10” and understood that electrical contractors could do solar work. Is there a written policy available so we know what they’re referring to? We want to get this in front of our Association because this policy is ridiculous.

A: There is no written policy that I am aware of that addresses this issue. This is a CSLB staff interpretation of B&P Code Section 7059.1 which states “a licensee shall not use any business name that indicates the licensee is qualified to perform work in classifications other than those issued for that license…”

In your case, the Board has determined that a “C-10” is limited to handling Photovoltaic (PV) or other electric solar systems and it would be misleading to imply you could install ALL types of solar. They suggest adding the word “electric” to the business name.

Carrying your question a step further, brings up some interesting issues. For instance, as I indicated in last week’s column, a “B” can perform ALL types of solar work. Would the Board therefore allow a general contractor to use the business name style “ABC Solar”? Your thoughts and ‘feedback’ on this is appreciated.

Know your CSLB Board Members

Governor Schwarzenegger appointed Joan Hancock to the CSLB in November 2007. She owns “Her Land Enterprises” and has been a licensed general building contractor in Sacramento since 1984. From 1977 to 1983 Ms. Hancock co-owned Hancock & Colyer Construction. She is a member of the Sacramento Mediation Center. Her term does not expire until June 2011.

General Contractors, Solar Energy and Bonding

Keep watching this ‘space’ as a contractor seeks help when his ‘world’ collides with the CSLB ‘universe’. How will the ‘planets align’ for a general contractor who wants to build ‘solar’ systems? Can I show another contactor how to ‘travel back in time’ to solve his problem in the ‘present’ day. These exciting stories of ‘time and space’ are real-world examples of the regulations that ‘rule’ a contractor’s life on Earth, or in California anyway…

Q: Can a general contractor legally do a PV (photo-voltaic) solar project?

A: In addition to the multitude of laws passed by the Legislature, which regulate contractors, the CSLB has created a number of rules and regulations governing the construction industry. Regulation 832.62 addresses solar system work within the scope of Class “A” and Class “B” licenses.

The definition of a general engineering contractor contains the phrase “in connection with fixed works requiring specialized engineering knowledge and skills. The Board has determined that this “shall include but not be limited to an active solar energy system.”

A general building contractor can handle solar energy systems, including Photovoltaic (PV), since the Board has concluded that this “constitutes use of more than two unrelated building trades or crafts within the meaning of Section 7057 of the B&P Code” (which defines a “B” contractor).

Q: I recently heard from the CSLB that they are looking into a project I worked on a few years ago. A complaint was filed against my license and the Investigator has asked me to provide all my contracts and records for an 18-month period. I think they are on a fishing expedition but want to know what actions can the CSLB take against me and my license if I do not have these records.

A: The CSLB has the right to request records from a contractor as part of any investigation. B&P Code Section 7111 allows the Board to take disciplinary action against a contractor who “without lawful excuse; delays, obstructs or refuses to comply with a written request…for information or records”. This same Section also requires a contractor to “make and keep records showing all contracts, documents, records, receipts and disbursements of all his or her transactions as a contractor…for a period of not less than five years after completion of a construction project…”

If you want any legal advice regarding the ramifications of non-compliance, I suggest contacting an attorney that is knowledgeable in dealing with these types of CSLB enforcement actions.

Q: Will the CSLB accept a backdated contractor’s bond? My bonding company sent this in to the Board but apparently it was not received. Now my license is suspended and one of our customers is refusing to pay us until this is straightened out. Help!

A: You don’t state how long ago this bond was sent to the CSLB. The Board can only accept a “backdated” bond within 90 days of the stated effective date. However, B&P Code Section 7071.7 does allow the registrar to accept a bond more than 90 days old “upon a showing by the licensee…that the failure to have the bond on file was due to circumstances beyond the control of the licensee”. In other words, if this “error” happened last month, you should have no problems getting the suspension lifted quickly. If your bond expired more than 3 months ago, you must be able to conclusively show that your bonding company did in fact file this bond with the State Board. Either way, I would suggest having the contractor’s bond filed in person in Sacramento so you can immediately secure a stamped copy for your records.