California Contractors License Qualifier

When you hire a Responsible Managing Employee to qualify your license, how much stock does he have to own? When you decide to use the RME, do the Board of Directors also submit fingerprints? If you apply for a Limited Specialty class is there an exam? But first, a contractor poses a question that shows just how complicated it becomes when determining what license is required to start moving dirt around . . .

Q: We’re looking at doing the trenching and install of electrical conduit next to gas conduit in the same trench. I know the plumbing classification covers the gas but I can’t seem to figure out where, besides maybe an actual electrical license, the trench and conduit falls. I have heard grading contractors do this work but this doesn’t seem right.

A: While the “C-12” can do earthwork (such as trenching) and paving, I do not believe it is proper for them to install the actual piping or conduit. You are correct the “C-36” can install plumbing pipe and a “C-10” can handle electrical conduit. Further, you can trench and lay any type of underground pipeline with an “A” (general engineering) or “C-34” (pipeline) classification.

Q: If my Corporation invites a qualified licensed contractor to be a RME, is there a minimum or maximum amount of ownership that the Corporation must give him? I ask this question because somewhere I read that if a contractor sets up a corporation he must own 51% in stock. I am confused.

A: If your Responsible Managing Employee (RME) accepts your invitation, there is no minimum ownership requirement (this is also the case for a RMO). Even if the RME were in fact to own some of the company, the CSLB would not recognize this. When reviewing a filed license application CSLB staff consider RME ownership as zero.

Who owns stock in a corporation is determined by the officer(s) and director(s). The “51%” figure is only an issue if a sole owner contractor decides to form a corporation and transfer his or her individual license number to the new company.

Q: If we hire a RME, must the corporate officers also qualify in one form or another? Must the corporation take a test? Must the officers and directors submit to fingerprints and criminal background checks? Must they be individually bonded?

A: The “corporation” is an entity and therefore cannot take the test. The company must have an individual as its qualifier. Only the qualifying individual (RME or RMO) would be required to take the proper exams. Fingerprinting is required for all personnel listed on the application. Live Scan forms are sent to the applicant after the Board accepts their application. Both the FBI and DOJ do background checks. In response to your final question, the corporation and RME (or RMO if owning less than 10%) must file a $12,500 Contractors Bond.

Q: I am hoping you can provide guidance. We are a new company that installs a specialty product. This is a Limited Specialty Classification “C61″/”D64”. We were told verbally by CSLB that we could apply for an Original Contractor’s License Examination Waiver (7065). We applied for the waiver but the Contractors Board rejected our application.

It is unclear what exam we need to take. When we review the Exam Study Guides for C61, it clearly states “Limited Specialty – No study guide available (No trade exam required).”

A: You’re correct that there is no TRADE exam for the “C-61”; however, there is a BUSINESS/LAW test required. This is likely the reason the application was rejected by the Contractors Board.

California Contractors License Experience

While I can guide you through the complexities of California contractor’s licensing, only you can gain the experience necessary for success. How much of that work will be accepted is always the call of CSLB staff as more than one contractor has discovered…

Q: I have a “C-27” license and applied for a General Building “B”. The Contractors Board rejected my application saying I did not have the proper experience. Would you look over what I sent them and tell me why this work doesn’t qualify me for a General Building license? Is the CSLB right?

A: Based on what you provided, my opinion is the CSLB is correct. While you have experience in plumbing, electrical, concrete, etc. it is all related to your landscaping work. I do not see anything related to a building or structure such as room additions or remodeling (patio’s do not count).

Q. I have an “A” license and would like to qualify for the “C-34” (pipeline) classification. Do you think I can get this without taking the trade test?

A: Because all aspects of the “C-34” are included under the General Engineering classification, you have an excellent shot at adding this to your existing license with a waiver of the trade exam.

Q: I have a drywall license and was looking to apply for a painting license. I have done some painting after the drywall is in place and want to know if you think I qualify for this trade?

A: Unless you have 4 or more years experience in the painting (“C-33”) trade it is highly unlikely you would qualify to sit for this exam. The Contractors Board requires 4 years FULL TIME experience (within the past ten years) in order to qualify for any classification.

Q: I have a question about Joint Ventures. My corporation is going to Joint Venture with another company and we both hold General Engineering licenses. Does it matter who we designate as our qualifying person?

A: Unlike all other licenses issued by the CSLB, they do not specify a qualifier on Joint Ventures. You’re licensing the entities and, while both qualifiers must sign the application, the license will not list any of the individuals.

Q: With all the housing problems, my work has been decreasing. I have a “B” license and was considering applying for the “C-36” and “C-33” classifications so I could hopefully increase my business. What would be involved in getting these trades?

A: I have received several calls from General builders who are looking at other avenues during this down housing market. In each case, you will need to file an application for additional classification documenting 4 or more years of experience. You can claim plumbing (“C-36”) and painting (“C-33”) experience you have gained while handling this type of work under your “B” license. Because a trade exam will be involved, you may only apply for one classification at a time.

California Contractors State License Board/ CSLB Meeting

Are you holding your breath over the new diesel equipment regulations? Have you been ‘stung’ by unfair competition from an unlicensed individuals calling themselves a contractor? These were among the top agenda items at the latest meeting of the Contractors State License Board…

The CSLB held its full Board meeting in Sacramento on September 10. Among those items discussed or reported on were: The Air Resources Board (ARB) recently adopted regulations; legislation to require public work contractors to become certified by the CSLB; successful sting operations in San Marcos and Pleasanton; the Governor’s recent Executive order; and a new ‘Advertising’ definition.

The ARB adopted comprehensive regulations to reduce diesel particulate matter (PM) and oxides of nitrogen (NOx) emissions from existing (and in-use) off-road heavy-duty diesel vehicles in California. As it relates to the construction industry, this may involve loaders, scrapers, backhoes, and other related equipment. ARB estimates this will cost the industry upwards of $3.2 Billion (Some industry observers estimate this could be much more). ARB also estimates average costs of retrofitting existing vehicles will run $8,000 to $15,000 each. However, since technology has apparently not caught up to the regulations, it could be very difficult to comply with. One contractor I spoke with said his small fleet of vehicles would need to be retrofitted at a cost of $100,000 but that the required devices “have not yet been manufactured”.

According to the ARB website, for more information on these regulations you can call the diesel vehicle information hot line at (866) 6-DIESEL (634-3735) or visit http://www.arb.ca.gov.

SB 1698 (Romero) was recently passed by the legislature and is heading to the Governor’s desk. This bill would, if signed, prohibit a contractor from performing work as a contractor or subcontractor on a state government public work, unless he or she has obtained a public works certification from the CSLB on and after January 1, 2011. Again, while not a scientific study, several contractors I spoke with are not thrilled with another “layer of bureaucracy”.

As of this writing, the State Budget “record” stalemate is well into its third month – with no end in sight. As it relates to the CSLB, this has resulted in the layoff of dozens of temporary employees and suspension of the Industry Expert Program. The budget stalemate has also resulted in delays to some enforcement investigations including those related to unlicensed activities.

The Board’s SWIFT operation in partnership with the San Diego Sheriff’s Dept. conducted a two-day sting on August 20-21 in San Marcos. They netted 40 unlicensed contractors. On Aug 27-28, they partnered with Dept of Insurance and local PD to target unlicensed activities in Pleasanton. They netted over two-dozen individuals in this sting.

Reflecting the huge growth in Internet advertising, the Board amended its definition of where a contractor must display his license number when advertising to include “any electronic” transmission…under any listing denoting ‘Contractor’ or words of similar meaning.

Spotlight on CSLB Members

Bruce Rust, one of the newest Board members was appointed (as a public member) by then Speaker of the State Assembly, Fabian Nunez. Mr. Rust resides in Clovis and is Business manager of Laborers Local #294 in Fresno. He has worked in the construction industry for many years in both CA and AZ.

California Contractors License Waiver

Statistics from the Federal government show construction related deaths in the workplace dropped 41 percent last year. One in five California workplace deaths are construction related. You might guess roofers taking a tumble were particularly at risk, but strong emphasis on safety education, skewed the result away from this trade as the answer. According to statistics reported by the Sacramento Business Journal, more than half the 2007 victims were specialty contractors, including electrical, foundation, plumbing and HVAC workers…

Q: We sell a product door-to-door although another company handles actual installation. We disclose this fact to the homeowner. My question is twofold: Does our company need a contractor’s license (we would rather not)? Do our half-dozen sales people need to be registered with the State (they do not want to go through the process)?

A: As we discussed, your company is required to have a contractor’s license since the contract, as you describe it, is between your company and the homeowner and includes the words “sales and installation”.

In answer to your second question, all 6 salespeople should be registered as a Home Improvement Salesperson. The problem is a licensed contractor must employ them. If and when you decide to obtain a license, I suggest having each salesperson complete the proper Application for Registration; pay the required $50.00 fee; go through the fingerprinting process and do the right thing by complying with the law.

Q: I was told that if I work 20% of the time, I could be the company Responsible Managing Employee (RME). My employer also told me that as RME I would not be responsible for their work and they would give me something in writing that states this. I’m a bit worried because this does not seem right. What’s your opinion?

A: My opinion is to proceed with caution. As the RME for your employer, you must work 32 hours a week or 80% of the time the business is operating, whichever is less. Either way, you would need to be employed more than 20% of the time. Since by definition, you are the “RESPONSIBLE Managing Employee”, you certainly have responsibility for the work performed – even with “something in writing” from your employer.

Q: Can you please help me with some information? My father-in-law has been a general contractor for approx 40 years. I started working for him about 5 years ago and 3 years ago we incorporated the company with my father-in-law as President and me as VP.

My father-in-law has just had his 70th birthday and wants to “retire”, and have me run the business with his license. He seems to think that the license can be transferred to me and that it is possible to waive the contractor’s licensing exam. Is this correct, and if so how do we do it? Any information or options that you can offer would be greatly appreciated.

A: Business & Professions Code, Section 7065.1 allows for a waiver of the license exam under certain circumstances. Unfortunately it appears you are in between two different Sections of this law. Subsection “(b)” allows for a waiver by an immediate family member of a licensee whose INDIVIDUAL license was active and in good standing. Subsection “(c)” allows for a waiver if replacing the qualifier on a CORPORATION. In both cases you must show that you’ve worked for the individual or company for five of the seven years immediately prior to filing the application.

According to someone I spoke with at the Board, since your 5 years is split between the two license entities, the CSLB will almost assuredly require that you pass the proper exams. Further, they cannot transfer his “individual” license since it is now assigned to the corporation; however, you can replace your father-in-law as the qualifying person on the corporation license.

Penalties for working as unlicensed contractors in california

While some law is subject to interpretation in implementation, most rules & regulations mean exactly what they say. Two answers for our first contractor every licensed entity should remember. Unlicensed contractors make everyone look bad, but when they prey on disaster victims they are really playing with ‘fire’. For anyone who considers themselves ‘owner builders’ a caution about time and experience at work…

Q: I have a sole owner license and will be applying for a corporate contractor’s license soon. Two questions: first, can I transfer my sole owner license number to the corporation, and second, could I run into any problems if I begin signing contracts under the corporate license (hopefully with the same number)?

A: The answer to your first question is YES. You can transfer your sole owner license to the new corporation if you own 51% or more of the company. If you own 50% or less of the corp., a new license number will be issued automatically. The answer to the second question is also YES, particularly in light of a recent court decision.

According to an article by Sam K. Abdulaziz, a noted Southern CA attorney, the courts have tightened up even more on their interpretation of Business and Professions Code section 7031. This code section basically says you must be properly licensed if you want to have any chance of winning a court action. This involved a case, whereby a subcontractor was barred from bringing a suit against a general contractor because they were not licensed at all times.

According to Mr. Abdulaziz the sub was a corporation that had applied for, but not yet obtained, their corporate contractor’s license at the time it submitted a bid. The company had entered into the contract, ordered parts, and submitted plans before the corporation was actually licensed. However, it had not started actual construction of the site. It did not matter that the RMO was licensed as an individual and a partnership, since he was not licensed on behalf of the corporation.

It would appear that if you sign a contract under the new entity using the number from a current license, you could be asking for trouble The existing laws (and judicial rulings) in this area are extremely harsh and the case in question continues that trend.

Representatives from the Contractors State License Board (CSLB) have been among the first responders entering the various fire/disaster zones in California when it was deemed safe. Investigators and other staff members have been providing information to residents, canvassing burned neighborhoods to give warnings and offer helpful information about hiring contractors.

The CSLB’s Statewide Investigative Fraud unit (SWIFT) teamed up with investigators from the California Department of Insurance (DOI) in the Santa Clara/Santa Cruz Mountains after one of the first fires in May to post warning signs about the dangers of unlicensed activity in disaster zones. SWIFT also conducted a total of four sweep operations in the fire ravaged areas of Butte County during the months of June and July. According to the Board, over one million acres have burned in the state so far this year.

Q: I am an individual preparing to apply for a General Contractor’s License in California primarily utilizing my owner/builder experience as qualification. Can you send me examples of successful applications under that provision?

A: Owner builder experience is the hardest to qualify with since the CSLB rarely gives the applicant full credit. Every applicant is different; however, a rule of thumb is if you spent a year working on building your own home, they will likely give you only three to four months credit towards the four-year experience requirement. I have handled successful applications, however, I have also had to discourage other applicants knowing they would not qualify.