Licensing, RME Responsibilities

While you are always ‘responsible’ as a qualifying individual you may not always be ‘liable’. We also explore more of the ‘in and out’s’ of being a license qualifier as an ‘on the job’ RME or RMO in California. First a ‘general’ answer for another contractor . . .

Q: I am currently working under my brother-in-law’s General contracting license doing concrete and masonry. I would like to form a corporation that does both these trades. As a General I believe he can only have 30% or so of his business come from one trade. That becomes a problem when my concrete part of the business needs to expand. Let me know if you have any ideas please.

A: General building contractors are not limited to a specific percentage of work in one trade. By law, they should work on projects involving “two or more unrelated trades’ but could conceivably handle concrete and masonry much of time while still doing plumbing, electrical, painting, etc. This being said, it is advisable to have the specialty class (in this case “C-8” or “C-29”) if doing a project with only one trade.

If you intend on handling this work separate from the primary business, it makes sense to form a new company. You can only apply for one classification at a time since testing would be required. You’ll need to show at least 4 years journeyman level experience in each trade.

Q: When a Responsible Managing Officer (RMO) disassociates with a corporation does he remain liable for the company operations. What about the liabilities incurred after his disassociation because he had to sign the indemnity agreement on the original contractor’s bond? According to the CA B&P code 7068.2 he is liable until the CSLB board receives the written notification of disassociation.

A: I suggest directly contacting the surety or insurance company that wrote your bond to find out what their policy is regarding liabilities and their indemnity agreement.

Regarding the broader issue of “remaining liable for the company operations “, Section 7068.2, does not actually use the word “liable”. It states in part that the qualifying person (such as the RMO or RME) “shall be responsible for the licensee’s construction operations until the board receives the written notification of disassociation”. (Note: It is legal for this form to be backdated, if filed with the State within 90 days.)

I think the wording in this code section was chosen carefully when you compare the definition of RESPONSIBLE as “accountable to somebody for an action or for the successful carrying out of a duty” and LIABLE as “having legal responsibility for something, especially costs or damage”.

I regularly tell callers – particularly the qualifying individual — who ask if they are “liable” that CSLB codes and regulations speak of duties and responsibilities rather than liabilities.

Q: Is there an expectation by the CSLB that the Responsible Managing Employee or RME be on job site on a daily, weekly, monthly or on an ‘as needed’ basis?

A: As an RME you should be actively engaged with the company as a bona fide employee and must be working at least 32 hours per week (or 80% of the time the company is operating) to comply with Board rule 823. The CSLB does not however, specify how often you must be on site. Since many companies have multiple projects, it would be nearly impossible to be at all of them daily or even weekly. I have even heard top Board staff publicly state there is no rule requiring a RME to be on one specific job site every day or week. Regardless, whether you intend on visiting a job site daily, weekly, monthly or on an “as needed basis” I would caution you to make sure all State codes and regulations are being followed.