RME/RMO & License Renewal

As a comedian would tell you, ‘timing is everything’. However, sometimes you just can’t help getting caught between the proverbial rock and a hard place. As I share with our first contractor, that situation is even trickier when the ground rule is also ‘unstable.’ How much money does a Nevada contractor need to ‘roll the dice’ on a California license? And a follow up from the Attorney General on recent alerts you’ve read here…

Q: My Responsible Managing Employee (RME) left the company last month. I have filed an application to replace him; however, what should I do with my renewal, which asks for the Qualifier’s signature? My license is due to expire at the end of the month. Help!

A: This is an issue that has plagued contractors for years. What to do when a RME or RMO leaves the license at the same time a renewal is due to be filed. The renewal application asks for both the Qualifier’s signature and if applicable, the signature of an officer or partner. Of course, if the Qualifier is an officer or partner – or a sole owner – this would not be an issue.

The Board’s policy has changed several times over the years but as of this column I can only address what it is today. In your situation, it is unlikely the CSLB will process your renewal without the new Qualifier’s signature. And his signature will not be valid until he becomes the official Qualifier.

I suggest filing the renewal with your signature as President and have the new RME sign where indicated. Also file a Notice of Disassociation and ask the CSLB to quickly process your replacement application. Hopefully the new Qualifier will pass his test and his fingerprints will clear quickly so he can be added onto the license prior to the end of the month. Coordination between the Board’s RME/RMO (replacement) and renewal units is critical to this being completed on time.

In the past, the Board would allow a renewal to be processed with an officer’s signature alone if a replacement application and Disassociation Notice had been filed. My personal feeling is the CSLB should not penalize the company if a Qualifier abruptly leaves at the end of the two-year licensing cycle.

Q: I just finished my application process for Nevada. I’m now looking at obtaining a license in California. It does not appear that financial or bank statements are required or there is even a form for this information. Am I missing something?

A: No financial or bank reports are required for licensure in CA. The only requirement in this regard, is responding YES to a question on the application, which asks, “Does your operating capital exceed $2500”. For years, California has made the determination that this is the minimum amount a contractor must have to be considered financially viable.

Contractors Update: In a recent press release, Attorney General Jerry Brown announced that he has filed lawsuits against eight individuals and six businesses that operated scams targeting small business owners. The lawsuits, seek to recover more than $3 million.

“These cases will send a powerful signal that small business owners must be on the alert,” Brown said. “These rip-off artists sent official-looking documents through the mail for the sole purpose of duping small business owners into paying them money – for no value in return.” 

The three cases involved mailed solicitations that appeared to be government documents featuring an official-looking seal, an official-sounding name, citations to the Corporations Code and a “reply by” date. As previously indicated in this column, the mailed forms claim that the business was in danger of losing its corporate or limited liability status if payment was not made within a short period of time. Simply, not true.

Contractor licensing for partnerships and corporations in CA

Which contractors must include a phone number in their signage? Can you ‘split’ a license to cover two different businesses? You would like to ‘inherit’ your parent’s contracting business, but how long can you wait to claim that license number? What happens when a contractor’s license is ‘limited’ by the departure of a partner? I’m cutting red tape and solving contractor’s license problems. Answers to these questions and more . . .

Q: I have a construction company setup as an “S” corporation. I hold the “B” and “C-36” license classifications. I would like to break off the plumbing section of the company to a new office using a different business name, however, I want to keep both under the same corporation as a single entity. From your previous columns I have learned that the CSLB only allows one “doing-business-as” or “dba” per license.

My questions are: Can I apply for a new license number for the plumbing “dba” without starting a complete separate business? If that is possible will each “dba” still retain both license classifications or will the plumbing “dba” have solely a “C-36” classification and the construction “dba” have only a “B” classification? Finally, will I have to take a test to obtain another license number?

A: You can apply for a new license number with a ‘dba’ under your existing corporation thereby giving you two distinct license numbers. It is up to you whether to retain both license classification or split up the “C-36” and “B”. Since you already hold both of these classifications, no further testing will be required.

Q: Someone reported me to the CSLB for not having my phone number on my trucks. Is this a requirement? I have my license number and my company name listed on every vehicle.

A: Plumbing (“C-36”), Electrical Sign (“C-45”) and Well-drilling (“C-57”) contractors must display their business name, permanent business address and contractor license number on both sides of every business vehicle. All other licensed construction trades need only display the business name and license number. While it may be a good business practice to do so, there is no requirement that you list your phone number on your trucks.

Q: I was in a family contracting business, which was dissolved a few years after my dad’s death. The license number still shows up on the Internet and I was wondering if it could be reassigned to me or another family member. I was an officer in the business and the name is still available.

A: Sorry, my research indicates your dad’s sole owner license was cancelled over ten years ago so it CANNOT be reassigned to you or anyone else.

Q: We want to make a change to our Limited Partnership contractor’s license. The Responsible Managing Employee (RME) just left and we were told when we called the CSLB that any change to a partnership license would cause it to be cancelled. How do we go about getting a new RME and still keep the license?

A: Your license is a limited partnership with several general and limited partners. As indicated it is qualified by a RME. If in fact the CSLB told you that “any” change would cause the license to be cancelled, this is incorrect.

Partnerships can change their RME or a limited partner without the license being cancelled. If you add or remove a general partner, then the Board would be required by law to cancel your license.

Adding a Specialty Classification to California Contractor’s License

We solve the problem, answer the question and help contractors make a ‘connection’ between the law and their work. As our first question indicates, knowing how the ‘current’ rules apply can be tricky. For some contractors, adding a specialty class can open a ‘pipeline’ of new business opportunity. Finally, take note, every contractor in California may be asked to put their ‘hands up’ for fingerprinting . . .

Q: Our company currently holds a “C-20″(HVAC) and “C-38″(Refrigeration) State License. When installing a walk-in cooler or freezer, we always get a city mechanical permit. However, does our “C-38” or “C-20” allow for the connection of the fan coil from a provided electrical circuit? If so, where can this statement be found in writing? Thank you for helping with this question.

A: If installing a refrigerator, refrigerated room or other insulated refrigerated spaces (such as a walk-in cooler), it’s proper to handle all work related to this installation including the electrical connection. By definition, a “C-38” contractor (Board Rules and Regulations 832.38) can install, maintain, service and repair related ducts, blowers, registers and thermostatic controls for the control of temperatures below 50F.

Further, B&P Section 7059 states that a specialty contractor can take and execute a contract involving two or more trades if the performance of that work is “incidental and supplemental” to the work for which the specialty contractor is licensed.

Q: As a licensed “B” contractor, we often perform light plumbing tasks in the overall context of a job – things like changing angle stops, installing a sink or a faucet, etc. Sometimes these tasks are subbed out to a “C-36″(Plumbing); other times they are performed by one of my employees. I am currently considering hiring an experienced plumber as an employee to offer a more complete array of plumbing services (pipe re-routes, relocation of drains, installation of tubs, etc.). This individual, while experienced in the trade, has no license of his own. My question is, as a general “B” contractor, can we simply offer plumbing services under our current license, or do we have to have a “C-36”? As always, thanks for your advice.

A: As you know, A “B” contractor can self-perform most trades including plumbing (personally or through their employee) if it is part of a project involving two or more unrelated trades or crafts. For example, a job installing a new tub/shower would be fine if combined with painting a room or putting in new flooring. You cannot however, advertise to perform “plumbing only” under a general license. To do so you would need to add the “C-36” to your license with you as the Responsible Managing Officer (RMO) or an experienced employee as the Responsible Managing Employee (RME). You can continue to sub out these “plumbing only” projects to a properly licensed “C-36”.

Q: I would like to know if I could pursue a contractor’s license for the “B”, “C-29” and “C-27”. I have worked as a project manager for over 5 years. Please let me know if I would need to test in all areas? Thank you.

A: While the CSLB should ultimately allow you to obtain these license classifications, you may only apply — and test — for one at a time. The Board will require that someone certify 4 or more years experience in general building (“B”), masonry (“C-29”) and landscaping (“C-27”) before approving you to sit for these exams.

CONTRACTOR ALERT: The CA Department of Consumer Affairs is considering a plan to require fingerprinting for ALL contractors – no matter how many years they have been licensed. Presently, the State’s fingerprinting program is only triggered if you apply for a new license, add a class, replace a qualifier, etc. This legislative proposal would mandate that all presently licensed contractors get fingerprinted as a condition of renewing their contractor license. So far, many in the construction industry – including myself -have spoken out strongly AGAINST this idea. More information as it becomes available.

New California Contractors License

With a slower economy many contractors are calling me to look into new ways to create jobs and profit. For many having a license is just the starting point in building their business. How can you realize more bid opportunities? Another contractor gets ‘linked’ to an answer, while a consultant with ‘designs’ on advising builders gets nowhere fast . . .

Q: I very much enjoy reading your column. I am a small General Engineering & Building Contractor. I would like to start two additional businesses with two different partners. The first would have street repairs/paving as its main scope of work. The second business involves the installation of solar panels. The first partner is not a Contractor. My second partner has a “C” license. How do I set up this business structure? Would the setup be different for each company? Would I be able to have a new ‘dba’ (doing business as) with each?

A: As long as you’re the qualifying individual owning at least 20%, you can qualify up to 3 licenses (not counting your current sole owner license). Since a “B” can properly do solar installations, it appears you have the proper classifications to handle this work. Therefore, it should not matter whether either partner is a Contractor.

You can set up these businesses in several ways. For instance you could form two new corporations, each with different officers and a different classification. Or you could establish one new company with the same officers and have a different ‘dba’ for each. A third option would be to form two partnerships with you as the qualifying partner. Since there are so many business structure combinations, I would suggest also contacting a legal or tax specialist before moving forward.

Q: Thank you for answering my question a few weeks ago. I have another question for you. As an individual, or even an LLC, acting as a “consultant” would I be required to have a business license in CA? I’m assuming they do require one. For example, I have a LLC and I’m considering offering consulting services to clients who are seeking Design / Build for their project. Please advise.

A: Acting as a ‘consultant’ or construction manager can be tricky since often the company is in effect acting in the capacity of a contractor. Whether a license is needed will depend on the contract you sign with the owner. If it calls for any “building” or “installation” (i.e. any construction), a license would be required — even if your intent were to sub-contract 100% of the project. As we discussed, the CSLB will not issue a license to a LLC.

Q: In regards to becoming a California Contractor, I had spoken with someone at the State, and was told that electricians do not need a card to work there. However one of our project managers came in this morning and said he had talked to an Oregon Contractor licensed in California, who told him that his guys had to take a test in order to work as an electrician in your state. Do you happen to know?

A: To work as a “C-10” (electrical) contractor you are required to hold a CA contractor’s license. If you employ electricians, they must each be certified to work in CA. Contractor licensing is handled through the Contractors Board while this certification is handled through the Division of Apprenticeship Standards – Electrician certification program (part of the Dept of Industrial Relations). For a link to more detailed information visit my web site, cutredtape.com and click on the “Resources” page.