As regular readers know, the black and white of written rules and regulations for contractors are primarily created by the Legislature. How these laws are used however is subject to interpretation. Outside of medical and legal practices, the California State Contractors Board has one of the most complex sets of rules governing work. That is why even experts sometimes go to the source for the best answers…
Q: I’m interested in getting your expert opinion. Can an “A” general engineering contractor take a subcontract for specialty trades such as mechanical or plumbing on a water treatment plant or pumping station project?
In the instance I’m looking at a prime contractor (with an “A” license) who is subcontracting the mechanical work to another “A” licensed contractor. This raised the question within our company: what work can we do as a sub holding this license?
A: First, there is no rule against an “A” contractor subcontracting to another “A”. The key question is the project, which is a water treatment plant.
From my many discussions with CSLB personnel over the years, they have regularly indicated that an “A” can perform most if not all work on a general engineering project. This would include specialty work such as plumbing or mechanical on a treatment plant
Using the Board’s view as it relates to infrastructure projects, an “A” could, for instance, pour the structural concrete on a bridge or power plant; handle the paving (only) on a pipeline project; install the irrigation on a new golf course; or place and hook-up underground electrical on a light rail extension. As an “A” I believe you could also install the machinery or mechanical on an industrial plant.
Even if the same type of work were being performed, it would not apply to a residential or commercial project. For instance, pouring a foundation on a new home or handling the plumbing or electrical on an office renovation would not be proper with an “A”.
While this is my expert opinion, I would suggest writing to the CSLB to secure their official determination prior to signing a contract of this nature.
Q: I read several of your previous columns from a few years ago on your web site. One said the use of referral fees might be allowed, but at the same time you cited code language that seemed to forbid the practice.
We would like to enter into solar contracts with both commercial as well as residential customers – and we were exploring the idea of paying past customers a referral fee for merely passing on our name and contact information — if that referral ended up in a sale. Is this allowed by the CSLB code?
A: As I indicated in the column you ‘keyword’ searched and quoted, I am not an attorney and therefore cannot give you a definitive answer. The example in my prior column involved a real estate agent giving a contractor’s business card to homeowners and I stated this did not appear to be a problem. The contractor implied he would give a “referral” fee to the agent if the homeowner hired him to do some work.
The key question becomes whether your payment of a referral fee to “past” customers is an inducement for them to enter into the contract in the first place. Since in your example, the inducement is directly with the homeowner this might cause a problem under B&P code section 7157. I have personally seen contractors offer a “discount” on future work for these types of referrals but this too may be skirting the law.
Because your question may impact many contractors, I have written a letter to the CSLB asking them for their “legal” opinion. I will share their response with you and readers of my column.