California General Building & Engineering Licenses

Funny how one question leads to another, but I will respond with more on the “A” vs “B” from a previous column. It is this back and forth of discussion that often leads to many contractors learning more about these issues critical to getting the most from your own license. With only so much space to illustrate a point or explain these very complex rules and regulations, my readers are always welcome to follow up, e-mail, write or give me a call when one question leads to another…

Q: I always read your column in the North Coast Builders Exchange News. I was looking at the question about general contractors and how the “B” class restricts this license to carpentry, unless there are two or more trades involved. I hold a “B” license, and have come across this situation where I was not able to bid on some projects because of not having the proper specialty license.

Regarding your answer on the “A”, you stated there is nothing in the Board statutes that specifies a given number of trades like the “B” (I also hold an A license). It appears from reading your article, reading the business and professions code, and my own interpretation that an “A” licensee could bid on any project and that license would allow any classification of work to be done (except maybe fire sprinklers).

Also does this mean as an “A” license, I can bid on a project that was primarily welding? I have fabricated and welded all types of structures in the past 20 years. I would really appreciate if you could tell me your views and if this is acceptable. Thank you very much in advance.

A: My prior response was not meant to imply that an “A” could do any trade or bid on any project. I was simply drawing a distinction between the “B” and “A” definitions. The “A” General Engineering class does not specify a given number of trades like the “B” General Building so you could for instance pour concrete for a culvert, install underground electrical for a railroad crossing signal or handle earthwork or asphalt paving on a street project (all three only involve one trade). On the other hand, an “A” cannot pour a foundation on a home or run wiring in an office building. With the “A” (General engineering) the project to be performed is the key.

I cannot make a blanket statement regarding where it would be appropriate to perform welding (“C-60”) work using the “A”. I once helped a contractor who only performed “butt welding” on railroad tracks and the CSLB determined they were required to hold an “A”. The fact that you have welded “all kinds of structures” may be proper; however, as I stated, the project to be performed is key. I hope this clarification helps. Thanks for reading the column.

Q: Can you tell me why it is so difficult to get a contractor’s license in Arizona? Are they trying to keep businesses out of their State? I sent in my application but it was returned. The problem: When asked on the application to “list all owners of 25% or more of stock in the corporation” I answered NONE. They want it to say “No one”. Your thoughts?

A: Your problem with the Arizona Registrar of Contractors is all too common. Unfortunately, I have seen them reject a number of applications for seemingly unexplainable reasons. I happen to know that a contractor had their application rejected last year for leaving that same question blank. The contractor was told to respond with “none” or ‘n/a’. I find it difficult to believe that Arizona is actively trying to keep businesses out of the State, but they do sometimes make it difficult for contractors to get a license.

California Contractors License Board Meeting

It was planes, trains and automobiles carrying me south for the latest California State Contractors License Board meeting. With only a dozen or so audience members in attendance, James Miller, Chairman of the CSLB gaveled their quarterly meeting to order in San Diego. A wide variety of topics were discussed during their 3-½ hour gathering on February 11th. All but two Board members attended.

One interesting item reported on was the number of applications submitted to the Board. While still averaging over 2500 applications a month for the final quarter of 2008, this number represents a 16% decrease from a year ago. Most of this fall-off can be attributed to original exam applications, which dropped back to 2000/01 levels. Due to this drop-off and other factors, the CSLB has eliminated most of their processing backlogs. It was reported that some Board processing units are able to review applications in a few weeks from the submission date. However, if the mandated twice-a-month furloughs continue, this situation could change quickly.

Another aspect of the changing economy buried in the 2-inch thick agenda was the number of applications that went void. In fiscal year 2006/07, over 16,000 applications were voided. Last fiscal year another 12,000 applications were never completed. This means that in a 2-year period, over 28,000 contractors submitted applications, had them rejected for any number of reasons; failed their exam or had other issues that ultimately resulted in the application being eliminated from further consideration.

The Enforcement Committee report highlighted the Board’s Senior Scam Stopper Seminars. These consumer education outreach events are held throughout California and include a variety of State and local government agencies. The goal is to educate consumers and give them the tools needed to fight scams and fraud including those perpetrated by unlicensed contractors. Also reported on were a number of highly successful SWIFT investigations. The Statewide Investigative Fraud Team (SWIFT) was very active throughout 2008, most recently mobilizing to provide proactive assistance to Southern CA wildfire victims in November and December. The Board’s head of Enforcement, David Fogt, hoped to conduct an enforcement sweep or sting operation in most of California’s 58 counties during 2009.

All CSLB meeting are open to the public. Information of the dates and locations of these meetings can be found on the Board’s website.

Q: Can a California Contractor’s license be transferred from one business partner to the other partner? Here is the situation: a company was started in 1996 with 2 business Partners. It is not a corporation. This qualifying Partner wants to retire. Can the License be transferred to the General Partner, without having to take the contractors board test?

A: Unfortunately a partnership license cannot be transferred to the remaining partner. Once a partner leaves a license it is cancelled by the CSLB. The remaining general partner will need to take the law and trade exams to qualify his or her own license.

Q: How many states can an individual hold a license in at one time?

A: There is not any limit. I’ve had a number of clients over the years that have been licensed in a dozen or more states. While an individual state like CA may limit the number of licenses one qualifier can be listed on at a given time, this does not impact an individual from becoming licensed in multiple states.

General California Contractors Licenses

Human wisdom partially comes from experiences that are shared by a friend or relative. This collective learning is often expressed by our most common clichés like ‘haste makes waste.’ That’s one every contractor can appreciate when paying for materials. Another to keep close to mind is ‘the devil is in the details’ especially when thinking about the ‘general’ rules for contractors. Reading the ‘fine print’ doesn’t always mean you can understand it…

Q: I would like to start a General Construction company bidding on public works projects. I’m not sure I can pass the “B” License exam at this time or that I have the required four years experience. I’m planning on hiring a friend who is a General Contractor to qualify my corporation and begin bidding on construction projects. However, before doing that, I wanted clarification on the Responsible Managing Officer (RMO) ownership rule.

How does owning 20% of the company correlate into revenue for the RMO? Does owning 20% of the company mean 20% of stock or my company’s revenue/profits? If he’s my RMO do I have to pay him anything?

His benefit in this arrangement is the fact that I would be utilizing his company for labor, materials, and management. Finally, is there a typical way of setting up payment to an RMO or is that negotiable?

A: If this general contractor wants to retain an active license as well as serve as your qualifier, he will need to certify under penalty of perjury that he owns 20% or more of the voting stock/equity of your corporation. This does not mean he needs to receive 20% of your company’s revenue/profits

He will be your qualifying individual and will be an officer of your company. Therefore, as the Responsible party for all construction work, he should be: employed by your company, involved in the day-to-day operations, and receive payment. The fact that his existing company will benefit is fine, but it does not justify being your RMO in name only. I am not aware of any standard way of establishing an amount of payment, so yes this would be negotiated between you and the qualifier.

Q: I am aware that a General “B” License holder is allowed to do all types of construction work, however if a certain amount of any one type of work is done, then a “C”-classification is legally required. At what percent of any one type of work is this required? Are they legally allowed to do and advertise their work in a particular sub-category (i.e.: plumbing, sealing, electrical…) without a “C”-class? Also, does this apply to the “A” Engineering Contractor License holder?

A: “B” general license holders can take a contract or subcontract if it involves two or more unrelated trades (other than carpentry) or they can perform jobs involving framing/carpentry only. They would need to have a specialty classification if the project is only that one trade (plumbing, electrical, painting, etc.). The General can also take a contract for only one trade if the work is subcontracted to a properly licensed specialty contractor. There is no rule or regulation that I am aware of whereby a percentage of one type of work triggers the need for a specialty license.

As for a “B” advertising specialty work, section 7027.1 states it is a misdemeanor to advertise for work unless the person holds a valid license in “the classification so advertised, except that a licensed building or engineering contractor may advertise as a general contractor”. In other words, I do not believe a “B” can specifically advertise for plumbing or electrical projects unless they hold the proper “C” class.

Regarding your question on the “A”, there is nothing in the Board’s statutes that specify a given number of trades (like the “B”).