CSLB Enforcement Workers Comp

When it comes to unlicensed contractors or unfair competition, the CSLB is on the hunt in California. You can bet when they get a clue, SWIFT action follows. Concern about those cheating legitimate licensed contractors in the ‘underground economy’ goes all the way to the top, as State officials will be happy to explain. Finally, a quick review of how ‘qualifiers’ might be utilized on a corporate license…

Q: I am a contractor and have noticed that my competition has no Workman’s Comp for his employees. I know this because I have checked with the CSLB. Does anyone check on these companies? Who can I call about this?

A: Its unfortunate, but some licensed contractors, in an effort to gain an unfair advantage, will officially state they are exempt from Worker’s Compensation Insurance while actually employing one or more people. The CSLB can look into these types of issues if brought to their attention. You may want to report this contractor by completing a Statewide Investigative Fraud Team (S.W.I.F.T.) LEAD REFERRAL. For readers of this column, if you need a “referral” form, visit the CSLB web site or call my office and I’ll forward you one. This form can also be used to report any unlicensed activity.

The day after I received your email, I received a letter from Stephen Sands, Registrar of Contractors, inviting contractors, members of builders associations and others to attend the upcoming CSLB Underground Economy Conference. It’s scheduled for Thursday June 18, from 8:30 a.m. until 4:00 p.m. at the Holiday Inn Capitol Plaza, in Sacramento (300 J Street). For anyone wanting an event flyer, contact me and I’ll fax or email one to you immediately. I understand seating is limited.

According to the Registrar’s letter, “licensed, law-abiding contractors are finding it increasingly difficult to compete against unfair competition, specifically those who have reduced their costs by failing to provide Worker’s Compensation Insurance and do not withhold state taxes from paychecks.”

The CSLB has organized this conference to educate licensed contractors, building industry associations, local building officials, and local law enforcement on how to effectively partner with the CSLB and other agencies to combat illegal construction activity.

Representatives from other agencies including the Department of Insurance, Employment Development Department, and the Department of Industrial Relations will be making presentations on common violations of law that undercut legitimate licensees.

Q: I’ve recently read about acquiring an RME. We are a corporation licensed with a “B” general contractor license and are interested in knowing the specifics for a Responsible Managing Employee (RME). I’ve read that an “exam” is required. Is this the CSLB Licensing exam, or one specific to the RME? Does the incoming person need a new license first if he’s already a general contractor? What about if we want a new classification? Is there a specific CSLB form/application? Thank you in advance.

A: The Responsible Managing Employee (RME) is a designation chosen by the contractor when applying for a contractor’s license. The RME is one type of qualifying individual. Other qualifiers may be listed as a Responsible Managing Officer (RMO) — as with your company President; qualifying partner on a partnership license or owner for a sole proprietorship.

If you intend on replacing your current RMO you can do so with another officer or employee (RME). If you intend on adding a second license classification, again, the designation is dependent on whether the person is an Officer of the corporation. An exam might be required depending on whether the incoming RME has previously held a contractor’s license in the classification you want to add (or replace). The specific CSLB form depends on what your company wants to accomplish; however, there is no need for the RME to first apply for his own license.