General Building Contractors Licensing in CA

If you ‘pay the freight’ you might naturally expect to receive delivery of what you paid for. However, government doesn’t necessarily always meet those expectations. Unfortunately, today it’s more like ‘business unusual’ in California. No matter how long you’ve been licensed there is always more to learn. A concrete contractor helps us ‘cement’ the learning curve for what must be displayed on your company vehicles…

Q: We sent our Worker’s Compensation Certificate to the Contractors Board last December about 2 weeks before the expiration date. When the system had not been updated, we sent a second Certificate in February via US mail. While checking our license online prior to signing a contract, we discovered that our CA license had been suspended for – you guessed it – failure to file a Worker’s Comp Certificate.

What are our options now? We must have our license back in good standing as soon as possible.

A: The State’s misguided furlough policy has struck again. The CSLB, which is fully funded by contractor fees, is experiencing some backlogs due to these forced (non-paid) days off.

I have received several recent calls from contractors whose license have been suspended for “failure” to file a Certificate of Worker’s Compensation. I checked into your specific issue and was informed that the February Certificate was logged in their computer system on February 17th; however, they could find no record of the one filed in December.

According to the Board’s online table of “processing times” this unit is experiencing a backlog of about 5 weeks. Since they process based on the order received, your license suspension will likely not be lifted for another week or more. I was told there are over 7000 Certificates or exemption forms waiting in the queue.

In my opinion, if the Governor were truly interested in creating and saving jobs he would lift the furlough for agencies that are not funded through the general fund. Helping to create a logjam of paperwork at the CSLB hurts established contractors. The same contractors who: a) must by law have a valid license to begin or continue work; b) employ thousands of people, who in turn pay taxes; and c) pay fees to the CSLB to process important forms like license renewals and Worker’s Compensation Certificates.

In the Legislature, Assemblyman Hector De La Torre has introduced AB 1215 to keep state employees working when the furloughs do not yield state general fund savings. In a recent Sacramento Bee editorial, he wrote “The Governor has put up a ‘no service’ sign to California residents by locking State employees out of their jobs despite their willingness to serve the public”. Assemblyman De La Torre went on to, as I believe, rightly point out that “closing down hundreds of agencies and departments and forcing a dramatic reduction in vital state services make it hard for everyone to do business…”

Q: My husband is a cement contractor, licensed for over 30 years. Our work trucks are insured through our commercial policies however, we were just told that the CA State license number is required on our vehicles. The company name is NOT on any vehicle, but we were told that the license number is still required by law somewhere, on the trucks. Is this true? I am sure we should know this after all these years, but we don’t. Many thanks for your expert advise.

A: Whoever told you about advertising on company vehicles is actually correct. Section 7029.6 requires contractors to display “his or her business name and contractor’s license number in a clearly visible location in print type of at least 72-point font or ¾ of an inch in height and width”. So, as you described it, both your name and number were missing.

CA General Licenses & Incidental Trade Work

As I have advocated for many years in the end piece for this contractor’s Q&A, ‘knowledge is power’. I share with you the benefit of knowing your license, and the laws that apply to using it. We also visit that place between the ‘rock’ of private contracting law and the ‘hard place’ of public works rules that are not quite the same…

An open letter to Kalb’s Capitol Connection:

Dear Mr. Kalb,

I hold several classifications including a “B” and “C-39” (Roofing). I was low bidder on a public works project and the second lowest bidder filed a protest. He stated that since the project included a small amount of glazing (“C-17”) and other minor trades, I should not be awarded the contract since I failed to list the required subcontractors.

I have been reading your column for years and went to your website to see if I could locate some information on this topic. I just wanted you to know that I utilized your back columns to put together my response to the protest. Thanks to your information, I was able to get the protest thrown out and was just awarded the contract by the city. Thank you.

Q: I just participated in a pre-bid conference in which the awarding authority ruled that either a “B” or “C-39” contractor could bid on the project. Since the job involves more than just roofing, shouldn’t a General builder be the only classification allowed? If the “C-39” is allowed to bid, do they need to list subs for the other trades? By the way I always enjoy reading your column in our local builder exchange newsletter, which is how I knew to call you.

A: As we discussed, since a large percentage of the project is roofing, the “C-39” would likely be the best classification to perform the work. Since the project includes other trades, a “B” should be allowed to bid as well. B&P Code Section 7059(a) addresses your main question in that a Specialty contractor is NOT prohibited from taking and executing a contract involving the use of two or more crafts or trades, if the performance of the work is INCIDENTAL AND SUPPLEMENTAL to the primary job.

As it relates to public works contracts, 7059(b) allows the awarding authority to “determine the license classification necessary to bid and perform the project”. Further, in no case “shall the awarding authority award a prime contract to a Specialty contractor whose classification constitutes less than a majority of the project.”

If a Specialty contractor is authorized to bid a project, all work outside of his or her license specialty, except work deemed ‘INCIDENTAL AND SUPPLEMENTAL, “shall be performed by a licensed subcontractor.”

The Contractors State License Board (CSLB) is urging all licensees to provide updated contact information as quickly as possible when a personal or business address or telephone number has changed. Because much of the documentation sent to licensees is time-sensitive, including license renewals, an outdated address can delay the CSLB’s ability to send licensees this important information.

By law, contractors are required to notify the CSLB in writing within 90 days of any change to a business address. Failure to notify the Board of an address change within the 90-day period is grounds for disciplinary action (Business and Professions Code Section 7083).

According to CSLB Registrar Steve Sands. “It’s important to remember that the CSLB is not informed when you submit a mail forwarding request to the U.S. Postal Service, so it’s the responsibility of the licensee to contact CSLB with their new information.”

CA Contractors License Suspension & Runoff Rules

If you don’t want to get ‘soaked’ by the wet weather, compliance with new runoff rules will ‘divert’ the potential for fines. While many are doing business ‘as usual’ contractors in California should be on high alert about a bill that would make a fundamental change in how and when license suspensions occur…

From time to time, I have highlighted legislation that may, if enacted, impact contractors. There is one such bill sailing through the Assembly and Senate that is getting a lot of attention from the construction industry. AB 8X 8 / SB 8X8 would authorize the Franchise Tax Board (FTB) to suspend professional licenses – including those issued to contractors.

Today, only the CSLB has the authority to suspend or revoke a contractor’s license AFTER A SPECIFIED APPEAL PROCESS IS COMPLETED. Code Section 7145.5 currently allows the FTB to report tax violations to the CSLB and the Registrar can then suspend a license for failure to pay this outstanding tax liability. IF PASSED, THIS BILL WOULD TRANSFER THE ABILITY TO SUSPEND A CONTRACTORS OR OTHER PROFESSIONAL LICENSE TO THE FTB, WHICH DOES NOT APPEAR TO HAVE THE SAME DUE PROCESS REQUIREMENTS. In other words, the express ability to suspend a license would transfer to a non-licensing agency.

Numerous construction associations including the Associated General Contractors, Western Electrical Contractors, California Fence Contractors, Southern California Contractors, and Marin Builders’ have written a letter to the State Assembly urging defeat of this bill. One of their primary concerns is the power this bill would give to the FTB. While acknowledging that they certainly support “compliance with the laws and regulations of the State of CA and agree that all taxes due should be paid in full”, they feel this far reaching measure sets a dangerous precedent.

This bill would require the CSLB to provide the FTB with the name and social security number or federal taxpayer identification number of each individual licensee of that entity. The bill would allow the FTB, once a notice of state tax lien has been recorded, to send a notice of suspension to the licensee.

The big question is: What happens if a corporation has ten officers and one fails to pay all his personal income taxes. Is it then fair and equitable to suspend the corporation’s license based on a tax dispute involving one unlicensed individual? The Contractor Associations are concerned that giving this power to the FTB could cause economic harm to the construction company and its employees.

The CSLB is reminding General engineering and other contractors who are working on one acre of land or more to be aware of new permit requirements approved by the State Water Resources Control Board (SWRCB). Beginning July 1st, new permits regulating the amount of allowable storm water discharge from construction sites will take effect to ensure that sediment doesn’t negatively impact the qualify of rivers and streams. If runoff exceeds acceptable limits, violators could be fined up to $37,000 per day.

SWRCB staff is offering a number of free classes around the state to discuss these new discharge requirements and address compliance issues. For more information on registration and the overall permit process, visit the SWRCB web site — www.waterboards.ca.gov.

New Federal Lead Paint Certification

A new Federal rule reminds us that you may not be able to ‘see’ the future, but you can anticipate some problems before they occur. For contractors, especially those involved in demo, renovation or remodels in older buildings, you must ‘lead’ the way in preventing toxic exposures. Finally, we help subs know when to put a ‘pay day’ on their calendar…

Q: I heard there is a new certification similar to asbestos removal for lead-based paint? Have you heard anything about this from the Contractors Board? If not, do you know which agency might handle this?

A: Regulations regarding lead-based paint are governed by various state and federal agencies. While the Contractors State License Board (CSLB) is not directly one of those, they recently issued a press release reminding licensees that new U.S. Environmental Protection Agency (U.S. EPA) requirements will take effect soon.

Beginning April 22, 2010, contractors could face fines of up to $37,500 for not complying with federal regulations aimed at protecting them — and consumers — from exposure to dust from lead-based paints.

Contractors working on remodeling projects in homes, childcare facilities and schools built before 1978, should ‘foresee’, or anticipate encountering lead-based paint. According to the CSLB, although this dangerous paint “may have been covered by non-toxic paints in subsequent years, remodeling or demolition will disturb the lead paint underneath, potentially harming workers and consumers.”

Contractors conducting renovation activities in pre-1978 buildings must receive training from a U.S. EPA-accredited training provider. Contractors or their employees with lead safety certification from the California Department of Public Health (DPH) may take a four-hour U.S. EPA-accredited course to achieve federal compliance. At least one person in a firm must be trained and certified in renovation. That firm must then apply to U.S. EPA for firm certification.

In addition, for any construction work where an employee may be exposed to lead, employers must provide a written lead-work pre-job notification to the nearest Division of Occupational Safety and Health (DOSH) District Office.

In some ways these requirements are stricter than those pertaining to asbestos. Indoors, these apply to all contractors who disturb lead-based paint in a six-square-foot area or greater. Outdoors, this is a 20-square-foot area. Certification forms and a listing of accredited training providers are available on line at www.epa.gov/lead or by calling 1-800-424-LEAD (5323).

Q: Could you clear up the time frame as to when a General contractor is required to pay a subcontractor once the contractor receives payment from the owner (i.e. in my case a public entity such as a city or county). I’ve read Business and Professions Code Section 7108.5, which states 10 days and Civil Code Section 3262.5 (a) that mentions 15 working days. How does each section apply? The difference between 10 days and 15 working days can be substantial. Are the requirements different if the contractor is a sole proprietor or a corporation?

A: You are correct, a payment made within 10 “calendar” days vs. 15 “working” days can significantly impact cash flow and a company’s ability to make payroll. B&P Code 7108.5 states that a prime contractor shall pay any subcontractor within 10 days of receipt of each progress payment from the owner (public or private) except where section 10262 of the Public Contract Code applies. Section 10262 also states that the contractor shall pay subcontractors within 10 days of receipt of each progress payment from the owner.

I believe Civil Code Section 3262.5 (a) only relates to public utilities. This states in part: “Any person or corporation which has contracted to do business with a public utility … shall pay any subcontractors within 15 working days of receipt of each progress payment…” The payment requirements for government or utilities should be the same for sole owners and corporations.