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 —