Specialty Licenses, Generals & Advertising DBA’s

I will ‘mow’ down a common misconception about adding ‘landscaping’ work to your General license. Two other questions help clarify how and when a ‘special’ waiver may be obtained by “A”, “B” or “C” contractors. First, we share the rules on when a DBA is appropriate in advertising a business name…

Q: I am familiar with the CSLB’s advertising guidelines after having reviewed these on your website Online Resources page. Nevertheless, there still seems to be some uncertainty associated with these statutes (B&P 7029.6 and 7030.5).

Our interest is to simplify our advertising whereby both our companies can advertise under the same ‘DBA’. Two questions: will the Board allow two companies with the same business name? Will we need to list the FULL company name plus the DBA? I know we’ll likely need to register any changes with our local government.

A: I’m glad you found these guidelines useful. In answer to your first question, YES, in general the Board will allow the same fictitious business name (DBA) for two companies. However, it is very unlikely the Board would allow a General Partnership (GP) or a Limited Partnership (LP) to list a ‘DBA’ as is the case with one of your business entities. In response to your second question, NO, you’re not required to list the full company name – only the “DBA’ portion.

Q: We’ve had a “B” license for many years. Our interest is to secure a “C-27” class to handle landscaping. Do you feel the CSLB would issue a waiver of this class under 7065.3?

A: According to Section 7065.3, the CSLB will look at whether a Specialty (“C”) classification is “closely related” to the class presently held by the contractor. Or as it relates to “A” or “B” contractors, the applicant will need to apply for a classification “which is a significant component of the licensed contractors construction business as determined by the Registrar”. While current law allows for an “add class” waiver, I do not believe the CSLB would grant a waiver for the landscaping classification.

Q: I have a large roofing company client who wants to add the “B” to his existing “C-39” license. He has experience in carpentry, HVAC, electrical and plumbing while performing commercial re-roof projects. I would like to get him an exam waiver under B&P 7065.3. Can you help with this and do you think the CSLB would approve such a request?

A: I have yet to see the Board approve a waiver for a General classification when the present class held is a ”C” specialty. As I responded to the prior questioner, the classification being applied for must be sufficiently related to the class presently held by the contractor.

When 7065.3 was added to the Board’s statutes in 1990, its “general” purpose was to allow “A” or “B” contractors to secure a waiver of a related additional class that had been performed or supervised on a regular basis. For General builders, this would likely include (but not be limited to) Plumbing, Plastering, Carpentry, Painting, Drywall, or Roofing. For General engineering contractors, this would include Sanitation Systems, Pipeline or Earthwork and Paving for example.

Home Improvement, Solar & Low Voltage Electrical

If you are reading this for the first time, or are a regular, don’t forget the answer you may need is likely to be found on my website from a previous column. As our first contractor has learned, a lot of good information is accessible online but sometimes going directly to the source for an answer is what’s really required. As consumer interest in solar power grows, let me offer a ‘general’ suggestion on who can benefit from this work…

Q: I went through about 30 of your columns on line but could not find anything on this topic. I’m a “C-10” contractor and just secured a job installing coaxial cable. I went to pull a permit and was told I needed a “C-7” (low voltage) license. Okay, how do I go about getting this; what paperwork is required and how long will it take? I’m afraid I might lose the project if I can’t get the “C-7” very soon.

A: I’ll respond to all your questions but you may not like the answers. By the time you go through the application, testing, and fingerprinting, it may be about 6 weeks or more before the “C-7” can be added to your license.

A better response is to tell you that a year ago, I had a similar question that I posed to a License Manager at the CSLB. She wrote back confirming that “…the “C-10” Electrical classification covers both high and low voltage (“C-7”) installation, maintenance and service”. To prevent this problem in the future, you may want to secure the “C-7”. To save this current job, give the permitting authority a copy of my response. If they have any doubts, I’ll be happy to email them the classification determination to help straighten out any misconception or inaccurate information.

Q: I was just issued my “B” license yesterday and want to install a solar system on a neighbor’s home. I read the “B” definition and it appears I cannot do this. Any suggestions? Should I now apply for the “C-46”? Thanks for your help.

A: Congratulations on obtaining your General building license. While you are reading Code Section 7057 correctly, the Board has passed Rule 832.62 that allows a “B” contractor to perform solar installations. The Contractors Board has determined that an “active SOLAR energy system constitutes use of more than two unrelated building trades or crafts…” so you and your neighbor can both ‘shine’.

Q: Has the Home Improvement Salesperson license been invalidated? We did some research and according to the CSLB website the home improvement classification was repealed. However, it does not appear the same is true for the “home improvement salesperson” (HIS). An “HIS” is governed by Section 7152, and requires employment by a “home improvement contractor”. All that said it seems if the “home improvement contractor” classification was actually repealed, then the “home improvement sales person” license would be invalidated as well. Are we correct?

A: The HIS “Registration” is still valid and in-force while the Home Improvement Certification was, as noted, eliminated in 2004. The key here is, these are two different code sections that are not connected.

A home improvement salesperson (HIS) is defined in Section 7152 as a person who is employed by a licensed contractor to solicit, sell, negotiate or execute contracts under which home improvements may be performed or home improvement goods or services installed or furnished. These improvements include (but are in no way limited to) flooring, pools, painting, tile, fencing, etc. The Home Improvement “Certification” contained in code section 7150.2 was not a “classification”.

Registrar Conference on Fraud & Qualifier Replacement

A complex question regarding bids after the Qualifier has left the company gets us rolling this time around. We also take a ride on a ‘vicious cycle’ that is the focus for a special meeting called by the Registrar…

Q: I have a concern that a competitor is not operating properly. My understanding is this corporation was purchased and has a license through a Responsible Managing Officer (RMO) who was the President. Isn’t it true that the corporation license is valid so long as the President is still an officer? Well I happen to know that the President was discharged a month ago.

What is the status of the license now that the RMO is gone? The company is continuing to use the existing license not just to finish existing jobs, but also to engage new business, without an RMO or Responsible Managing Employee (RME).

At this time, there is no one supervising operations that have passed the contractor’s exam, so how can they legally continue operating? Also, what happens with the departed RMO? Is he still “liable” for their work?

A: The Company may continue to use the license for 90 days to complete projects in progress and engage new business- even if the RMO has been discharged. If they do not replace the RMO within that time, the license will be suspended. However, if the company files an application to replace the Qualifier and processing has not been completed within the initial 90-day period, the company can request another 90-day extension. This request must be made in writing within the first 90 days. The “departed” RMO is NOT liable for work performed after he leaves the license.

Another important question to ask is whether this was a stock or asset purchase. Generally speaking, if this were an asset purchase, the buyer will be required to apply for a new license. If this is a stock purchase, the seller has likely agreed to relinquish the corporate name and corresponding license number.

A contractor bids project after project only to lose out to an unlicensed individual or licensed competitor who is not paying his or her required payroll taxes or Worker’s Compensation Insurance. This bidder, who may be lower by 20% to 30%, is also likely paying employees cash “under-the-table”. The legitimate contractor gets fed up and in order to compete (or even survive), starts to underestimate payroll, stops pulling permits or pays some employees off the books. It’s a vicious cycle but one that was brought to light at a recent construction Industry meeting held in Sacramento.

At the September 28th meeting called by the Registrar of Contractors, it was estimated that California loses up to $100 Billion every year in revenue, a significant portion of which is attributed to the construction industry. As many contractors are aware, California continues to experience the severe problem of businesses operating in the underground economy. As discussed, in the current economic climate, the problem is getting worse.

The 60 people in attendance from throughout the State included several County District Attorneys, representatives from the Department of Insurance, Franchise Tax Board and CSLB, staff representing both Democratic and Republican legislators, as well as industry leaders for numerous building trades. Among the topics discussed were: ways the CSLB can work more effectively with the Joint Enforcement Strike Force (JESF); what actions can be taken against repeat offenders; methods of prioritizing construction fraud investigations; and how best to respond to leads from contractors and the industry aimed at combating fraudulent construction activities.

According to the Registrar’s invitation, “the expectation is that the CSLB and Industry Associations can work together to demonstrate to the public, governmental agencies and business groups the extensiveness of construction fraud and the need to prioritize and provide enforcement resources.”

Specialty Contractors & Business Names

I get a host of questions from contractors and most are pretty straightforward. Every once in awhile I get a contractor’s question from ‘left-field’ that ‘catches’ me off guard. It also is interesting when I get an inquiry from what some may consider my ‘competition’. Really, in your effort to ‘score’ a contractor’s license it’s no contest when I begin ‘pitching’ the answers…

Q: I recently received my specialty contractor license. Last week, a “B” contractor contacted me about becoming his Responsible Managing Officer (RMO). He says I don’t have to own 20%; he just has to buy a bond to cover this percentage of ownership. I’ve never heard of this. Is it true what he’s saying?

A: There is no requirement that a RMO own 20% (or any percentage) of a corporation. This minimum ownership is only required if you want to keep your existing license active. I’m not sure what he’s referring to regarding “buying a bond to cover 20%”? The only bonding requirement is if you own less than 10% of the company, in which case a $12,500 Bond of Qualifying Individual would be necessary.

Q: I probably shouldn’t tell you this but I’m from a license school. This being said, I’m hoping you can answer a question about use of a business name. A “C-10” contractor that has been licensed for 20 years, as “XYZ Construction”, wants to transfer his sole owner license to a new corporation. The CSLB has rejected his application telling him he cannot use the word “Construction” (as in XYZ Construction Inc.). Why, since he has been using this name for so long?

A: The rules have changed in the last 2 decades. Most contractors could use “construction” in their business name; however, about a dozen years ago, the policy was changed. To my knowledge, the Board did not retroactively require that contractors drop this name; however, today only an “A” (General engineering) or “B” (General building) contractor can use the word “construction” — unless it’s prefaced by a descriptor, as in XYZ “Electrical” Construction.

Q: I am a “B” contractor. Many of my projects have involved pouring concrete for foundations as part of this general construction. In fact, sometimes I’ll handle a job that only involves the “C-8” trade. In your opinion, do you think I could run into any problems?

A: Yes, you could have a problem in the future. As a “B” you should be working on projects that involve two or more unrelated trades – not including framing or carpentry. It is not proper to handle one trade alone unless you sub contract this work – or personally hold the specialty classification. Since it appears you have a number of years experience with concrete, I would suggest that you apply for the additional “C-8” classification.