A, B General Licensing & RME

Surviving the downturns in our economy is never easy. Contractors, like everyone else, are seeking creative ways to keep their benefits affordable. As the economy ebbs and flows, businesses must sometimes look into new ways to meet the needs required to continue working in this new reality…

Q: My husband and I have really struggled with paying for health insurance. Up until October of last year, we were paying for group insurance through Blue Cross because we were in a partnership with another building contractor and were able to get a small group rate. The partnership dissolved, and now we are trying to figure out how to continue getting that less expensive group rate.

My husband has been licensed for over 30 years (he is a Sole Owner). Is it possible to add me as a Responsible Managing Employee (RME) to qualify having two people in the company so we could continue our group insurance? What are the qualifications to be an RME? Due to pre-existing conditions for both of us being able to qualify for health insurance, as individuals would cost a fortune, which we can’t afford.

A: I sympathize with your situation. I have spoken with other people in your position and understand how difficult it is to secure individual health insurance coverage with a pre-existing condition.

To become a RME, you’ll need to first determine if you can qualify for a contractor’s license. Since your husband is the “B” Qualifier, you cannot qualify the same classification that he does. Therefore you’ll need to look at another classification such as painting or plumbing or drywall, etc. If you can show 4 or more years of full time experience (within the past 10 years), you’ll be able to sit for the law and appropriate trade test. The work must be at a Journeyman level or above and cannot only be “administrative” in nature. Once you pass the exams, a $12,500 Bond of Qualifying Individual must be posted and you will need to clear fingerprinting.

As an alternative, you and your husband may want to look at incorporating and assigning his current Sole Owner license to the new company. This would then allow you both to become employees and possibly qualify for “group” insurance. Before considering this, please speak with your insurance agent as well as your accountant and/or legal council. I sincerely wish you, and all dealing with these issues, the best of luck.

Q: Hello, I found you on the web (cutredtape.com) while searching for an answer to my licensing problem. I handle a lot of work for a certain Southern California city. We have an “A” license and either self-perform or sub-out grading, concrete, fencing, landscaping, and paving. There has never been any real problem —until last week. The City wants us to now have a “B” to handle the exact work we have been handling for many years under the General Engineering (“A”). In your opinion, can we do the work with our current license? By the way, this is a park project. Could we get the “B” if we had to?

A: Thank you for your question. As we discussed, by definition, an “A” can handle projects related to “parks, playgrounds and other recreational works”. Since the project has NOTHING to do with a building you can tell them that, in the opinion of at least one licensing expert, the “B” would be improper and hard to justify.

However, this being said, since a city can determine the “proper” classification for a specific project you may need to apply for the “B” to do this work. Of course qualifying for the General Building classification may be difficult since none of your experience is in “connection with any structure built, being built, or to be built…” as specified in Code Section 7057.

Foreign Corporations, Process Agents & LLC Contractor Licensing

Despite the news about a slowdown in construction work in California, people outside the state know it’s still a ‘golden’ opportunity as the economy revs up again. As we learn from another contractor, a long time issue with LLC’s is about to make a ‘180’ but what you have heard isn’t the whole story for contractors…

Q: A foreign corporation has asked us to do some work for them in Southern California. They will be consultants so should not need a contractor’s license. The company wants to know if it has to register with the California Secretary of State even though they are not actually performing the work? My understanding is that they still have to because they are engaged for profit under the tax code.

Is this your understanding as well? Also, if they do have to register in California, what forms will they need to file and can your company assist with the paperwork? I know this is not exactly a license issue, but I thought you might be able to provide some insight.

A: Based on the information provided, this corporation will need to register with the Secretary of State’s Office (SOS) to do business in CA. If they are conducting business and have employees in the State, they would be subject California’s corporation and tax codes.

Regarding the paperwork requirements, a “Statement and Designation by Foreign Corporation” will need to be filed and must include a Certificate of Good Standing from their home State. The company must list a resident agent for service of process who is authorized to receive legal filings on their behalf.

Fees to the SOS are dependent on how quickly they need this document filed. The base fee is $100.00 and all that is necessary if sending in the form. For an extra $15.00, they can have the document filed in person and can expect to have a corporate number in about 4 weeks. For an additional $350.00 a 24-hour turnaround can be requested. I always recommend reserving the name first to make sure it is available.

There are many companies — including Capitol Services — that can act as “agent”, reserve a corporate name and hand-deliver the form to the SOS in Sacramento.

Q: I see where the CSLB can now issue a license to a Limited Liability Company (LLC). This is great. How do we get started and what is required by the State?

A: I’ve received a number of calls from attorneys and contractors about this new law. While the law took effect on January 1, 2011, authorizing the issuance of a LLC license, the CSLB has until January 1, 2012 to implement it.

According to a report presented at a recent CSLB meeting, Information Technology (IT) staff has begun to work with the Licensing division to develop the rules and program for their automated system. It’s anticipated these changes will take most of 2011 to complete with “user testing in November and December of this year”. Therefore, the CSLB will not be able to accept a LLC application until after implementation is completed (on or about the first week of January.)

Q: I worked for a company as Responsible Managing Employee (RME) until October of last year. I left to pursue projects on my own but just discovered that I’m still listed as the RME. Shouldn’t they have filed the paperwork to remove me from the license? Am I still exposed to any liability? What penalties do they face?

A: Code Section 7068.2 actually requires “the licensee or qualifier” to notify the CSLB in writing within 90 days of disassociation. You are still subject to potential liabilities until you’re officially removed from the license. A licensee that does not replace the qualifier within those 90 days is subject to license suspension and disciplinary action.

“C-36”, “C-46” & CSLB February Meeting

While you work daily to build and repair the world I’m often ‘sitting in’ for you at those long government meetings. Hard plastic chairs aside, we’ll catch up on the latest quarterly CSLB get together. First though, these contractors need solutions…

Q: Can the installation of radiant floor heating systems, small hydronic piping systems for fan coils, and hydronic boilers/water heaters smaller then 400k BTUs be performed by a “C-36” plumbing contractor?

A: According to my research, the “C-36” can do this hydronic and radiant floor heating. Board rule 832.36 is very broad and Plumbing Contractors have traditionally done this type of work.

Q: We have a “B” license but and would like to know if we can advertise for solar work. What about if we want to change our business name to reflect this specialty?

A: Since a “B” can perform all types of solar, you should be able to advertise this fact. However, to my knowledge, the CSLB would not allow you to use “Solar” in your business name since you do not hold the “C-46” classification.

The Contractors State License Board held its quarterly meeting on February 1st in San Francisco. Except for two excused absences, all members were present when Board Chair Lisa Miller-Strunk gaveled the meeting to order.

After several public comments related to items not on the agenda, the various standing Committee reports were delivered. Each report presented was tempered by the grim State Budget and continued hiring freeze. As I’ve indicated in several past columns, the CSLB is a “special fund” agency, fully supported by contractors through their application and renewal fees. NO General Fund money is used, yet the Board is forced to leave positions unfilled thereby harming contractors and consumers alike.

For example, the Licensing Committee reported that the Licensing Information Center (i.e. phone unit) has seven vacancies. While other personnel can fill in occasionally, caller wait time, to reach a live person, has been increasing. As someone who has been dealing with the Contractors Board since 1982, I have seen – and heard about – different levels of service over nearly 30 years. When the Board has a full contingent of 15 personnel, wait time was generally a minute or less. The Board knows that as an initial contact, to answer a question or determine the status of an application, it is important that calls be responded to promptly and when possible by a live person. They are hoping to receive an exemption to fill these ongoing vacancies.

At the end of the Public Affairs report, it was announced that the coordinator of the Senior Scam Stoppers would be retiring at the end of March. There are currently 4 different seminars on tap through March; however, no new events are being scheduled beyond this date. Again, the inability to fill a position – from funding paid entirely by contractors — will likely halt a very valuable program — one that informs and educates seniors on how to protect themselves from unlicensed and unscrupulous individuals.

The Enforcement Committee Report highlighted how retirements will impact their efforts to go after the “bad actors” among the “good contractors”. While a contractor facing a consumer complaint may applaud less enforcement, keep in mind that one of their prime tasks is to go after unlicensed individuals, thereby leveling the playing field for those who play by the rules. Again, the Board has formally requested an exemption to the hiring freeze to fill many of their 17 vacancies.

A, B, Qualifiers & Business Name Advertising

For contractors in crisis, I can offer immediate answers to your questions- by phone or email. This is my business and knowing whom to call or what office to visit is often crucial to finding the correct solution. Another contractor draws a fine line in asking about the rules regarding advertising. Finally, an important question for anyone who may be a Qualifier, in these tumultuous times for the industry…

Q: Can we self perform structural steel work under our “A” and “B” license or do we need a separate license?

A: I cannot give you a definitive response at this time since I don’t know what the specific project involves. Generally speaking you should be able to self- perform structural steel work under the “B” since structural steel is often considered “framing”. If the work is industrial in nature, then the “A” would come into play since a General engineering contractor can self perform most portions of an industrial project. This being said, the cautious approach would be to apply for the “C-51” (structural steel) class.

Q: I have questions regarding advertising requirements in CA that I’m hoping you can help me with. We have a situation where one of our subsidiaries, does both manufacturing and installation.

Recently one of our trucks was warned by the CSLB that failure to disclose a license number on the vehicle could result in a citation. As I understand, it’s a requirement for all forms of advertisement to include the CA License Number as well as the name of the entity holding the license.

The question: because this entity does both manufacturing and installation under the same name, must all advertising, even if it is only for product and not installation, include our license number? Any insight you can offer would be greatly appreciated.

A: Yes, advertising does need to include the contractor’s license number; however, manufacturers or suppliers do not need to disclose their license even if they have one. You’re also correct a license number is not required if only advertising the sale of the product.

Since it’s possible a “manufacturing” truck may be at an “installation” job site – even if they’re NOT doing ANY installation — you’ll want them to list a license number on the vehicle if for no other reason than preventing issuance of a citation. Why take a chance; put the number on all vehicles.

Q: I was the Qualifying individual for my Corporation “C-10” license. They cut back on business, laid me off and let the Worker’s Comp Insurance and our Bond lapse. How do I change the license to my name and reactivate it? Thanks so much for your input.

A: Sorry these tough economic times have affected this business and your employment. According to the CSLB web site, this license is indeed suspended. The present status shows the company license is under Suspension because both the Contractors Bond and Qualifier’s Bond have been cancelled and Worker’s Compensation has expired. You are still listed as the Responsible Managing Employee (RME), so I would strongly advise that you remove yourself or disassociate immediately, since you are still responsible for any work performed until you officially do so in writing.

Unfortunately, you cannot change the business name since this is a corporation and you are not an officer. The license belongs to the corporation, not to you as an individual and I could not locate another license that you’re listed on.

You will need to apply for a new (sole owner) license and will be issued a new number. No test is required but you’ll need to secure a new Contractor’s Bond and, if you hire employees, proof of Worker’s Compensation Insurance.