“C-4”, “C-20”, Fingerprinting & License ScamsAlert

Oh, say can you “C”? I’ll school this contractor with a license question that may benefit others interested in a wider margin for profit. An urgent alert for all contractors, and we share how honesty is truly the best policy when applying for your contractor’s license…

Q: How does someone with a “C-20” License go about getting a “C-4”? I just looked up a competitor’s license on line, and they now have a “C-4”. They have always subcontracted their wet heat and plumbing work out, so I have no idea how they even qualified to apply for one. I checked the personnel list online, and I see no change in ownership, new Responsible Managing Officer (RMO) or other people listed. If you have a moment to educate me, I’d sure appreciate it.

A: Thank you for the interesting question. There are several ways he could qualify for the additional “C-4” Boiler classification. According to my notes, accumulated over nearly 30 years, the CSLB has determined that the “C-4” is “closely related” to the “C-20” (HVAC) class. This being said, your competitor may have qualified for a trade exam waiver under Section 7065.3. He would need to have been a licensed contractor for at least 5 years and applied for a classification that, as determined by the Registrar, is “closely related to the classification or classifications in which he is licensed”.

7065.3 also allows a waiver if the qualifying individual is a licensed General Engineering or General Building contractor and applies for a classification “which is a significant component of the licensed contractor’s construction business”.

The “C-20” contractor could have also gained experience by supervising boiler work through hired subcontractors or he may have been performing hot water and boiler work directly even though he has never held the proper “C-4” class.

Q: A friend who you helped a few years ago referred me. I tested and passed my General “B”, but it has been under review for some time now. My friend suggested I contact you and see if there is anything that can be done. Or should I just wait it out. Thank you for your time.

A: Your application is under review by the Criminal Background Unit (CBU). Most times a review is done if you respond “YES” to question #11 (criminal background) on the license application. Or, you respond “NO”, but a fingerprint check shows you failed to list one or more criminal incidents in your background.

Either case could trigger a time-consuming review or more detailed investigation. The CSLB requires that every applicant list ALL prior criminal convictions regardless of when it took they place or even if it was sealed or expunged.

If a response should have been YES but the NO box was checked, the Board will contend that the application was falsified and may allow the applicant to withdraw and start over. There would be no need to retest; however, a new application and state fee would be required. On the other hand, if you responded NO and there in fact is nothing in your background, then I would suggest contacting the CSLB directly to see what they can tell you. Good luck with your overall licensing.

ALERT: FOR APPLICANTS WHO HAVE RECENTLY APPLIED FOR A CONTRACTOR’S LICENSE. I have received calls and emails from applicants regarding a company that is apparently sending letters pretending to be associated with the State Contractors Board. Use caution when responding to any mailing after you file an application with the CSLB. Scams ‘masquerading’ as ‘official’ government paperwork have exploded in recent years. Better to be safe than sorry, call with any question.


RMO, ‘Service’ Licensing & Finder Fees

Often the language used in government regulations is unclear. As an expert who works with these rules regularly, I am ‘pumped up’ and will make this contractor’s question understandable. I will help another contractor ‘find’ the honest answer to his question about ‘referrals’…

Q: I hope you can clarify something for me. We have a consultant that helps us from time to time on project management. We were discussing whether a concrete pumping service requires a license. I say they do not because they are a service. He says they need to have a “C61”-“D06” license, which, as it turns out does say “concrete pumping service”. What gives here? We have concrete pumpers and concrete saw cutters that are unlicensed and they all tell me they don’t need a license because they are a service. My consultant says that if that were the case a person who has an electrical “service” or a plumbing “service” wouldn’t need a license either. Which one of us is right?

A: Your consultant is correct on very one important point. Being a “service” does not preclude needing a contractor’s license. For instance, a number of licensed contractors – particularly HVAC and Plumbing — are primarily service companies.

Whether a concrete pumping contractor needs a license depends on whether he is simply providing concrete materials. If he is operating the concrete ‘pumper’ as well as controlling the hose and location of the concrete, then he would likely need a license. If he were simply delivering the concrete material to a job site where a contractor takes control of the operation, then a license would not be necessary.

Q: As part of my business law prep, I recall that there was a requirement for qualifying parties (I’m a RMO) to be present at the job location for a specified amount of time. I cannot remember exactly what that time period was? Do you have any info on this subject?

A: I am not sure what code you’re referring to; however, my best guess is B&P Section 7068.1. This states in part that as the Responsible Managing Officer (RMO), you’re responsible to exercise “direct supervision and control” of your employer’s construction operations. There is no mention of any specified amount of time that a Qualifier is required to be at a specific job site. When you think about it, how could you possibly be on every project site if work was going on statewide at a dozen different locations?

The Board has adopted rule 823(b) defining direct supervision and control as including any one of the following: supervising construction, managing construction activities by making technical and administrative decisions, checking jobs for proper workmanship, or direct supervision on construction job sites. Basically, if you participate in the company’s day-to-day activities, you would likely satisfy the intent of the law.

Q: I have a quick question. Are “finders fees” legal? There are all sorts of people in my area who are offering to refer business my way for a finder fee. They’re basically asking me to inflate my quote by 10-20% or take the money out of my profits. They tell me I need to make sure the money is paid to them after I am fully paid for the job (i.e. it cannot come out of the contract directly).

A: Finder’s fees are not legal. Section 7157 – Prohibited Inducements – states in part: “no salesperson or contractor’s agent may accept any compensation of any kind…” and “no contractor shall pay, credit or allow any consideration or compensation of any kind to any other contractor or sales person…” In the Contractors License Law and Reference Book Index, this code section is listed under the letter “K” for KICKBACK! Honestly, don’t go there.

Apprentice Electrical & Out of State Contractor’s Licensing

It’s probably not a ‘shock’ to hear government is short on funds, but what does this mean for enforcement of contractor’s rules in California? We’ll investigate how this may affect your workers in the field. Another contractor’s question helps define how an ‘out of state’ company could partner with your contracting business…

Q: I am a licensed General contractor, working on putting a project together for a local government. The owner has previously used a specific contractor for some of its low voltage wiring. This contractor has a “B” license and has given us a sub-bid to install the low voltage electrical and conduit for this project. My question is, can a “B” contractor take a sub-contract for less than 2 trades? And can he legally install this work without a specialty license?

A: “B” contractors cannot take a sub-contract if it only involves one trade unless he also holds the required specialty class or the one “trade” is framing or carpentry. In other words, he would need to hold the “C-7” (Low Voltage) or “C-10” (Electrical) classification for this project. B&P Code section 7057(b) covers this in detail.

In 2009 the Legislature gave the CSLB the authority to fine electrical contractors that employ uncertified workers; however, they did not provide the additional funding or personnel required to handle this type of enforcement. Legally the Division of Apprenticeship Standards (DAS) must certify Journeyman electricians before they can actively work for “C-10” contractors.

According to a recent article in the Sacramento Business Journal, a group of electrical contractors have recently formed The Construction Compliance Trades Program to target these uncertified electricians. Acting on tips, “investigators” are sent to job sites to interview and photograph workers who are required to carry cards proving they’re certified. In one recent investigation, eleven journeymen, working for three different companies, were allegedly discovered to be in noncompliance. This information was turned over to the CSLB for an official investigation. If the workers are found to be in violation the companies could each be fined. Further, this citation would stay on the contractor’s license record for up to 5 years.

Q: I represent a construction company Incorporated in Delaware. They are planning on conducting business in Los Angeles but do not have a CA contractor’s license. My client would like to know if in place of taking the law and general building exams, he can associate or Joint Venture with an established company that possesses a General contractor’s license?

A: Your client may only “Joint Venture” with an established company if they themselves have a CA contractor’s license. By definition, a Joint Venture (JV) consists of two or more entities that are licensed, active and in good standing. This would mean having someone qualify a license for the out-of-state company by taking the law and trade exams. If you go through this process, there would be no need for the JV.

This company may want to “associate” with another entity by forming a partnership of corporations. In this example, the partnership will need to designate a qualifying individual (i.e. someone who already holds a license or must sit for the license exams).

However, I would recommend that your client directly apply for the license rather than go through either one of the above scenarios.

SWIFT Unlicensed Enforcement & RMO/RME License Qualifiers

Contractors will be happy to hear about the figurative SWIFT ‘kick in the pants’ unlicensed contractors are getting. Can a son-in-law qualify for a family license waiver? I’ll expand on a previous ‘Q&A’ for this contractor’s solution. We also share some important considerations if you’re a licensed contractor thinking about becoming a CA Qualifier…

Q: I have an opportunity to RMO my licenses. They are both under one CA license number. I have never been a Responsible Managing Officer (RMO) and know nothing about the good & bad points of doing this. One question is can I leave at any time with my license? I would be hired as a Corporate Officer, Manager or Superintendent with an hourly wage. Where can I get good information without paying an attorney?

A: First, if you’re going to be the Responsible Managing Officer (RMO), by definition you’ll need to be a Corporate Officer. Your corporate title is up to the company doing the hiring and could for example be Vice President, Secretary, Treasurer, etc. If hired as a “manager or superintendent” this would make you a Responsible Managing Employee (RME).

There are both advantages and disadvantages with being a RMO. For instance, you are not required to be employed 32 hours a week like a RME. On the other hand, as an Officer, you could be financially liable for judgments or other financial problems that may arise with your new employer. Either way, you have the option of leaving (disassociating) any time you want. Since you have never done this before, I would recommend caution before jumping into this situation.

You likely should contact an attorney; however, if you want some basic (non-legal) answers they can be found in the book “What Every Contractor Should Know: Answers to Real World Questions in CA, NV and AZ”. Chapter 7 is entitled: The RME/RMO.

Q: A few weeks ago, you answered a question in our local builder’s newsletter regarding the passing of a contractor license to a son. I believe you stated that the only requirement was that the “son” must have 5 years experience in the field. I have three questions: 1) Do the 5 years need to be consecutive? 2) Does this also apply to a son-in-law (he works within the same industry) 3) Can the two of them inherit the license as co-owners?

A: I don’t believe I said the “ONLY” requirement was 5 years in the field. There are several other considerations. The new Qualifier can be a son or son-in-law but only one can apply to take over a family license. The 5 years employment must be within the prior 7-year period and must be with the business that holds the license. While having experience with another company would allow your son-in-law to take the exam, it would not make him eligible for a waiver.

The CSLB has been busy nabbing the bad guys. During the past week the Board’s Statewide Investigative Fraud Team (SWIFT), in coordination with local enforcement agencies, conducted undercover stings in South Pasadena and Chico. The CSLB posed as property owners and invited suspected illegal operators to bid on home improvements such as fencing, landscaping and painting.

Notices to appear in court were issued to 21 suspects primarily for operating without a license or illegal advertising. 2 of those caught in the Chico sting were repeat offenders and face a penalty of up to $5000 and at least 90-days in jail. Two of those nabbed in Pasadena had their vehicles towed for driving with suspended licenses due to a prior DUI conviction.

According to the Registrar, Steve Sands, these stings “should serve notice that the CSLB and its partners are serious about cracking down on illegal contracting activity”.