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.