Fingerprinting, LLC Licensing & Partnerships

A major change in California contractor licensing is coming. S-l-o-w-l-y. Another contractor helps ‘clear up’ some general rules on partnerships. As we have advised before honesty is the best policy when applying for a contractor’s license…

Q: We have an existing Partnership license; however, my company would like to add me as a new partner. I am a little ‘fuzzy’ on our ability to get my “B” license added to the “A” license. Would this require that we apply for a new partnership? Can I be added as another partner and bring my General Building license in? What are my options?

A: The CSLB will not allow an existing General Partnership to add (or for that matter subtract) a partner. This would change the partnership and require you to apply for a new license. If applying for a new license you have the option of listing as many partners as you wish. As we discussed, these can be entities like a corporation and/or individuals like you. As an individual you must either be designated as a full partner (i.e. ‘Qualifying partner’) or RME (Responsible Managing Employee). As we also discussed, a RME is NOT a partner.

There are exceptions to the above. The CSLB will allow a General Partnership (GP) to replace its RME without being required to apply for a new license. Further, a ‘Limited Partnership’ (LP) can replace the “limited” partner and maintain its existing license.

Q: What’s the latest information on getting a license for a Limited Liability Company (LLC)? I represent an out-of-state LLC who is interested in applying for a CA contractor’s license. I know the new law allows the Contractors Board to issue a LLC license but understand this hasn’t taken place as yet. Can you provide me with an update regarding where this stands? Thank you.

A: I continue to get calls and emails regarding the licensure of Limited Liability Companies (LLC). As referenced in a prior column, last year the State legislature passed and the Governor signed legislation allowing the CSLB to issue a license to a LLC. While the law took effect January 1, 2011, it is not due to be implemented until the end of December (January 1, 2012 at the latest).

Unlike all other contractor licenses, LLC licenses will be required to: 1) maintain a $100,000 surety bond (rather than the normal $12,500 contractors bond); 2) maintain liability insurance coverage of at least $1 million (which is not a current requirement for licensure). According to recently enacted Code Section 7071.6.5, the increased bond requirement is “for the benefit of any employee damaged by his or her employer’s failure to pay wages, interest on wages, or fringe benefits and is intended to serve as an additional safeguard for workers employed by or contracted to work for a Limited Liability Company”.

Q: I’m applying for a new contractor’s license. My Sole Owner license was issued over 20 years ago and I recently incorporated. I see on the application where they’re asking about my criminal background and I’m worried because I had 2 DUI’s when I was in my early 20’s. These are the only incidents in my background but I don’t believe I mentioned this on my first application. I have never had a complaint against my license. Do you think the Contractors Board will hold this against me?

A: I doubt the Contractors Board will hold this against you. According to my discussions with CSLB personnel, yours would not be the first application since 2005 (when fingerprinting was implemented) where a contractor came clean about his past criminal background. If these incidents over 25 years ago are the only ones on your record, you should receive this new license without any difficulty. To paraphrase a familiar line, ‘the truth shall set you free.’