AZ Licensing, Worker’s Compensation Exemptions & “C-61”

Our first contractor inquiry introduces a new character in the ongoing Capitol Connection story.   One of the most important people working behind the scenes at Capitol Services is stepping up front. Many contractors who have worked with our Sacramento office have gotten answers directly from Shauna Krause, my expert assistant.  Now, readers of the Connection will also benefit from her knowledge, experience and outgoing personality as she tackles some of the future “Q&A” featured here…



Q:  You helped my company get their AZ license last year and I have a question.  I am the Qualifying Employee on the current Arizona license (I don’t own any stock).  There is another company who would like to hire me to be their Qualifying Employee so that they can obtain an Arizona “KB-1” (Dual General Building) license.  I also don’t have any stock ownership in this company.  Can I be a Qualifying Party for both companies?


A:  Glad to hear from you again.  The Arizona Registrar of Contractors (ROC) will not allow you to become the Qualifying Party on this second license.  This would only be allowed if one of the following were true:  a) you, as the Qualifier, owned at least 25% of each entity; or b) one licensee is a subsidiary of the other licensee.


Q:  I’m a licensed contractor who you might say ‘plays by the rules’.  There is another contractor in my area that does not.  I know for a fact that he has several employees but does not carry workers compensation insurance.  Any suggestion on who to contact about this information?  I would like someone to investigate this guy.


A:  As you know, any contractor that hires employees must cover them by carrying Worker’s Compensation insurance.  If a licensed contractor has no employees, an Exemption from Worker’s Compensation can be filed with the CSLB.  The problem, as you indicated, is some contractors have employees yet file the Exemption anyway.  A related problem is employers who “under-report” the number of employees they have.


I suggest that you file a complaint with the CSLB and the Department of Industrial Relations (DIR).  As I have indicated in prior columns, both agencies have taken a real interest in ‘leveling the playing field’.   A new law that will require contractors to reaffirm this exemption every time they renew their license may help in the long run.




Q: Is there a required exam for the “C-61”/”D-21”?


A:  Yes, the CSLB requires that you pass a law exam; however, there are no trade tests for any of the “C-61” categories.  Once you become licensed as a “C-61/ D-21”(Machinery & Pumps) contractor, you should review the entire list of “C-61” categories to see which others you may qualify for.  These additional trades would be issued without any further testing.


According to a recent CSLB press release, “the first state contractor license was issued to a limited liability company (LLC) on January 19, 2012.”  The recipient, a client of Capitol Services, was from the state of Washington.  As of late last week, the “CSLB has received 36 LLC applications,” said Registrar Steve Sands. “However, our Licensing division has had to reject many because they were submitted without the correct information.”

A common reason for rejection is the missing LLC registration number or that the personnel listed on the application do not match those reported by SOS. As this is a completely new application process, anyone needing assistance can contact the Connection.