Can a legal judgment ‘ricochet’ from its intended target? Our first contractor is hoping to get out of harm’s way before the legal battle is joined. We share the steps another contractor must ‘dance’ in a corporate shuffle. We will help another questioner ‘plug in’ to the reason he may, or may not, need to file a CA contractor’s license application…
Q: Okay, say a contractor disassociates from a company while there is a lawsuit pending but before a judgment is obtained, and then associates with another company. If a judgment is later obtained against the first company will it follow the license holder to the new company?
A: In my opinion, the judgment should not follow the contractor under your suggested scenario. However, he or she will likely be required to divulge a suit is pending when associating with the second company. Generally, the Board’s policy is that judgments apply to personnel who are still listed on the license. Personnel who have previously disassociated should not be held responsible. The date of disassociation is critical and this is not a ‘get out of jail’ free card.
Q: Our Company recently converted from a “C” Corp to an “S” Corp. Ownership has remained the same. Do we need to do anything with our License? One of your recent Q&A articles in our local contractor’s builder exchange newsletter spoke about a Sole Owner who converted to an “S”, therefore needing a new license. Are we in the same boat?
A: When converting from a “C” corporation to an “S” corporation (or vice versa), you do not need to do anything with your license. The CSLB is not concerned with what type of corporation you are. If you kept the same corporate number (which according to our research looks to be the case) then a new license is not required. A Sole Owner is an entirely different type of business entity than a corporation, hence the need for filing new license application.
Q: If my corporate license were to be suspended, would I be able to use my personal contractor’s license as a back up and continue to work?
A: First, it depends on why the license was ‘Suspended’ by the Board. If the Board action is simply related to a Bond or Worker’s Compensation cancellation then that’s one thing. If the Suspension is caused by a judgment or disciplinary action this is something totally different. We’ll assume it’s the former reason.
You can use your personal license as long as it is current and Active. You should consider transferring the contracts that are currently under your corporate license over to your personal license in order to continue work in progress, plus you would need to sign new contracts under your Sole Owner business name. You should not do business under your corporate license number and name while it is suspended.
Q: We provide a patient safety monitoring system that utilizes the existing CATV coax system in hospitals and other medical facilities. We place a Server at the CATV demarcation point in the hospital communication room; a Room Control unit (similar to a cable TV set top box) in each patient room; and a computer at each nurse station using the existing hospital computer network. All we do is install and plug in our equipment. All new cable/coax installations are the responsibility of the facility using their in-house staff or contractors. Are we required to apply/obtain a contractor’s license to install our own equipment?
A: According to the CSLB, a license would not be required for this type of work. However, if the medical facility you’re doing the installations for requests that you have a contractor’s license, then a “C-7” (Low Voltage Communications) would be the proper classification to apply for.