RME/RMO, Section 7031 & Contractor Expert Witness

When you need something quickly do you expect to get it from a government agency? We find ourselves ‘standing up’ for a contractor who needs some ‘active’ defense in keeping his license. We offer an ‘expert’ opinion for a lawyer, and help everyone learn more about RMO/RME requirements in CA…

Q:  Is there any way to get the CSLB to issue an opinion – quickly – whether a license is needed for a particular kind of very specialized work?   It looks like a gray area to me, so I am trying to provide our client with options, which at this point would seem to be either get a license or get CSLB to say that one is not required.  What information do you (and the Board) need from us?
A:  To secure a response – quickly or otherwise — from the CSLB we’ll need to know very specifically what work your client will be performing.  It has been our experience over the years that even if only a small portion of the project involves actual construction a company is required to hold a contractor’s license.  Let us know if you or your client would like us to move forward on this request.

Q:  I have a case where a client of ours is being sued.  I know the statutes basically require that the contractor be able to prove that their license is active and good standing during the time the work was being performed.  Can you get us that proof in a hurry?  We have a court case due to start in less than a month.

A:  You’re referring to B&P Code Section 7031 (d), which states that if there is a dispute regarding the status of a contractor’s license, then “proof of licensure pursuant to this section shall be made by production of a verified certificate of licensure from the Contractors State License Board…”  We can help you secure this Certified License History and, inasmuch as you have an upcoming court date, should have it in hand well before the start of your hearing.

Q: I know I’ve read this in one of your prior columns, but could you remind me if my license number needs to be included on an informal bid.  I was asked to give someone a quote on a small bathroom remodel and wanted to keep it simple.

A:  A license number should be included on all construction contracts, subcontracts and BIDS as well as all forms of advertising. It’s not a big deal why not just list the number?

Q: I read your column regularly and don’t recall seeing any questions regarding expert witness.  I would like to consider retaining someone on behalf of my client.  Is this something you have done before or do you know anyone who can act in this capacity?

A:  I have personally served as an expert witness on numerous court cases, mediations, arbitrations, etc.  I also know other experts that may be able to assist you and your client. It all depends on the exact situation call me to discuss the specifics.

Q:  I am applying for a new corporate license and I am trying to determine whether I should apply as an RME or RMO (Responsible Managing Employee or Officer).  I am a Vice President, but don’t have any ownership or salary at the present time.  Are there any requirements that state that an RMO has to have ownership, and are there any salary requirements for an RMO?

A: An RMO means that your title with the company is President, Vice President, Secretary, Treasurer, Director or a related position.  The CSLB does not have any ownership or salary requirements for Officers as RMO’s however you are responsible for exercising DIRECT supervision and control over the company’s construction operations.

 

Graffiti Removal, Business Naming & Limited Liability Company (LLC) Licensing

The sushi master can cut fish thin but the law ‘cuts’ contractor’s regulation even finer. While it may be okay here, it won’t be over there- what’s a contractor to do in navigating this bureaucratic maze? Regulations exist for almost every aspect of ‘doing business as’ a contractor…

Q:   Do I need a contractor’s license to remove graffiti from public and private property?  Our process is to use chemical paint lifters and pressure washing. I have knowledge of the laws in AZ but not in NV or CA where I’m looking to get licensed.

A: Thank you for contacting Capitol Services.  In NV a license would NOT be required to REMOVE graffiti via chemicals and pressure washing; however, in CA a “C-61”/”D-38” (Limited Specialty) license would be necessary.  However, a contractor’s license would be required in both states if you also APPLY any paint or sealant after you remove the graffiti. Now that you know you need a license in one or both states, call us back to discuss the application process.

Q:  We have a corporation “Smith Concrete Inc., dba Smith Home Remodeling” which has both a “C-8” concrete and “B” General Building license.  Can we advertise and do business as “Smith Concrete Inc” in relation to our “C-8” work, and concurrently advertise/do business as “Smith Home Remodeling” on our General Building projects?

A:  Sorry you may not do business as two different names with only one license number.  You can either do business under your entire name, “Smith Concrete Inc., dba Smith Home Remodeling” or use just your  ‘doing business as’ (dba) “Smith Home Remodeling”.  To simultaneously conduct business under two different names, you may want to apply for a second “C-8” license under Smith Concrete Inc.– with no fictitious business name (dba).  Then you can use the new license number to advertise and conduct your concrete work, while using the existing license for your general construction.

 

Q: We are currently licensed as a corporation in CA, however this is a Limited Liability Company (LLC) in our home state.  Now that the CSLB is issuing licenses to LLC’s, we want to get a license for that business entity as well.  We would like to use an employee of our CA corporate entity as our Responsible Managing Employee (RME) since he has his own inactive Sole Owner license.  Does he have to be an employee of the LLC or could he be a consultant?

A:  The new law allows them to serve as a Responsible Managing Member, Manager or Officer (RMM or RMO), or be designated as a RME. Contractor’s Board regulation #823 addresses the specific requirements related to RME’s including that this individual be a Bona-fide employee of the LLC (not a consultant).

Q:  I hold a ”B” contractors license and want to be able to take on projects for painting and tile work.  I understand that with my “B”, I can’t do single trade projects without holding these classifications.  Do I have this right?  What would be required if I want to get these two licenses?  Is there any way to get an exam waiver?

A:  You are correct; General Building contractors must either hold the specialty class (in this case the “C-33” painting and “C-54” tile) or sub-out the work to a properly licensed specialty contractor.   To secure these classes (and self-perform this work), you’ll need to file two Applications For Additional Classification.

The CSLB will only allow you to file one application at a time.  You can request an exam waiver by submitting significant proof (i.e. project lists) that you have handled these trades since your license was issued 5 years ago.  Even with these detailed projects lists, the CSLB may still require to sit for the trade test.

HEAT Danger on the Job, Qualifiers & “A” Scope of Work

We ‘heat’ up the discussion with contractors as a warning reminder to stay cool on the job this summer. Another contractor is concerned about what happens if his Qualifier gets thrown ‘under the bus’. A general gets advice on ‘covering’ his base, and more on the statewide crackdown on the economic ‘underground’…

Q:  I am President of this company and as we discussed, we intend on using “Bob” to be our qualifying person for our CA contractor’s license.  That being said, what happens if “Bob” gets hit by a bus or leaves the company for any reason?  What is the typical protocol for companies in dealing with this issue?  Look forward to your response.

A:  The State of CA has a procedure in place should your qualifying individual (in this case “Bob”) leave or be unable to continue as your Qualifier for any reason.  The Contractors Board will give a company 90 days to replace this individual, during which time the license remains in good standing as if the Qualifier were still there.

Q: We are bidding a public works project for new construction.  The question came up: Can an “A” License contractor install exterior fire service items or does it require a “C-16” license?  What research I found, I don’t see where the “C-16” license is necessary because I hold an “A” general license, but I want to make sure I’m covered.

A:  Your covered!  General Engineering (“A”) contractors can self-perform the installation of exterior fire service items like water mains, fire hydrants, and other related fixed works requiring specialized engineering knowledge and skill.

WARNING!  It’s the time of year when temperatures can rise to over 100 degrees.  The summer sun is more direct and radiant heat from the sun and ground (concrete, asphalt, etc.) can take its toll on construction workers. MOST IMPORTANTLY, know the symptoms of heat stress, heat exhaustion and heat stroke.

As most readers know, it’s recommended that you try to perform the heaviest work first thing in the morning when heat exposure is less.  Use mechanical equipment whenever possible to eliminate or reduce manual labor in the heat.  Schedule frequent rest breaks in a cool spot or shade; have plenty of drinking water available (i.e. stay hydrated), and stay away from caffeinated drinks and alcohol. Finally, take precautions to protect your skin (hat, long sleeve clothing, etc.), eyes (sunglasses), and use sunscreen.

 

Dubbed, “Operation Underground”, investigators from the Contractors State License Board (CSLB), Department of Insurance (CDI), Employment Development Department (EDD) and county District Attorneys’ offices partnered for a series of sweeps at suspected illegal construction sites on June 20 and 21, 2012.  Sweeps were conducted in 11 counties, where over 100 enforcement actions were issued for, among other things: failure to carry Worker’s Compensation insurance; under-reporting the number of workers to obtain cheaper insurance premiums; and cash payments to avoid payroll withholding taxes.

“Participants in the state’s underground economy are harmful to everyone,” said CSLB Registrar Steve Sands. “Anyone who neglects their responsibility to comply with state contracting, insurance, and payroll requirements drives up premiums. At the same time, legitimate licensed contractors struggle because illegal operators underbid them.”

According to Insurance Commissioner Dave Jones, “Operation Underground is a result of the partnership under the Joint Enforcement Strike Force to aggressively combat the underground economy”. Jones stated, “Legitimate businesses that play by the rules are often forced to close their doors because illegal businesses are cheating the system.”

Contractor Rumors, Scams, CSLB Warnings and DUI

Common wisdom says you always consider the source when evaluating a statement, offer or claim. That is doubly wise for consumers who are falling victim to unlicensed contractors making Internet pitches for work. These bad operators muddy the waters for the licensed good guys doing business legitimately. A significant problem that government is fighting on your behalf…

Leave it to unscrupulous individuals to ruin a good thing.  Popular Internet bulletin board sites like Craigslist have seen a jump in excessive illegal and deceptive ads, which prompted the CSLB — and contracting boards from Arizona, Nevada and Oregon – to jointly issue a “consumer alert”.

The agencies are warning consumers that if they use Craigslist or other similar websites to find a contractor, they face a real risk of hiring someone whose only goal is to rip them off. According to the CSLB, the unusual step of issuing a consumer alert is being taken because of the growing problem that Craigslist has not adequately addressed.

“Craigslist serves as a valuable tool to legitimately licensed and insured contractors, offering them a free advertising vehicle to connect with consumers,” said CSLB Registrar Steve Sands, “Unfortunately, hundreds, if not thousands, of unlicensed or unscrupulous contractors are breaking the law every day by posting deceptive or illegal ads, and Craigslist has done little to address the issue.”

In addition to protecting  consumers, these Contractor Boards are concerned that allowing these illegal and deceptive ads to be posted unfettered creates an un-level playing field, where licensed and insured contractors cannot compete.  To illustrate the seriousness of the problem, simultaneous enforcement operations were conducted last week in California, Arizona, Nevada, and Oregon, using Craigslist ads as a basis to identify suspects.

In California alone, undercover sting operations conducted in eight different cities led to the arrest of 100 suspects. Three-quarters were identified from Craigslist ads. One suspect is a convicted murderer, while two others are registered sex offenders. All suspects now face a variety of charges, including contracting without a license and illegal advertising.

The issue of illegal online advertising isn’t new. CSLB addressed the problem with the Internet site in 2006 and 2007. As a result, Craigslist placed a link at the top of its “Skilled Trade Services” page to license information and to the California Department of Consumer Affairs website.

 

 

According to Assemblymember Bill Berryhill (R-Stockton), CSLB’s enforcement operations have bipartisan support from the state legislature. “It is important that consumers who hire unlicensed contractors truly understand their own liability.”

Assemblymember Bill Monning (D-Carmel) applauded the work of CSLB to protect California consumers and to crack down on the underground economy.  “These citations and arrests protect not only consumers, but also law-abiding contractors who cannot compete and are going out of business.”

Q:  I have been licensed since 1999 in good standing. A company wants me to become Responsible Managing Officer (RMO). I pled ‘no contest to a DUI in 2011.  Now with this on my record will the state deny my ability to RMO this company?  Can I keep my Sole Owner license active?

A:  In the large majority of cases, one DUI would not prevent you from becoming a Qualifier as RMO.  However, if you’re currently on probation the CSLB may require that you wait until this is completed.  Regarding your second question, you’ll need to have at least 20% ownership of the company that you qualify.  If you own less than 20% then you’ll be required to inactivate your Sole Owner license.