‘Loaning’ Your License, B&P 7031 & Fire Protection

A California contractor has a ‘scary’ offer that unlike those made by the ‘Godfather’ he can refuse.  We often assist attorneys and industry execs with research and explanation of how contractor’s regulations work. This time the lesson is one everyone can benefit from learning, before it costs you dearly…


Q:  I have been approached by an out-of-state company wanting to use my CA contractor license number.  What they proposed is the following: they want me to add their company name as a ‘doing business as’ or dba on my license.  They then want to use my license to contract work.  I would be performing the work, and they offered to pay me an hourly wage plus an extra monthly fee for the use of my license number.  The company has other employees that will be on site besides me, and the company has Worker’s Comp and a business license.  But can this be done or does this sound as bad as it looks?  I know I can set up as a Responsible Managing Employee (RME) or Responsible Managing Officer (RMO) and do this but I have never heard of this dba approach before.  So is this legal but scary or just plain illegal??


A: Thank you for contacting us.  You are correct in thinking that the method they proposed is not the correct way to go about the process.  Another entity cannot simply add their name to your license as a dba and then be allowed to use the license.  A license is issued to a particular entity, whether a sole proprietor, partnership, corporation, or LLC, and only that entity can contract with the number.  The company who approached you can utilize you as the RME or RMO as you suggested, but they would need to apply for a new license and get a new license number issued for their company.


Q: I am an attorney and I regularly read your column.  I have a client whose workers compensation policy is currently expired and therefore their contractor’s license is suspended.  I’m trying to stress to them the urgency of this and I remember reading one time in your column awhile back about contractors who are not properly licensed not being able to collect money for the entire project, even if their license is only suspended for part of the project.  Can you refresh me on this?


A: You are referring to B&P Code 7031, which states that one cannot collect for work for which a contractor’s license is required unless that person is duly licensed at all times during the performance of that act or contract.  Further, if the project owner brings the action to court, they can recover all compensation paid to the unlicensed contractor during the entire course of the project, even if the license was invalid for only one day!


Q: My company currently has a General Building license and we’d like to add the “C-16” Fire Protection classification to the license.  Can our Qualifier request to waive the trade exam since he has held the “B” license for over 10 years?


A:  In certain circumstances the CSLB will consider granting a waiver of particular trade exams if they are closely related to the current classification on your license, however the “C-16” Fire Protection is not a classification that the CSLB considers closely related to General Building.  Your Qualifier will need to show at least four years of experience doing that type of work and sit for the trade exam in order to add that classification.